Complainant

Respondent

Anonymised Parties

An Area Sales Manager

An Engineering Company

Representatives

complainant

Head of HR

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-00036488-001

02/06/2020

Before commencing employment, the complainant sought to have a clause in the proposed contract of employment allowing the respondent impose a layoff or short time working removed from his contract. This was agreed to by the respondent. The respondent argues that layoff without pay is an implied term in his contract.

Prior to taking up employment with the respondent and, as part of the negotiations on the proposed contract in 2018, at the complainant’s request the respondent agreed to the removal of the following clause from their initial contract offer as the complainant was not in agreement with same:

'Lay Off/Short Time: The Company reserves the right to institute temporary lay off from work or to temporarily reduce working hours where through circumstances beyond its control is unable to maintain full time employment'.

On receipt of the revised contract terms and conditions on 24th January 2018, where the respondent agreed to remove the potential for Lay Off/Short Time from the contract and confirmed so in cover email, the revised contract of employment was signed by the complainant and the respondent acknowledged receipt of signed current contract agreement in place on 1st February 2018.

On 2nd April 2020, the respondent notified the complainant of their intended reduction in hours and salary with effect from 16th April 2020, which the complainant considered to be in breach of his contract and with which he did not agree. The respondent reduced the complainant’s gross wages during April and May by €1,506.46 during April 2020 and €1,280.00 during May 2020.

Notwithstanding his contractual entitlement not to be laid off or put on short time, the complainant does not accept that there was in fact a financial imperative on the respondent to do so. The Complainant also claims that his workload has not diminished.

The Complainant is employed as Area Sales Manager for the UK and Ireland, pursuant to a contract of employment dated 29 the January 20185.        

In or around February/March 2020, the position in respect of the global pandemic Covid 19 began to develop rapidly. A nationwide lockdown was imposed on or about the 27th March 2020. As a result of the pandemic and the restrictions imposed by the Government, like many businesses in Ireland, the Respondent's business was severely impacted. The effect of the Government's restrictions on travel was that the Complainant and many of his colleagues, were unable to fully perform their duties as they were unable to travel to client sites, both in Ireland and the UK. As a result, there was an insufficient level of work for the Complainant for five days per week/on a full-time basis.

Staff in every department (including all other members of the sales team) within the Respondent were either placed on temporary layoff or short time working without pay, depending on the level of work available for each role at the time. Alternatively, where possible, arrangements were made with individual staff whereby they would take annual leave/ unpaid leave days each week on a temporary basis during the initial lockdown period (as an alternative to layoff/short time working).

The Respondent attempted to engage with the Complainant to try to agree alternative arrangements in relation to his hours of work on a temporary basis, with a view to ensuring business continuity and also that the Complainant's employment could be maintained.

The Complainant responded on the 30th March 2020 stating that the options proposed were not suitable for him given his current circumstances. The Complainant went on to say that he would be able to support by moving temporarily and for the month of April only to a 4 day week (to work 4 days with 1 day off)

Unfortunately, there also was not sufficient work for the Complainant for 4 days per week. The respondent replied to the Complainant on the 2nd April 2020 noting once again the impact the Covid 19 pandemic was having on the Respondent's normal business activities and that there was not full time work available for the Complainant at that time. The respondent said it was hoped and expected that this situation was temporary, and that the Complainant's normal workload would return in the near future once restrictions had been lifted.

The respondent noted that the Complainant was not agreeable to the proposals put forward and stated that in light of the reduction in workload, the Respondent had no option but to rely on section 11 of the Redundancy Payments Acts and gave the Complainant notice of short time working with effect from the 16th April 2020. It was confirmed that this short time working arrangement would continue until at least the 30th April 2020 and that the position would be reviewed again at that stage.

The Complainant responded on the 6th April 2020 and expressed his dissatisfaction with the content of the email. The Complainant took issue with the points made by the Respondent and he made reference to his contract of employment not including a provision dealing with layoff and/or short time working.

The Respondent acknowledges that the Complainant was not paid in respect of 6 days in April, as he was placed on short time working due to the unprecedented and extraordinary circumstances arising as a result of the Covid 19 Pandemic.

Section Il of the Redundancy Payments Act 1967 ("the 1967 Act") deals with lay off and short time working. Section 11(1) deals with lay off and states that:

"Where after the commencement of this Act, an employee's employment ceases by reason of his employer's being unable to provide work for which the employee was employed to do and —

(a)         It is reasonable in the circumstances for the employer to believe that the cessation of employment will not be permanent and

(b)         The employer gives notice to that effect to the employee prior to the cessation,

That cessation shall be regarded, for the purposes of this Act as layoff".

Section 11(2) of the 1967 Act refers to short time working and provides that:

"Where by reason of a diminution in the work provided for an employee by his employer (being work of a kind which under his contract the employee is employed to do) the employee's remuneration for any week is less than one-half of his normal weekly remuneration, he shall for the purposes of this Part be taken to be kept on short-time for that week".

Section 11(2) of the 1967 Act specifically refers to the employee's remuneration being less than one half of his normal weekly remuneration, and the implication is that this is permissible in legitimate circumstances.

While the criteria set out in section 11(1) of the 1967 Act (which apply to layoff) are not stated to apply to short time working, it is worth noting that they were complied with in this present case. The Respondent was of the view that any short time working arrangement were temporary in nature, which was in fact the case as the Complainant resumed his full-time working hours on the 1st September 2020. The Respondent also gave notice of the short time working arrangement to the Complainant in advance. It is therefore submitted that Section 11(2) was genuinely invoked by the Respondent, and in exceptional circumstances.

It is submitted that there is a custom and practice within Ireland, and particularly in the context of Covid 19, that periods of temporary layoff and short time working are without pay. Where such a custom and practice exists, this forms part of the employee's terms and conditions of employment, as an implied term. In this regard, the Respondent refers to and relies on the decision of the EAT in Employer v Employee [PW379/2012] which held:

"The question the Tribunal must answer is whether or not, by virtue of the employer having invoked Section 11 of the 1967 Act, the employee's contractual and statutory right to pay during that period of lay-off is suspended. No evidence was produced before the Tribunal in relation to the custom and practice of the respondent. However, it can be said that generally throughout this country the custom and practice is that layoff will be without pay. That custom and practice has existed since the coming into force of the Redundancy Payment Act.

The Tribunal finds that when Section Il is genuinely invoked, and the employer satisfies Section 11 1 (a) and (b) then, the contract of employment is temporarily suspended and there is no right to payment during that period. Furthermore, the Tribunal finds that there is a notorious custom and practice in this jurisdiction that employees will not be paid during a period of lay-off".

The Tribunal held that the employee's claim pursuant to the Payment of Wages Act 1991 failed.

Section 5 of the Payment of Wages Act 1991 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.

The respondent submits that there is a custom and practice within Ireland, and particularly in the context of Covid 19, that periods of temporary layoff and short time working are without pay. Where such a custom and practice exists, this forms part of the employee's terms and conditions of employment, as an implied term.

Implied terms are terms of the employment contract that are not necessarily set out in writing or agreed orally but will nevertheless form part of the agreement between the employer and employee. Such clauses are not confined to implied statutory terms but may also include clauses with which both parties might reasonably be considered to have agreed to. The final contract agreed between the complainant and the respondent must be seen in light of the exchanges that took place before it was signed. It is clear that it was expressly agreed that the employer would not have the right to lay off the complainant, or impose short time, as evidenced by the agreement of both parties to remove the enabling clause relating to layoff/short time. The removal of this clause can only reasonably be interpreted as an agreement that the respondent could not unilaterally impose a lay off or short time on the complainant and therefore this would supersede any implied term by custom and practice that might otherwise have existed.

The deduction was not related to statute or to any term within the complainant’s contract of employment. Neither did he consent to the deduction. The complaint therefore is well founded.

I find that the complaint is well founded and order the respondent to pay the complainant compensation equivalent to;

The difference in the net amount actually paid and the net amount of the wages that would have been paid to the complainant if the deductions, the subject of this complaint, had not been made.

Payment of wages.   Deductions due to lay off.   Implied terms.