Complainant

Respondent

Anonymised Parties

A Childcare Assistant

A Childcare Provider

Representatives

The Complainant attended the Hearing in person and was not represented

The Respondent attended the hearing in person and was not represented

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00029420-001

02/07/2019

The Complainant was employed by the Respondent as a Childcare Assistant from 18 April, 2018 until 27 May, 2019 when she resigned her employment. The Complainant worked an average of 40 hours per week and was paid a gross weekly salary of €420.00. The Complainant claims that the Respondent made an unlawful deduction from her wages contrary to Section 5 of the Payment of Wages Act 1991 in relation to unpaid holiday entitlements on the termination of her employment. The Respondent disputes the claim and contends that no unlawful deductions were made from the Complainant’s wages on the termination of her employment.

The Complainant resigned from her employment with the Respondent with effect from 27 May, 2019. The Complainant contends that she did not take any paid annual leave during the calendar year 2019 and that the Respondent failed to pay her outstanding holiday pay entitlements on the termination of her employment.

The Complainant stated that she was obliged to give the Respondent four weeks’ notice under the terms of her contract in circumstances where she wished to terminate her employment. The Complainant stated that she only worked two weeks of the four weeks’ notice period and decided to leave at that juncture to commence alternative employment. The Complainant stated that she received only a payment of €210.00 in respect of accrued annual leave on the termination of her employment and that the Respondent withheld the remainder of her entitlement as a result of her failure to work the other two weeks of her notice period.

The Complainant claims that the amount of the payment which the Respondent withheld in respect her holiday pay constitutes an unlawful deduction from her wages contrary to Section 5 of the Act.

The Respondent stated that the Complainant submitted a letter of resignation on 13 May, 2019 to confirm that she intended to leave her employment on 27 May, 2019 as she wished to take up alternative employment with another childcare provider.

The Respondent stated that the Complainant’s contract included a term which provided that she was obliged to give four weeks’ notice if she wished to terminate her employment. The Respondent also stated Complainant’s contract provided that any failure to give or work the required notice period would result in her having an amount equal to any additional cost of covering her duties during the notice period not worked deducted from any termination pay due to her.

The Respondent submits that the Complainant was reminded of her contractual obligations on submission of her letter of resignation and advised that the relevant deduction would be made from her pay on cessation if she chose to leave her employment after having worked only two weeks. The Respondent stated that the Complainant indicated that she understood her contractual obligation and was happy to leave after having worked only two weeks of the notice period.

The Respondent stated that the Complainant had accrued an entitlement of 66.28 hours annual leave for the period from 1 January, 2019 until her employment terminated on 27 May, 2019. The Respondent submits that the Complainant received a payment of €210 in respect of 20 hours annual leave as a goodwill gesture on cessation of her employment. It was submitted that the Complainant was not entitled to receive payment in respect of the balance of her annual leave entitlement (i.e. 42.28 hours) as the Respondent was entitled to offset this payment against the expense which it incurred in relation to the additional cost to cover her duties during the final two weeks of her notice period.    

The Relevant Law

Section 1 of the Payment of Wages Act provides for the following definition of “wages”:

                “wages”, in relation to an employee, means any sums payable to the employee by the                 employer in connection with his employment, including—

                                (a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other                                 emolument, referable to his employment, whether payable under his contract of                                 employment or otherwise, and

                                (b) any sum payable to the employee upon the termination by the employer of his                                 contract of employment without his having given to the employee the appropriate                                 prior notice of the termination, being a sum paid in lieu of the giving of such notice.”

Section 5 of the Act provides:

5.— (1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

(c) in the case of a deduction, the employee has given his prior consent in writing to it.

(2) An employer shall not make a deduction from the wages of an employee in respect of—

(a) any act or omission of the employee, or

(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,

unless—

(i) the deduction is required or authorised to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the contract of employment made between the employer and the employee, and

(ii) the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of the wages of the employee), and

(iii) before the time of the act or omission or the provision of the goods or services, the employee has been furnished with—

(I) in case the term referred to in subparagraph (i) is in writing, a copy thereof,

(II) in any other case, notice in writing of the existence and effect of the term,

and

(iv) in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and

(v) in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and

(vi) in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is of an amount not exceeding the cost to the employer of the goods or services, and

(vii) the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than 6 months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.”.

The Complainant referred her complaint to the Workplace Relations Commission on 2 July, 2019. By application of the time limit provided for at Section 41(6) of the Workplace Relations Act 2015 the cognisable period for the purpose of this claim is confined to the six-month period ending on the date on which the complaint was presented to the WRC. Therefore, the cognisable period covered by the complaint is the six-month period from 3 January, 2019 to 2 July, 2019. I am satisfied that the alleged unlawful deductions which the Complainant claims were made from her wages on the termination of her employment on 27 May, 2019 fall within the cognisable period covered by the claim.

The issue for decision in relation to the instant complaint is whether or not the Respondent made an unlawful deduction from the Complainant’s wages contrary to Section 5 of the Payment of Wages Act 1991 in relation to the withholding of the balance of her holiday pay entitlement which was offset against costs incurred as a result of her failure to work the final two weeks of her contractual notice period.

It was not in dispute between the parties that the Complainant had accrued an entitlement to 62.28 hours annual leave for the period from 1 January, 2019 to 27 May, 2019 on the termination of her employment. It was common case that the Respondent made a payment of €210.00 to the Complainant on cessation of her employment in respect of 20 hours annual leave and that the balance of her entitlement (i.e. the amount of €630.00) was offset against the costs incurred as a result of her failure to work the final two weeks of her contractual notice period.

It is clear that the Complainant’s contract contains a term which required her to give the Respondent four weeks’ notice if she wished to terminate her employment. It was not in dispute that the Complainant was fully aware of this contractual term and that she decided to terminate her employment after having worked only two of the four weeks of her notice period.

The Respondent submits that it was contractually entitled to make the deduction in respect of costs incurred as a result of the Complainant’s failure to work her full period of notice and, in that regard, relies on the following paragraph from its Employee Handbook: “If you terminate your employment without giving or working the required period of notice, as indicated in your individual Statement of Main Terms of Employment, you will have an amount equal to any additional cost of covering your duties during the notice period not worked deducted from any termination pay due to you. This is an express written term of your contract of employment”.

Having regard to the evidence adduced, I am satisfied that the Respondent failed to comply with the requirements of Section 5(2)(iv) of the Act i.e. it did not furnish the Complainant with particulars in writing of the act or omission and the amount of the deduction at least one week before the deduction.

In fact, the final payslip the Complainant received, which was paid on 12 June, 2019, does not include details of the deduction made from her gross pay in relation to this matter.

Having regard to the foregoing, I find that the deduction of €630.00 from the Complainant’s final salary payment was an unlawful deduction within the meaning of Section 5 of the Act. Accordingly, I find that the complaint is well founded.

I find that the Respondent made an unlawful deduction from the Complainant’s wages contrary to Section 5 of the Payment of Wages Act 1991, and accordingly, that the claim is well founded. I hereby direct that the Respondent to pay the Complainant the sum of €630.00 subject to any lawful deductions, in respect of unpaid holiday pay.

Payment of Wages Act 1991 – Section 5 – Unlawful Deductions – Unpaid Wages – Holiday Pay – Contractual Term