Complainant

Respondent

Anonymised Parties

A Sales Representative

A Computer Technology Company

Representatives

Not represented

Lewis Silkin Ireland

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-00038869-001

23/07/2020

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

CA-00038869-002

23/07/2020

In September 2015, the complainant commenced employment with the respondent as a sales representative.  His annual salary was €45,000 and he had the potential to earn a further €45,000 in commission, subject to the achievement of certain targets.  He was on long-term sick leave for 12 months from February 2019.  In December that year, his use of his company credit card was suspended because of an unpaid bill of €15,273.73, most of which he incurred when he was absent.

On May 19th 2020, the complainant was given notice of redundancy and his employment was terminated on June 26th 2020.  His final payslip included a redundancy payment of €25,434.46; however, the amount outstanding from his credit card bill was deducted.

On his e-complaint form, the complainant claimed that his employer unlawfully deducted €15,273.73 from his wages, and, secondly, that he was paid €15,273.73 less than the amount due to him at the termination of his employment.  At the opening of the hearing, he said that he is seeking one award of €15,273.73 in compensation, but that he wishes to have two complaints adjudicated on.

CA-00038869-001:  My Employer has Made an Illegal Deduction from my Wages

In his submission to the WRC, the complainant said that he discovered a deduction from his redundancy payment only when he got his payslip on June 25th 2020, the day before he received the payment.  He said he was not informed about the deduction seven days in advance, he didn’t agree to it and it was not mentioned in his redundancy separation agreement of May 19th 2020.  A copy of this document was submitted in evidence.     

The complainant said that the clause in his contract concerning deductions from wages makes no mention of a deduction for an outstanding credit card bill. 

Referring to the separation agreement, the complainant said that this provided that, at the termination of his employment on June 26th 2020, he was to be paid €25,434.46 gross, “subject to normal tax deductions.”   I understand from the documents submitted by the respondent that this comprised a statutory redundancy payment of €6,396 and an “ex gratia” payment of €19,038.46.  His final payslip also shows that, on June 25th 2020, he received the following sums:

€3,461.53:  Wages

€5,341.20:  Accrued holidays

€3,461.54:  Commission for the period of garden leave from June 1st to 26th 2020

€25,434.46:  Redundancy

CA-00038869-002:  My Employer has Paid Me Less than the Amount Due to Me

Regarding this second complaint, the complainant submitted the same information that he presented under the heading of his first complaint, CA-00038869-001, in relation to an illegal deduction from his wages.

At the opening of her submission on behalf of the respondent, Ms Whyte raised two preliminary issues for consideration.  These were reiterated in a further submission of March 25th, in response to the complainant’s correspondence of March 10th and 12th, which had not been issued to the respondent in advance of the hearing.

The first concerns the fact that the complainant signed a severance agreement which included confirmation that he waived his rights to bring a claim against the respondent.  In the weeks prior to his departure from the company, the complainant had a query about a commission payment of around €37,000 that he claims he was not paid in respect of work carried out in 2016.  On May 19th 2020, he received a copy of the severance agreement that he was required to sign on receipt of his redundancy payment.  On that day, he sent an email to the HR business partner asking about his 2016 commission:

“In relation to the outstanding commissions, is this also pursuant to the absolvements (sic) if the signature is sent through for the ex gratia payments?  As in, if a signature is sent by June 2nd for the ex gratia payment, does that mean I will be legalling waivering (sic) my entitlement request for the €37k+ commissions owed in line with the severance package?”

The HR business partner replied the following day and advised the complainant that,

“Signing the Severance Agreement doesn’t waive your entitlement to commission but it waives your entitlement to take a legal claim of any nature against (name of the company) post signature.”

As a second preliminary issue, Ms Whyte argued that any claim of a deduction from or non-payment of the complainant’s enhanced redundancy payment is not covered by the Payment of Wages Act 1991 (“the Act”), because, within the meaning of the legislation, a redundancy payment is not considered to be wages. 

Ms Whyte referred to an earlier decision in which I was the adjudicator, ADJ-00020852, A Sales Representative and a Mechanics’ Training Business.  In respect of this complaint, I decided that ex gratia sums paid at the termination of employment are not included in the definition of wages, as set out at section 1 of the Act.

Submission of March 10th 2021

In a submission which he sent to the WRC in advance of the hearing, the complainant addressed the respondent’s case.  He said that the decision in ADJ-00020852, is not relevant to his complaint, arguing that this case concerns the failure of an employer to uphold the terms of a severance agreement and of unlawful deductions under the Payment of Wages Act 1991.  He also referred to the fact that there were no “prior indicators” regarding what element of his severance package was to be used for the “unlawful deductions” and he did not receive a receipt for the deductions.

Concerning the respondent’s case that he waived his right to take a legal action against his employer by signing a severance agreement, the complainant referred to ADJ-00010702, the case of an Accountant and a Performance Management Service.  Here, the adjudicator, Mr Eugene Hanly found that the complainant’s claim for payment of a bonus failed, because,

“This matter has been superseded by the all-encompassing severance agreement.”

The complainant argued that no party has a right to amend the severance agreement without the agreement of the other party.  It is his case that his employer changed the terms of the agreement by deducting the amount equivalent to his outstanding credit card bill without his consent.

The complainant also referred to ADJ-00005973, a Plumber and a Construction Sub-contractor.  Here, the adjudicator, Mr Kevin Baneham, found that an illegal deduction was made from the Plumber’s wages when his employer deducted €200 in respect of his use of a company credit card to pay his phone bill.  Mr Baneham reached this conclusion because the employee’s contract of employment did not provide for deductions from pay, he did not get notice of the deduction and he did not receive a receipt for the amount deducted.

An Alternative Case under the Redundancy Payments Act 1967

If he is not successful in his complaint under the Payment of Wages Act, the complainant asked that I consider his complaint under the Redundancy Payments Act 1967.  In accordance with section 24 of this Act, the complainant said that a payment of €25,434.46 was agreed and he referred a complaint to the WRC on July 23rd 2020, less than four weeks after his employment was terminated.

The complainant referred to Schedule 3 of the Redundancy Payments Act which provides that, in considering the definition of remuneration,

“…account shall not be taken of any sums paid to an employee by way of recoupment of expenses necessarily incurred by him in the proper discharge of the duties of his employment.”

The complainant also referred to section 51 of the Redundancy Payments Act:

“Any provision in an agreement (whether a contract of employment or not) shall be void in so far as it purports to exclude or limit the operation of any provision of this Act.”

Finally, he referred to section 52 of the Redundancy Payments Act and the commission of an offence under that legislation by a corporate body.  In his submission, the complainant said that he reserved the right to initiate legal proceedings against “several guilty parties.”

Submission of March 12th 2021

After the hearing had finished on March 12th 2021, the complainant sent an additional document to the WRC which he referred to as a “closing statement.”  Arguing that, contrary to the respondent’s position that I have no jurisdiction to hear his complaint, the complainant referred again to ADJ-00010702 as a precedent, where the adjudicator found that the complainant was bound by the severance terms that he agreed with his employer.  He said that “no sums deemed due from either party …can be factored into the agreement unless expressly stated and agreed.”  He said that his complaint can be directly correlated to the decision of the High Court which is referred to by the adjudicator in ADJ-00010702, that of Sunday World Newspapers v Kinsella and Another [2007] IEHC 34.

The complainant argued that section 5(1)(b) of the Payment of Wages Act does not apply to the deduction from his wages, because the amount due preceded the severance agreement.  Section 5(1)(b) provides that,

“… 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,”

The complainant noted that there is no provision in his severance agreement for any deduction from the agreed amount of €25,434.46, apart from a deduction in respect of tax.

In conclusion, in this submission, the complainant asserted that clause 6 of the severance agreement under the heading, “Release of Claims,” provides that the Payment of Wages Act “cannot be utilised by the parties who are signing the severance agreement” and he submitted that the respondent cannot therefore rely on this statute in its defence of his claim.

The Relevant Law

The complainant submitted these complaints under the Payment of Wages Act 1991.  Section 1 of the Act sets out a 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 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.”

Provided however that the following payments shall not be regarded as wages for the purposes of this definition:

(i) any payment in respect of expenses incurred by the employee in carrying out his employment,

(ii) any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,

(iii) any payment referable to the employee's redundancy,

(iv) any payment to the employee otherwise than in his capacity as an employee,

(v) any payment in kind or benefit in kind.”

Findings

It is clear from sub-section (b)(iii) above that payments related to redundancy do not come within the definition of “wages.”  I note from the complainant’s final payslip that, on June 25th 2020, he received €12,509.90 in wages, comprised of one month’s pay, accrued holiday pay and commission.  He also received a redundancy lump sum of €25,434.46, of which, €19,038.46, was an ex gratia payment.  His payslip shows a deduction of €15,273.73 for “Amex,” which, I understand, refers to his American Express company credit card.  The net amount received by the complainant in his final pay was €17,157.53.  It is apparent from this payslip that, at the termination of his employment, there was no deduction in the wages to which the complainant was entitled.  It is also apparent that the respondent used the opportunity of the availability of the ex gratia payment to deduct the sum owed by the complainant on his company credit card.

The complainant argued that the outcome of the decision in ADJ-00005973, a Plumber and a Construction Sub-contractor, is relevant because the adjudicator found that there had been an illegal deduction of €200 from the complainant’s wages to cover the cost of his mobile phone bill which he paid with his employer’s credit card.  In that case, the plumber was not made redundant and the deduction was taken from his final wages.  In the case we are concerned with here, the complainant received all the wages that were due to him. 

I wish to address the complainant’s request in his submission of March 10th 2021, to pursue an alternative complaint under the Redundancy Payments Acts 1967.  The complainant did not submit a complaint under the Redundancy Payments Act within the six-month timeframe set out at section 41(6) of the Workplace Relations Act 2015 and, aside from this, his arguments concerning breaches of the Act under sections 24, 51 and 52 are misconstrued and ill-advised.  From the information provided on the complainant’s final payslip, I note that the final amount he received of €17,157.53 includes net wages and a sum which accounts for his entitlement to a statutory redundancy payment of €6,396.  As there is no legal entitlement to a redundancy payment in excess of the statutory amount, I find that there was no breach of the complainant’s entitlements under the Redundancy Payments Act.   

Conclusion

Section 1 of the Payment of Wages Act is clear, to the effect that “any payment referable to the employee’s redundancy,” is not considered as wages.  I must conclude therefore, that these complaints fall at the first preliminary hurdle.  For this reason, I find that there is no requirement to consider the respondent’s argument in relation to the second preliminary matter, the complainant’s waiver of his rights to pursue a complaint against his employer. 

CA-00038869-001:  My Employer has Made an Illegal Deduction from my Wages

Any payments related to redundancy are not included in the definition of wages at section 1 of the Payment of Wages Act.  For this reason, I decide that I have no jurisdiction to adjudicate on this complaint.

CA-00038869-002:  My Employer has Paid Me Less than the Amount Due to Me

As I have concluded that the complainant received all the wages to which he was entitled at the termination of his employment, I decide that this complaint is not well founded.

Definition of wages, deduction from redundancy payment