Complainant

Respondent

Anonymised Parties

A Technology Start-up

An Engineer

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-00031414-001

07/10/2019

The respondent is a start-up technical company, engaged in the development of a forensic solution for military and global defence agencies. The complainant is an engineer and he commenced working for the respondent as Senior Design Engineer / Chief Technical Officer on August 1st 2012. He is a minor shareholder in the company, along with the CEO and the CFO who are the major shareholders.

This is a complaint about the non-payment of wages for the last two months of the complainant’s service with the company.

The company received a research grant from the EU Horizon 2020 Fund and the money was drawn down in tranches from 2012. The complainant said that around May 2019, the CEO told him that money was running short. In August 2019, there was no money left in the budget to pay his wages. He understood that a final tranche of funding was due from the EU fund at the end of 2019, on condition that a product demonstration scheduled for September went ahead.

In September, the complainant said that he worked on getting ready for the demonstration and he participated in the demonstration itself on September 26th.   He claims that he is entitled to his wages for August and September 2019 and that he is also due some wages for October, when he spent time finishing reports, tidying up and returning equipment to the respondent’s premises.

At the hearing, the CEO agreed that he informed the complainant in May 2019 that the project had run out of funding and that August would be the last month that he would be paid. The CEO said that the complainant asked for a termination letter, so that he could apply for redundancy. The CEO said that they planned to start up another project and they hoped that the complainant might transfer over to that project when they got funding sorted.

The CEO said that the September demonstration was important and he asked the complainant to attend for two days. The complainant agreed; however, the CEO said that he understood that the complainant was doing this as part of his commitment as a shareholder.   He said that the project is owed a the final tranche of the budgeted fund in mid 2020 and that certain actions of the complainant put this remaining funding at risk.

The CFO addressed the issue of wages and he said that, at the end of December 2019, the complainant was paid for the month of August. He agreed with the CEO that the complainant’s contribution in September was as a shareholder and not as an employee.

It is apparent to me that, as a 10% shareholder in a company that may or may not become a sustainable business, the complainant never agreed to work for free and he is entitled to be paid for the days that he worked. I accept the difficulties associated with running a company on research funding that may not always cover the costs; I note also that the CEO and CFO paid the complainant’s wages out of their own funds for the last two or three months of his service.

Section 1 of the Payment of Wages Act 1991 defines wages as “…any sums payable to the employee by the employer in connection with his employment.” It is clear to me that, leaving the funding difficulties aside, the relationship between the complainant and the CEO is that of employee and employer and, for this reason, regardless of his shareholder status, or any other matter, the complainant is entitled to his wages.

I have considered the complainant’s evidence regarding the time that he spent working for the respondent in September and October 2019. He said that he worked in September up to the day of the demonstration on the 26th and he worked for a few days in October, finishing reports and returning equipment. I have concluded therefore, that he is entitled to be paid his wages for one month.

I have concluded that the complainant is entitled to one month’s wages in respect of his employment with the respondent in September and October 2019. In accordance with section 6 of the Payment of Wages Act, as amended, I am required to direct the respondent to pay compensation as a net amount. I decide therefore, that the respondent is to pay him €2,409.34.

Payment of wages