ADJ-00022011

Complainant

Respondent

Anonymised Parties

An Employee

An Employer

Representatives

Robert Purfield SIPTU

Act

Complaint/Dispute Reference No.

Date of Receipt

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

CA-00028985-001

12/06/2019

On June 16th, 2017 the complainant’s representative wrote to the respondent lodging a pay claim on behalf of all of their members across the company. Following extensive negotiations this claim was resolved with the assistance of the conciliation services of the Workplace Relations Commission in May 2018. The document produced which has become known as phase 1 was accepted by way of a ballot of all of the unions members across the company including the management grades of which the claimants are part of. This document provided for an agreement in principle to realign payment of salary to a payment in arrears system. On June 7th 2018 the Union sent a communication to its members on personal contracts and in management 1&2 grades, again confirming the position that the claim was across all members working for the company. On July 17th, 2018 those working in the grades received an email from Mr. XX informing them that they were not covered by the recent negotiated collective ballot. Following this the Union then wrote on both 18th July and 21st August reiterating the position regarding the pay claim. This led to a response from Mr YY dated 17th September, 2018 reaffirming a company's position. The Union again outlined their position in a letter dated 18th September 2018. Throughout late 2018 discussions commenced on stage 2 talks which was facilitated by Ms.AA. These talks where to address Part 2 of the WRC document from May 2018 and concluded in May 2019 when a document was issued for consideration. During these talks the respondent moved to implement the payment in arrears which was agreed in principle in the WRC document. Following representations from the union on the issue some mitigating measures were introduced but were not applied to personal contract holders. On January 2nd 2019 the move to payment in arrears was made. This resulted in the payment of salary on that date been classed as a bridging payment. The company subsequently started deducting loan repayments from those affected. At the time of the initial deduction talks on Stage 2 of the WRC document were still ongoing and the company had not paid the increases from stage 1 to those affected. The Union again wrote to the company on 30th April 2019 seeking restoration of the deductions to those affected. With the conclusion of talks on stage 2 part of the proposals included a mechanism for resolving the non-payment of stage 1 increases to those affected. This involved giving each affected member and opportunity to unwind increases given by way of pay reviews and to receive the increase included in the WRC document as well as defining which contracts were covered by collective bargaining in the future. This was accepted at ballot and is still being processed by the company. As outlined above there are two parts to the argument as to why the deduction should not have taken place. Firstly the company had not settled the claim on behalf of all the union members working for them in their refusal to apply the increase from stage 1 of the agreement to those affected. Simply put if the company did not see this cohort, of which the claimants are a part of, as part of the Union claim then move to payment in arrears should not have occurred. The company had sought no prior agreement from the claimants to apply for a loan and repayment structure which puts them at odds with the payment of wages act 1991, Section 5. The first deduction from the claimant’s wages took place on 16th January, 2019, a number of weeks before the stage 2 document was balloted on and accepted. That no agreement was sought constitutes a breach of section 5 of the act. Secondly, while there was an agreement in principle to adjust the payment schedule for those who received the increases in phase 1, there was no agreement reached for process or timescale to undertaking this. Regardless the phase one agreement has not applied to these members. This further underlines the argument that the deductions from January 2016 onwards or done without the permission of the claimants as to date they have not received these increases.

The respondent operates a number of business units from various airports in the republic of Ireland. The group employs 3550 people, the majority of whom are represented by SIPTU Forsa Mandate and connect trade unions and another 4300 people between the joint ventures and wholly owned subsidiaries in the international businesses around the world. For a variety of historical and operational reasons, the respondent has operated a multiplicity of payroll systems (168) paying employees in advance and in arrears, weekly and fortnightly on different days and for different periods. the respondent is currently in the process of moving all staff ,through negotiation and consultation, to a single 'group arrears' payroll system. The move simplifies payslips with salary and time keeping overtime payments for the same time keeping period showing on the same payslip. The company is making this move to provide consistency and greater controls in the payroll process, ensure that all employees are paid correctly for the hours they have worked and eliminate rework, streamline and simplify the payroll process, and to reduce the number of payrolls within the group as a whole. The respondent has engaged with the staff and their representatives over the past 3 years to bring the payroll situation to a more manageable level. This has and continues to require negotiation with the various unions, consult and engage with the individual employees who have personal contracts of employment and who may also be members of a trade union but not necessarily covered by collective bargaining arrangements. In May 2018 the respondent reached a collective agreement under the auspices of the WRC with SIPTU. The principal elements of the agreement known as ‘Phase 1’ where, pay increases totalling 8.5% over 36 months commencing 1st of April 2017 and expiring 31st July 2020. Amongst other matters, it was also agreed in principle that pay realignment would occur from January 2019 by moving all SIPTU members to a new payroll. Pay alignment was the term used to describe the process whereby staff would move to a standardized payment in arrears payroll arrangement and this was clearly understood by all the parties concerned. In Q4, 2018 the company sought to review the planned payment in arrears communications with SIPTU officials and representatives prior to briefing staff, following the approach that had been successfully applied with the Mandate and Forsa trade unions the previous year This briefing and presentation of the company's proposed communication materials was held on 6th November. At this meeting SIPTU officials and representatives objected to the payment in arrears mechanism. The chief objections where that, whilst SIPTU had agreed to payment in arrears pay realignment in principle in the May 2018 agreement they had not agreed to the mechanism in detail and did not agree with the company's proposals. This began a series of meetings between SIPTU and senior company representatives at which a number of alternative options to reduce the impact of the bridging payment recovery for staff was discussed with SIPTU. Following the discussions described above the company's staff briefing material was updated. Representatives from the company met with SIPTU on 27th November to review same. The Union ask for an additional slide to be added to the presentation to provide a comparison between repayment amounts that an employer would make from June 2019 in the case of one €500 paid through payroll to €500 gross deducted from the amount owed from someone on €35,000 and someone on €65,000. The revised material was shared with them on 27th November. This covered the two-chief means by which the company agreed to reduce the impact of bridging repayments on staff:1) delayed the commencement of bridging recovery for the majority of staff to 19th June 2019 at which point the final round of pay increases under the May 2018 pay agreement would have been applied. 2) provided staff with options in how they wanted to use their €500 either receive it through payroll or to offset it against the bridging. During the ongoing discussions over this period SIPTU advised that they would use the period between December and June 2019 to seek further offsetting measures for their members. To compensate staff for any inconvenience caused and as part of the agreement reached a lump sum payment of €500 was paid to all affected 2 members including the complainant on the date of implementation. The details of the transition where communicated to each staff member individually by way of letter from the chief people's officer on 14th December. Similar agreements were reached with the other unions. In addition, 154 other salaried staff were also moved to the payment in arrears payroll. In total this meant that the respondent, have now, just under 3000 of their employees in Dublin and Cork are operating on the one payroll system. On the 18th of July, 21st of, 13th of September, 18th of, 12th of February and 30th of April 2019 SIPTU wrote to the Chief People’s officer and group head of IR seeking that the pay increases contained in the phase 1 agreement be applied to the members whom where on personal contracts outlining that their original pay claim was on behalf of all of its members. The respondent had repeatedly informed the Union during the course of the pay negotiations in 2018 and follow-on discussions in 2019 that the negotiated pay increases were only applicable to those whom the Union where collectively bargaining and not employees whose pay was determined by performance review. In it's correspondence the Union replied to the fact that the pay reductions negotiated collectively following the financial crisis in 2009 we're also applied to personal contract holders like the complainant and therefore any negotiated pay increases should be equally applied. As stated above there are a significant number of employees in the respondent who are not covered by collective bargaining arrangements and the complainant is in that population, however, he is a member of the Union. Detailed communications and briefings regarding the introduction of payment in arrears to those SIPTU category staff was conducted between 29th of November and 16th of January 2019 including but not limited to

·         Briefings to c550 SIPTU staff

·         CPO oh Mr ND issued an email to all staff on 6th December inviting them to attend briefing presentation sessions and drop in clinics

·         11th- 12th December 2018: 2 full day clinics held in Dublin c.70 staff attended. In addition to the above all union category staff including the complaints received a letter and FAQ in December 2018 outlining the change in detail. Staff received different letters depending on whether they were transitioning from the advance or existing arrears payroll, and if they were out of the office and off pay. The mechanism for transition arrangement was outlined and it was fully explained to the staff that they would receive a bridging loan to ensure that there was no impact on pay. The bridging loan was the equivalent to the amount of the employee's gross fortnightly pay which in effect meant that staff currently paid in advance will be paid as follows:

An additional item of correspondence was sent to all affected employees on the 7th of January detailing the fortnightly amounts calculated to commence repayments on the bridging. The complainant referred the matter to his Union to the WRC on the 12th of June without further reference to his employer. For completeness, the repayment of the bridging loan paid to the collectively bargained for SIPTU members commenced on 19th of June following representations made by the union to delay the commencement of the repayments until the final phase of the 8.5% pay agreement was paid. A similar agreement has been reached with the other trade unions. The complainant is on a personal contract. His contract states “you will be placed on a personal contract and your salary will be paid on a fortnightly basis and that your salary may be reviewed from time to time in conjunction with your manager and HR” section 14.1 of the contract states: “the company reserves the right to reorganize the way in which business is carried out and the employees are expected to accept change in work practices and to do what is considered reasonable to facilitate these changes you will be given as much notice as possible to any significant changes in your terms and conditions of employment such notice may be given by way of an individual notice or a general notice to all staff” section 16.1 States: “the company reserves the right to make any reasonable changes to your terms and conditions of employment any such changes will be notified to you before the proposed change. The respondent has fully complied with this requirement.”  The complainant's pay is determined as part of a pay review process conducted annually in April of each year. Staff whose pay is determined as part of the process do not receive the pay increases attached to collectively bargain agreements. In addition and in accordance with the complainant's contract of employment he also received a 15% of annual basic salary performance-related payment. This payment is made based on the company performance and individual and team objectives. Initiatives such as the introduction of efficient payroll systems significantly contribute towards the complaints performance. The decision to reduce the number of payrolls in the respondent was taken to minimise the number of errors and queries been raised as well as to ensure that all staff got paid correctly for the hours they worked. There is an objective needed to introduce the payroll change which will ensure that the majority of employees are operating from one payroll. Detailed engagement took place with the staff representatives regarding the changes and regular updates issued to ensure staff are fully informed. The respondent acted reasonably when it insured that the employees concerned would not be without pay during the transition period in addition to this compensated all individuals for any inconvenience caused. The complainant did not return the €500 paid to him as compensation. Staff who were not collectively bargained for and have personal contracts were widely consulted with, and briefed on the planned change. The Union correspondence clearly set out the claim was on behalf of all of its members and understood that payments in arrears would be applied accordingly. The argument that pay reductions applied to all staff in 2010 means that the same pay increase should also apply is fundamentally flawed. there was no mechanism agreed for pay reductions in 2010 prior to the negotiation of the cost recovery programme agreement in 2010 and it was only fair to apply them to all staff wear as there is an agreed mechanism to review the complaints pay which has afforded him pay increases above those negotiated collectively under the terms of the phase 1 agreement. the complainant's contract clearly states that his pay is determined by performance related. Employee’s wages have not been reduced in any way therefore a deduction cannot have occurred. This argument is based on the premise that we implemented the change to payment in arrears and the employees got their salary based on this change. The loan was not ‘wages due’ to the employees at that pay reference period, The employee concerned was paid his wages as due plus was paid alone ie the loan sits outside of wages. If the loan constitutes wages, the employee consented to it by virtue of not giving it back and taking the €500 voucher. The complainant will receive his fortnightly pay at the end of his career with the respondent which in essence means that this movement to the payment in arrears payroll is a deferment of payment which was covered by the bridging loan and therefore no deduction arises as a result of the changeover. There are 700 personal contract holders employed by the respondent practically all of whom have been impacted by the introduction of payment in arrears in the same manner as the complainant. any decision on this individual case could have collective implications as it relates to a body of workers rather than just one individual.

The complainant alleges that the Respondent has made an unlawful deduction from his wages when it introduced the new ‘arrears; payroll system. The Respondent states that there has been no unlawful deducted as the complainant’s contract of employment allows for such changes and the complainant hasn’t actually had anything deducted from his wages.

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”

Having carefully considered the evidence adduced by both parties together with the submission lodged, I am satisfied that the Respondent has not contravened Section 5 of the Act. The complainant in his submission attempted to create a nexus between the 8.5% pay increase negotiated by his union for members and the mechanism adopted by the respondent to move all its employees onto an arrears bases payroll system. The complainant is employed under a personal contract and as such did not receive pay increases attached to collectively bargained agreements. The 8.5% pay increase negotiated by the Union did not apply to him. Therefore, the introduction of the arrears payment system was not reliant on him receiving any pay increase pursuant to that agreement. The Act allows a deduction if a term of the employee’s contract of employment provides for it or if the employee has given his prior consent in writing. The complainant’s contract of employment states: “you will be placed on a personal contract and your salary will be paid on a fortnightly basis and that your salary may be reviewed from time to time in conjunction with your manager and HR” section Clause 14.1 states: “the company reserves the right to reorganize the way in which business is carried out and the employees are expected to accept change in work practices and to do what is considered reasonable to facilitate these changes you will be given as much notice as possible to any significant changes in your terms and conditions of employment such notice may be given by way of an individual notice or a general notice to all staff” Section 16.1 States: “the company reserves the right to make any reasonable changes to your terms and conditions of employment any such changes will be notified to you before the proposed change”  I am satisfied that the Respondent has fully complied with its obligations pursuant to Section 16.1 of the contract in that they notified the complainant in writing of the mechanism that would be adopted to facilitate the move to the arrears based payroll system. Furthermore, I am satisfied that the move to the arrears payroll system is a reorganization of the business of the type anticipated by clause 14.1 of the contract. I further note that the complainant accepted the compensation package offered in relation to any inconveniences caused by the change over from the old to the new payroll system. On that basis I find that the complaint is not well founded and accordingly fails.

The complaint is not well founded and accordingly fails.