TED1920

Ms. Nulty, ‘the Complainant’, stated that she worked for Blackrock Leisure Ltd., ‘the Respondent’ from 2 September 2015 until 3 February 2017. This was disputed by the Respondent, who claimed that she was employed from 26 September 2016. The Complainant states that she was not given a contract within two months of being employed thus breaching her rights under the Terms of Employment,(Information) Acts 1994 to 2014, ‘the Acts’.

The Complainant referred a case under the Acts to the Workplace Relations Commission, (WRC). The Respondent did not attend the WRC hearing and the Adjudication Officer, (AO), found in favour of the Complainant and accepted that her rights had been breached under Ss. 3 and 5 of the Acts.

The Respondent appealed this decision to the Court.

Complainant arguments

The Complainant was employed as a cashier from 2 September 2015 until 3 February 2017. She was paid an hourly rate of €10.50 per hour, which was reduced unilaterally to €9.50 per hour from 9 January 2017. She worked 42 hours per week.

The Complainant was not given a contract of employment or a written statement containing the particulars of her employment. The Complainant was not given pay slips until September 2016.

Respondent arguments

The Complainant was employed from 26 September 2016 to 3 February 2017.

The Complainant was provided with a contract of employment containing the particulars of her employment.

The pay slips do not support the Complainant’s claim that she commenced working for the Respondent in September 2015. The pay slips cover the period from September 2016 until February 2017.

There must be a legal contract of employment between the parties if the Complainant is to be entitled to redress. If the Complainant’s version of events is favoured by the Court then the Complainant was aware that she would receive her wages in cash without deduction of income tax and was, therefore, fully complicit in the arrangement. In the case of a contract which is not entered into for an illegal purpose nor prohibited by statute, the performance of the contract to be unenforceable requires not just that it involves illegality but also that the employee actively participated in the illegality.

The case ofHayden v. Sean Quinn Properties Limited (1994) ELR 54 is authority for the above proposition, (reference was made also to the ruling inHussein v The Labour Court (HC) (2014)).

Witness evidence

Ms. Ann Connolly

Ms. Connolly stated that she was the Office Manager for the Respondent.

The witness stated that the Complainant worked 10 hours per week for the Respondent and that she commenced working for the Respondent in September 2016. She stated that the Complainant had started as a cashier and had helped out by emptying the machines and assisted with events.

She stated that the company employed three cashiers, each of whom worked 10 hours per week.

In respect of this particular claim made by the Complainant, the witness stated as follows;

The Complainant was given a contract of employment at the end of September 2016, which she never signed

The witness did not have a copy of the contract given to the Complainant and could not explain why the Respondent had failed to provide the Complainant with all relevant HR documents when requested to do so. The witness said that other cashiers had signed their contracts.

Ms. Ann-Marie Nulty

Ms. Nulty is the Complainant.

The witness gave evidence that she was employed by the Respondent from September 2015 to February 2017. She said that she was appointed as a manager from August 2016. This involved, among other duties, putting a roster together. At all times there would be 2 or 3 cashiers on the premises.

The Complainant stated that she knew Mr. Gary Mullen to be the owner of the Respondent, who also owned similar businesses in Dublin, Newry and Dundalk.

The witness denied that she had only ever worked 10 hours per week. On the contrary, she stated that she worked 4 to 5 days per week with work days of up to 10 hours per day. She stated that the casino stayed open past midnight every night, with a cut off time of 4am.

The witness described how she had been called out one night to turn off the alarm after a break in.

The witness described how party events were held on Bank Holiday week-ends, Christmas and Halloween and that the photographs showing the staff in costume were photographs of these events.

The witness stated that she had not claimed social welfare payments while working for the Respondent. She stated that she had repeatedly requested a contract of employment but had never received one. She stated also that she had been requesting pay slips for some time until they were provided for part of her earnings from September 2016.

Under cross examination, it was put to the Complainant that if, as she claimed, she was working full time from August 2015, then she had paid no tax and had benefitted accordingly up to September 2016, after which, she claimed, only part of her income was declared for tax, which also benefitted her. The Complainant agreed that she knew that she was liable to pay tax and said that she had sought pay-slips.

It was put to the witness that if, as she claimed, she worked full-time then her P60, which reflects her pay-slips, must be wrong. She was asked why, if this was so, she had not contacted her employer? She replied that she had not done so as she had left her employment.

It was put to the witness, and accepted by her, that she had no documentary evidence to support her claims.

The witness stated that, after pay-slips were introduced, she was given cheques for the amounts shown on the pay-slips and the remainder of her wages was paid in cash. Prior to that, all her wages had been paid in cash, which had been left in an envelope in the safe.

The Applicable Law

Terms of Employment (Information) Act 1994

Written statement of terms of employment.

• 3.—(1) An employer shall, not later than 2 months after the commencement of an employee’s employment with the employer, give or cause to be given to the employee a statement in writing containing the following particulars of the terms of the employee’s employment, that is to say—

• (b) the address of the employer in the State or, where appropriate, the address of the principal place of the relevant business of the employer in the State or the registered office (within the meaning of the Companies Act, 1963),

  (c) the place of work or, where there is no fixed or main place of work, a statement specifying that the employee is required or permitted to work at various places,

(e) the date of commencement of the employee’s contract of employment,

• (f) in the case of a temporary contract of employment, the expected duration thereof or, if the contract of employment is for a fixed term, the date on which the contract expires,

  (fa) a reference to any registered employment agreement or employment regulation order which applies to the employee and confirmation of where the employee may obtain a copy of such agreement or order,

  (g) the rate or method of calculation of the employee’s remuneration and the pay reference period for the purposes of the National Minimum Wage Act, 2000,

  (ga) that the employee may, under section 23 of the National Minimum Wage Act, 2000, request from the employer a written statement of the employee’s average hourly rate of pay for any pay reference period as provided in that section,

  (h) the length of the intervals between the times at which remuneration is paid, whether a week, a month or any other interval,

(j) any terms or conditions relating to paid leave (other than paid sick leave),

(k) any terms or conditions relating to—

(i) incapacity for work due to sickness or injury and paid sick leave, and

(ii) pensions and pension schemes,

• (l) the period of notice which the employee is required to give and entitled to receive (whether by or under statute or under the terms of the employee’s contract of employment) to determine the employee’s contract of employment or, where this cannot be indicated when the information is given, the method for determining such periods of notice,

  (m) a reference to any collective agreements which directly affect the terms and conditions of the employee’s employment including, where the employer is not a party to such agreements, particulars of the bodies or institutions by whom they were made.

  (2) A statement shall be given to an employee under subsection (1) notwithstanding that the employee’s employment ends before the end of the period within which the statement is required to be given.

  (3) The particulars specified in paragraphs (g), (h), (i), (j), (k) and (l) of the said subsection (1), may be given to the employee in the form of a reference to provisions of statutes or instruments made under statute or of any other laws or of any administrative provisions or collective agreements, governing those particulars which the employee has reasonable opportunities of reading during the course of the employee’s employment or which are reasonably accessible to the employee in some other way.

  (4) A statement furnished by an employer under subsection (1) shall be signed and dated by or on behalf of the employer.

  (5) A copy of the said statement shall be retained by the employer during the period of the employee's employment and for a period of 1 year thereafter.

  (6) (a) The Minister may by order require employers to give or cause to be given to employees within a specified time a statement in writing containing such particulars of the terms of their employment (other than those referred to in subsection (1)) as may be specified in the order and employers shall comply with the provisions of such an order.

  (b) The Minister may by order amend or revoke an order under this subsection, including an order under this paragraph.

  (7) This section (other than subsection (6)) shall not apply or have effect as respects contracts of employment entered into before the commencement of this Act.

Notification of changes.

• 5.— (1) Subject to subsection (2), whenever a change is made or occurs in any of the particulars of the statement furnished by an employer under section 3, 4 or 6 , the employer shall notify the employee in writing of the nature and date of the change as soon as may be thereafter, but not later than—

• ( b) where the change is consequent on the employee being required to work outside the State for a period of more than 1 month, the time of the employee’s departure.

  (2) Subsection (1) does not apply in relation to a change occurring in provisions of statutes or instruments made under statute F13 [, other than a registered employment agreement or employment regulation order,] or of any other laws or of any administrative provisions or collective agreements referred to in the statement given under section 3 or 4.

  Inserted (1.08.2012) by Industrial Relations (Amendment) Act 2012 (32/2012), s. 18(c), S.I. No. 302 of 2012.

Complaint to adjudication officer under section 41 of Workplace Relations Act 2015

• 7. — (1) An employee shall not be entitled to present a complaint under section 41 of the Workplace Relations Act 2015 in respect of a contravention of section 3 , 4 , 5 or 6 , if the employer concerned has —

  ( a ) complied with a direction under section 6A given in relation to the contravention F20 [ before, on or after the commencement of section 8 of the Workplace Relations Act 2015 ] , or

  ( b ) been given a direction under that section in relation to the contravention and the period specified in the direction within which he or she is required to comply with the direction has not yet expired.

  F21 [ (1A) An employee shall not be entitled to present a complaint under Part 4 of the Workplace Relations Act 2015 in respect of a contravention of section 3(1A) —

  (a) unless the employee has been in the continuous service of the employer for more than 1 month, or

  (b) if the employer concerned has been prosecuted for an offence under this Act in relation to the same contravention.

  (2) A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015 in relation to a complaint of a contravention of sections 3 , 4 , 5 , 6 or 6C shall do one or more of the following, namely —

( b ) either —

• (i) confirm all or any of the particulars contained or referred to in any statement furnished by the employer under section 3, 4, 5, 6 or 6C , or

  (ii) alter or add to any such statement for the purpose of correcting any inaccuracy or omission in the statement and the statement as so altered or added to shall be deemed to have been given to the employee by the employer,

  ( c ) require the employer to give or cause to be given to the employee concerned a written statement containing such particulars as may be specified by the adjudication officer,

  ( d ) in relation to a complaint of a contravention under change section 3 , 4 , 5 , or 6 , and without prejudice to any order made under paragraph (e) ] order the employer to pay to the employee compensation of such amount (if any) as the adjudication officer considers just and equitable having regard to all of the circumstances, but not exceeding 4 weeks ’ remuneration in respect of the employee ’ s employment calculated in accordance with regulations under section 17 of the Unfair Dismissals Act 1977 .

  F21 [ (e) in relation to a complaint of a contravention under section 6C , and without prejudice to any order made under paragraph (d) , order the employer to pay to the employee compensation of such amount (if any) as the adjudication officer considers just and equitable having regard to all of the circumstances, but not exceeding 4 weeks ’ remuneration in respect of the employee ’ s employment calculated in accordance with regulations under section 17 of the Unfair Dismissals Act 1977 .

Deliberation

The Respondent claimed to have provided the Complainant with a contract. This was denied by the Complainant. There was a direct conflict of evidence. The Court prefers the evidence of the Complainant. The Court was persuaded by the demeanour of the Complainant when giving her evidence and by the fact that the Respondent could not produce a copy of the contract containing the terms of the employment that it says it gave the Complainant.

The Court accepts the Complainant evidence that she sought a contract, but this was not provided to her.

The second line of defence for the Respondent is that a contract whose performance is illegal is unenforceable. The legal principle was enunciated in a case from 1772 calledHolman v Johnsonin which Lord Mansfield summed it up as follows; ‘No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act’.

As case law has developed, the courts have taken the view that much depends on the importance of the term that involves the illegality and the extent to which the person seeking to enforce the contract participated in the illegality.

InRed Sail Frozen Foods v Companies Acts (2007) ELR 246Laffoy J. noted the comments ofGibson LJ in Hall v Woolston Hall Leisure Limitedas follows; ‘In cases where the contract of employment is neither entered into for an illegal purpose nor prohibited by statute, the illegal performance of the contract will not render the contract unenforceable unless in addition to knowledge of the facts which make the performance illegal the employee actively participates in the illegal performance. It is a question of the facts in each case whether there has been a sufficient degree of participation by the employee’.

The case ofHall v Woolston Hall Leisure Limited [2000] EWCA Civ 170involved a situation where the employee negotiated a pay rise. She asked for £250 per week net of deductions and that was what she got. The pay slips which accompanied her wages however, showed gross pay of £250, deductions of £63.35 and a net sum of £186.65. She said that when she queried this she was told ‘this was the way we do business’. The Tribunal found that the employee was turning a blind eye to the illegality and that she knew the Inland Revenue was being defaulted and, in those circumstances, participated in the illegality.

The Court of Appeal disagreed with this finding. It said: “There was nothing illegal about Mrs Hall's contract when she was first appointed sous chef on 15th July 1994, or when it was varied by her promotion to head chef in or about September 1994 at an increased pay of £250 per week net of deductions. There is nothing necessarily wrong or illegal in agreeing to pay an employee a sum net of deductions: seeMiller v. Karlinski(1945) 62 TLR 85, 86per du ParcqLJ cited inNewland v. Simons & Willer Ltd. [1981] ICR 521, 527D-E.After her pay increase, however, although Mrs Hall received £250 net as agreed, she noticed that her pay slips showed a gross pay of £250 and a net pay of £186.65, with deductions purportedly made of £63.35 per week. On querying this with the respondent she was told simply "It's the way we do business". So matters continued, evidently, for some 5 or so months. The Industrial Tribunal held that Mrs Hall was turning a blind eye to the fact, and knew, that the Revenue was being defrauded.

It is a fact that Mrs Hall continued to receive payslips and did not report her employers to any authorities. But, as Peter Gibson LJ has said, there was no positive duty on Mrs Hall to pay or do anything (cfRC v. Herd [1993] 1 WLR 1090),nor was she herself guilty of any unlawful conduct. Her continuing passive receipt of payslips, after her initial query, cannot in my view be regarded as making her a party to her employers' plan to deceive, or as amounting to participation in it such as to preclude her from enforcing her contract of employment.

I consider that the Industrial Tribunal and Employment Appeal Tribunal were wrong to regard Mrs Hall as involved in her employer's unlawful scheme in any way that disabled her under English law from enforcing her contract of employment, even if she had, by her present claim, been seeking to enforce it.”

In the Supreme Court decision ofQuinn -v- Irish Bank Resolution Corporation Limited (In Special Liquidation) & Ors [2015] IESC 29Clarke J , said as follows, albeit obiter: “ the case ofLewis v. Squash Ireland [1983] I.L.R.M. 363,can, I think fairly, be said to represent the orthodox position in this jurisdiction and has also been implicitly recognised by the courts".

The case concerned the alleged unfair dismissal of a director of the respondent company. The decision focused on a sum of €2,000 which the appellant director received annually in addition to his annual salary. This sum was treated by the company as an expense for the purpose of tax evasion, thereby defrauding the Revenue. The Tribunal, having distinguished the case from St. John Shipping held the illegality did not render the contract of employment void, but that the illegality caused the contract to be unenforceable.

In the view of the Tribunal, public policy rendered the illegal contract unenforceable. The Tribunal considered, relying on the decision of the Tribunal inNewland v. Simons and Willer Ltd. (1981) I.C.R. 521, that the essential question is “Has the employee knowingly been a party to the deception on the Revenue?”. The Tribunal decided, on a subjective test, that the employee in question had been party to the deception.

Since then the Unfair Dismissals Act has been amended by the Unfair Dismissals (Amendment) Act 1993 so that an employee now is, notwithstanding a contravention of the type which occurred in Lewis, entitled to redress under the Act in respect of his/her dismissal. This was observed by Laffoy J. in ReRed Sail Frozen Foods Ltd. (In Receivership) [2007] 2 I.R 361.

It was held that the amendment to the Unfair Dismissals Act 1977 did not impede an employee from successfully pursuing a claim under that Act. As regards holiday pay and arrears of wages, which were governed by the Protection of Employees (Employers' Insolvency) Act 1984, there was no such statutory provision and the common law rules on illegality were found to apply. However, the Department had adopted a pragmatic approach and made payments to the former employees on the basis of taxed payments to employees. Laffoy J. found that the Department made this decision either without regard to the issue of enforceability of the contracts of employment or, perhaps, was satisfied that no issue of enforceability arose. Laffoy J. held that it was lawful for the receiver to pay the arrears of wages and holiday pay to the Department in the circumstances.

The test therefore is active participation in addition to knowledge. It is for the person seeking to rely on the illegality to prove knowledge and participation.

In the instant case, some comparison can be drawn with the circumstances of theHallcase. The Complainant was certainly aware of the fact that her income was potentially subject to income tax and she was aware that this income was not being declared. She gave evidence under oath, however, that she had repeatedly requested a written contract and pay slips. The Court finds her evidence on this to be credible. Therefore, the Court accepts that she made efforts to put her contractual relationship on a legal footing. Any legal obligations to make deductions of tax and social protection payments rest with an employer and no evidence was offered to the Court of any act on the part of the Complainant.

Under cross examination, it was put to the Complainant that she was a beneficiary of any alleged illegality. However, the Court is of the view that the efforts made by the Complainant to change this situation illustrate the difficulties in which she found herself as an employee in circumstances where, it is alleged, her employer was not compliant with the legal requirements to make accurate returns to the State authorities. Both the power and the responsibility to do so rested with her employer and, as Gibson LJ noted in the case of Ms. Hall, there is no positive duty on the Complainant to pay or do anything in such circumstances.

It is worth noting again the significant observation in that judgement that the continued passive acceptance of the situation ‘cannot, in my view, be regarded as making her a party to her employer’s plan to deceive, or as amounting to participation in it, such as to preclude her from enforcing her contract of employment’.

It is a reasonable interpretation of Laffoy J’s judgement in theRed Sailscase to say that she did not demur from the broad approach adopted in theHallcase that the test in such cases depends on evidence of active participation in any alleged illegality and that knowledge, of itself, is an insufficient basis to render contractual obligations to be unenforceable. While there is no doubt in the instant case that the Complainant had knowledge, it is up to the Respondent to prove active participation. The facts, as outlined to the Court, do not support such an assertion.

In view of this consideration, the Court accepts that the Complainant is entitled to the protections of the Act.

The Court is of the view that in assessing compensation, regard should be had to the fact that only some of the Complainant’s earnings were, allegedly, declared to the authorities and that it is on these amounts that compensation should be based.

The Court awards €360 compensation for the breaches of the Complainant’s rights under s.3 of the Act and a further compensation of €360 for breaches under s.5 of the Act.

Determination

The decision of the AO is varied accordingly.

Signed on behalf of the Labour Court



Tom Geraghty
FMcC______________________
30 August 2019Deputy Chairman



NOTE

Enquiries concerning this Determination should be addressed to Fiona McCarthy, Court Secretary.