MWD203

This is Mr Karpenko’s (‘the Complainant’) appeal from a decision of a Rights Commissioner(r-148344-mw-14/MMG) dated 15 November 2016. The Rights Commissioner decided at first instance that the claim under the National Minimum Wage Act 2000 (‘the Act’) failed. The notice of appeal was received by the Court on 6 December 2016. The appeal was first heard and determined by the Court on 8 February 2017. The Court issued its determination, upholding the Rights Commissioner’s decision, on 9 February 2017. The Complainant subsequently successfully appealed from that determination on a point of law to the High Court. That Court found that the Labour Court had erred in law and remitted the matter back for “further determination”. This Court accordingly conducted a second hearing of the matter on 13 December 2019 and afforded the Parties the opportunity to make additional submissions in the light of the judgment of the High Court.

The Factual Matrix

The Complainant was employed by Freshcut Food Services Limited (‘the Respondent’) from 15 July 2013 to 28 February 2014 as a Production Operative. The Complainant was presented with, and signed, a document entitled “Statement of Main Terms of Employment” on 15 July 2013 which document was purported to be a statement for the purposes of section 3 of the Terms of Employment (Information) Act 1994. That Statement provided as follows in relation to the Complainant’s hours of work:

• “Your normal hours of work are between 9.00 pm. (sic) to 9.00 am. (sic) Monday to Sunday. Shifts are six days a week as per roster with a 30 minute (sic) break and two 15 minute(sic) breaks each day. You may be required to work additional hours when authorised and as necessitated by the needs of the business.”

Complainant’s Submission

The Complainant submits that his contractual hours – as outlined in the Statement of Main Terms of Employment received on 15 July 2013 – totalled sixty-six hours per week. He further submits that he is entitled to rely on section 8(1)(a)(i) of the Act for the purposes of determining his ‘working hours’ within the meaning of the Act for the purposes of the within claim, in the absence of any records being produced by the Respondent. In support of her submission in this regard, the Complainant’s Counsel directed the Court to its previous Determination in MWD146O’Leary International Limited v Viktors Gurkovsand in particular to the following paragraph of that Determination:

• “The net effect of [section 8] is that where an employee’s hours of work are determined in accordance with paragraph (a) and they work additional hours during a reference period the applicable hours should be calculated in accordance with paragraph (b). Conversely, where an employee actually works less hours in a reference period than those determined in accordance with paragraph (a), his or her working hours for the purpose of the section are nonetheless determined by reference to paragraph (a).”

• “The employee’s contract provides he would work from 9am to 9pm (sic) and applies an effective 1 hour of breaks. Therefore it is an 11 hours per day. The contract provides for six 12 hour shifts. On that basis the employee is contracted to work 66 hours per week.”

Respondent’s Submission

The Respondent submits that the Complainant was paid in excess of the relevant national minimum wage rate for his ‘working hours’ within the meaning of section 8 of the Act. It further submits that the relevant contractual provision states that the Complainant’s “normal hours of work are between 9.00 pm. (sic) to 9.00 am. (sic) Monday to Sunday. Shifts are six days a week as per roster.” In the Respondent’s words, the Complainant’s submission incorrectly paraphrases the contractual provision as stating that the Complainant “would work from 9am to 9pm”. (Emphasis added). According to the Respondent, the Complainant’s Representative has chosen to ignore the words “between” and “as per roster”, which words its says “entirely qualify the meaning and effect of the contractual term in question.” In summary, the Respondent submits the “the contract provides for the [Complainant] to be rostered for a maximum of six shifts per week and that those shifts will be rostered at some stage between 9.00pm and 9.00am as per rosters.”

The Respondent refers to the following passage in McDermott’s text, Contract Law 2^ndEd. at para 10.171:

• “Each word in the contract must be presumed to have some meaning. The court cannot simply give effect to some words and ignore others …”.

The Respondent exhibited copies of work rosters for weeks 6, 7 and 8 of 2014. They demonstrate that the Complainant was rostered to work from 9.30 pm to 7.00 am on Sunday, Monday, Tuesday, Wednesday and Friday of Week 6; 9.30 pm to 7.00 am on Sunday, Monday, Tuesday, Wednesday and Friday of Week 7; and from 9.30 pm to 7.00 am on Monday, Tuesday, Thursday, Friday and Saturday of Week 8. That is to say the Complainant was actually rostered to work five shifts in each of those three weeks. Each shift was 9.5 hours in duration and the Complainant was entitled to breaks totalling 1 hour in each shift meaning he was required to work 8.5 hours per shift or 42.5 hours per week. The Respondent also submitted a ‘Detailed Clocking Report’ which documents the hours actually worked, and the rest breaks taken, by the Complainant between 30 September 2013 and 21 February 2014, inclusive. He is recorded as having worked and paid for 44 hours in week 6 of 2014; 42.29 hours in week 7 of 2015 and 33.47 hours in week 8 of 2014.

Evidence

The Complainant declined to give evidence at the within hearing.

Mr Dave Nugent gave evidence on behalf of the Respondent in relation to the Complainant’s terms and conditions of employment and in relation to the manner in which rosters (including those pertaining to the Complainant) were prepared and issued during the period of the Complainant’s employment with the Respondent.

Discussion and Analysis

The Disputed Provision

The written statement issued by the Respondent to the Complainant under the Terms of Employment (Information) Act 1994 is not a contractper se. However, it appears that the Parties agree that the statement accurately reflects the relevant contractual provision. Consequently, as the case turns on the true construction of the Parties’ contractual agreement, the provision in the statement dealing with the Complainant’s working hours must be construed in accordance with the ordinary rules of contractual construction. In other words, the Court must seek to ascertain the intention of the Parties to the agreement in circumstances where it appears from their respective submissions that the provision is capable of multiple interpretations. In the process, the Court must apply a presumption that the parties intended their agreement to make sense from the perspective of business efficacy. It is also to be assumed that the parties did not intend their bargain to produce an unreasonable result. (SeeAdams & Others v British Airways plc[1995] IRLR 577).

InDodd v Churton[1897] 1 QB 562, Lord Esher MR formulated the rule as follows:

• “One rule of construction with regard to contracts is that, where the terms of a contract are ambiguous, and one construction would lead to an unreasonable result, the Court will be unwilling to adopt that construction.”

InSchuler A.G. v Wickman Tool Sales Ltd[1974] AC 235, the House of Lords was required to decide if the expression “condition” used in a commercial contract was to be interpreted as referring to a term the breach of which constituted a repudiation of the contract entitling the aggrieved party to regard the contract as being at an end (which is the accepted legal meaning of the word).

The Plaintiff had concluded a contract with the Defendant whereby the latter was to distribute panel presses manufactured by the former. The parties had provided that it was a ‘condition’ of the contract that named representatives of the Defendant would visit specified customers of the Plaintiff at least once per week. The Plaintiff subsequently rescinded the contract on the grounds that the stipulated visits had not been made. The Plaintiff advanced the argument that the use of the word ‘condition’ meant that a failure, for any reason, to make a visit at the frequency specified constituted a repudiation of the contract. The House of Lords rejected this submission on the basis that such a conclusion would be so unreasonable that the parties could never have agreed to it.

In his speech Lord Reid said the following: -

• “In the present case it is not contended that Wickman's failures to make visits amounted in themselves to fundamental breaches. What is contended is that the terms of cl 7 'sufficiently express an intention' to make any breach, however small, of the obligation to make visits a condition so that any such breach shall entitle Schuler to rescind the whole contract if they so desire.
  Schuler maintain that the use of the word 'condition' is in itself enough to establish this intention. No doubt some words used by lawyers do have a rigid inflexible meaning. But we must remember that we are seeking to discover intention as disclosed by the contract as a whole. Use of the word 'condition' is an indication -- even a strong indication -- of such an intention but it is by no means conclusive. The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.”

• "if detailed semantic and syntactical analysis of a word in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense."

• “In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.”

• “My Lords, I will say at once that I prefer the approach of the learned judge. But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce inPrenn v Simmonds[1971] 3 All ER 237 at 240-242, [1971] 1 WLR 1381 at 1384-1386 andReardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co [1976] 3 All ER 570, [1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of 'legal' interpretation has been discarded. The principles may be summarised as follows.
  
  (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
  (2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
  
  (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
  
  (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.
  
  (5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had …..”.

The Act

Section 8 of the Act provides:

• (1) For the purpose of determining under this Act whether an employee is being paid not less than the minimum hourly rate of pay to which he or she is entitled in accordance with this Act, but subject to section 9, “working hours”, in relation to an employee in a pay reference period, means—
  • (a) the hours (including a part of an hour) of work of the employee as determined in accordance with—
    • (i) his or her contract of employment,

      (ii) any collective agreement that relates to the employee,

      (iii) any Registered Employment Agreement that relates to the employee,

      (iv) any Employment Regulation Order that relates to the employee,

      (v) any statement provided by the employee's employer to the employee in accordance with section 3(1) of the Terms of Employment (Information) Act 1994,

      (vi) any notification by the employee's employer to the employee under section 17 of the Organisation of Working Time Act 1997,

      (vii) section 18 of the Organisation of Working Time Act 1997, or

      (viii) any other agreement made between the employee and his or her employer or their representatives that includes a provision in relation to hours or work,

    or

    (b) the total hours during which the employee carries out or performs the activities of his or her work at the employee's place of employment or is required by his or her employer to be available for work there and is paid as if the employee is carrying out or performing the activities of his or her work,

  whichever, in any case, is the greater number of hours of work.

  (2) “Working hours” under this section shall include—

  • (a) overtime,

    (b) time spent travelling on official business, and

    (c) time spent on training or on a training course or course of study authorised by the employer, within the workplace or elsewhere, during normal working hours,

  but shall not include—
  • (i) time spent on standby or on call at a place other than a place of work or training provided by or on behalf of the employer for whom the employee is on standby or on call,

    (ii) [time spent absent from work on annual leave, sick leave, protective leave, adoptive leave, parental leave, carer's leave under the Carer's Leave Act 2001, while laid off, on strike or on “lock-out”, or time for which the employee is paid in lieu of notice, or]

    (iii) time spent on travelling between an employee's place of residence and place of work and back.

• “It seems clear that the effect of subsection (1)(a) of this section is to provide that the working hours of an employee, for the purposes of determining if the Act has been complied with, are the hours during which he or she is contractually obliged to be available to his or her employer. Paragraph (b) of subsection (1) deal with a situation where no working hours are specified by one of the instruments referred to in paragraph (a) of the subsection or where the actual hours worked are different to those determined in accordance with paragraph (a). Significantly, where there is a difference in working hours as determined in accordance with paragraph (a) as compared to those determined in accordance with paragraph (b), whichever mode of determination produces the greater number of hours is to be used.

  The net effect of this provision is that where an employee’s hours of work are determined in accordance with paragraph (a) and they work additional hours during a reference period the applicable hours should be calculated in accordance with paragraph (b). Conversely, where an employee actually works less hours in a reference period than those determined in accordance with paragraph (a), his or her working hours for the purpose of the section are nonetheless determined by reference to paragraph (a).”

Application of the Law to the Facts

It is abundantly clear to the Court – having considered the Statement of Main Terms of Employment issued to the Complainant, in conjunction with the copy rosters exhibited by the Respondent – that the Complainant was not contractually obliged to work from 9.00 pm to 9.00 am, six days per week (less one hour of breaks per shift) as submitted by the Complainant. The true construction of the contractual provision in relation to the Complainant’s hours is that contended for by the Respondent i.e. the Complainant was required to work those shifts, between the hours of 9.00 pm and 9.00 am, notified to him by rosters to be issued in advance by the Respondent. The copy rosters exhibited to the Court demonstrate that the Complainant was required in accordance with those rosters to work 42.5 hours per week in each of the three relevant weeks. The Complainant chose not to give evidence in the course of the within hearing so therefore there was no evidence from him before it from which the Court could infer that he was required to work additional hours over and above those for which he was rostered. The Complainant’s employment with the Respondent ceased on 28 February 2014. His P45 issued on cessation of employment records that he was paid €3,642.10 gross for the eight-and-half-week period between 1 January 2014 and 28 February 2014.

For the purposes of completing the “necessary exercise of the assessment of ‘whichever is the greater’ between the hours of work as determined in accordance with the contract of employment and the total hours during which the complainant carried out or performed his work activities at his place of employment or was required by his employer to be available for work and was paid as if he was carrying out or performing his work activities” referred to by MacGrath J, this Court, in order to establish the Complainant’s ‘working hours’ within the meaning of section 8 of the Act, must compare his rostered hours with those he actually worked. In Week 6 he worked 1.5 hours longer than he was rostered for; in week 7, he worked approximately 31 minutes less than his rostered hours; and in week 8 he only worked almost 9 hours less than his rostered hours. This latter week coincides with the period in respect of which the Complainant, through his solicitor, requested a statement pursuant to section 23 of the Act.

The Complainant was rostered to work for 42.5 hours in Week 8 of 2014. He actually worked 33.47 hours that week and was paid at the rate of €10.00 per hour giving him a gross payment of €337.50 as per the Respondent’s reply to the section 23 request). His ‘working hours’ for the purpose of the Act in the relevant reference period was 42.5 hours. In the reference period, he was therefore entitled to a minimum payment of €367.63 (= 42.5 hours x €8.65). The Court must conclude, accordingly, that the Complainant was paid less than the national minimum wage during the pay reference period.

The Complainant’s legal representatives did not adduce any evidence in relation to the other eight or so months of the Complainant’s employment outside of the pay reference period. It is not the role of this Court to undertake, unaided, an analysis for that period such as it has done in the paragraph above for the period that coincides with the period covered by the Complainant’s section 23 request.

Redress

Having carefully considered the facts of this case, in light of the direction issued by the High Court to it, this Court finds that there was an underpayment to the Complainant in Week 8 of 2014 totalling €30.13. The Court, therefore, directs the Respondent to pay this amount to the Complainant.

No evidence was adduced on the Claimant’s behalf in relation to any reasonable expenses he may have incurred “in connection with the dispute”. Therefore, the Court is not directing that any payment be made under section 26(1)(a)(ii) of the Act.

The decision of the Rights Commissioner is set aside and the appeal succeeds.

The Court so determines.

Signed on behalf of the Labour Court



Alan Haugh
RK______________________
8 May 2020Deputy Chairman



NOTE

Enquiries concerning this Determination should be addressed to Richard Kennedy, Court Secretary.