Complainant

Respondent

Anonymised Parties

Salesperson

Sales and Service Company

Representatives

  Self

 No attendance

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-00035614-001

07/04/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00035614-002

07/04/2020

The complaints are concerned with withholding of wages in lieu of notice in accordance with the terms of employment and withholding of pay in lieu of annual leave on termination of employment details of which are set out in the summary of the Complainants case. The person named by the Complainant was notified of the complaint and the arrangements for a remote hearing of the complaint. In January 2021 he informed the WRC that he no longer had any involvement with the Company and that it was in liquidation. The WRC responded to this correspondence by calling the named contact and followed this by an email seeking the address for all future correspondence. There was no response. The person named by Complainant and with whom the WRC communicated or attempted to communicate, was a Director of the Respondent Company and is the person who informed the Complainant in writing that he was not to receive the payments which are the subject of the complaint, but rather that the Complainant had been overpaid and monies were due to the Respondent. On February 23, 2021, the same named contact person emailed the WRC’…this is clearly something to do with one of the Irish companies and they are all closed due to Government order so I need a name and some detail and I’ll pass it on to whoever should get it after re-opening in April or May. This won’t involve me as I would have zero direct knowledge of the content as I work in London so I need to know who is making the complaint so I can find out which company it is.’

Having reviewed the file and discussed the matter with the Complainant at the hearing, I am satisfied that the named person was central to the employment relationship which the Complainant had with the Respondent, that he was personally involved in the contractual matters which form the basis of the complaint including confirming the acceptance of the Complainants resignation on and in doing triggering the notice period section of the agreed terms of employment and also, that he was a person with whom the Complainant had regular dealings during his employment. For these reasons the professed lack of knowledge of the Complainant, the Company involved or the issues in dispute as conveyed to the WRC by the named contact person, is not accepted. At best it is regarded as disingenuous. Furthermore, I am satisfied that every reasonable effort was made by the WRC to provide the Respondent with details of the complaint, that this and the notice of the hearing were properly notified to the Respondent through the person named by the Complainant and who was familiar with the complaints to be heard. On this basis, I proceeded to hear the complaint, taking into account the material provided by the Complainant including the statement of terms of employment and the correspondence issued to him by the Respondent in February 2020.

This was a virtual hearing, conducted remotely.

Regarding the name of the Respondent-the name on this Decision is that on the signed employment agreement between the two parties:

The Complainant stated that he commenced employment with the Respondent on 13/11/2017. The rate of pay at termination was given as €3125 gross €2550 nett. He described various difficulties within the employment in terms of achieving the type of business that would generate commission payments. In July 2018 these difficulties led to an agreement which provided what was described as a bridge payment while the business developed the necessary resources to support the sales targets. He provided a list of dates of interactions with the Respondent around sales and pricing. The named contact person was a recipient of much of the email communications. At one stage he was told at a meeting that he was to be the national sales manager, salary discussions to follow. On February 5th, 2020 he submitted his resignation in writing because of the situation in the Company and that he could not earn commission. In accordance with section 14.1of his terms and condition he gave three months’ notice. He worked until February 14th when the named contact person met with him and told him the Respondent would be exercising their right to give pay in lieu of the contracted notice period. The Complainant was asked to leave immediately and that a letter would be sent to him detailing all payments due to him. From this conversation he understood that the balance of his notice and other outstanding payments would be detailed and paid. This never happened. Instead on February 25th, 2020 he received a letter dated February 21st which described the commission payments made in 2018 as advance payments due to the Respondent and detailed an overpayment of commission in respect of three prospective sales. The overpayment described by the Respondent amounted to 12 027.12 The amount given as owed to the Complainant in pay including pay in lieu of notice, amounted to €9711.247 leaving a balance of €2315.65 claimed as owed to the Respondent expressing a willingness to enter into a repayment plan in respect of the monies owed to the respondent.

The Complainant contested the basis of the calculation-that the amounts agreed and paid in 2018 were not paid as an advance but rather as’ an acknowledgment that the company was not in aposition to provide a platform for me to earn commissions and achieve the OTE in my contract’.

The commissions on three sales deducted by the Respondent the Complainant said were not due-he had completed the sales and it was supply or installation problems subsequent to his involvement which caused the sales to fall through.

He had not been paid from the end of January 2020 and his claim was for wages and holiday pay for the period of his notice up to May 5th, 2020.

The Respondent did not attend the hearing. The correspondence supporting the deduction or withholding of payments is that of 21 February 2020 which confirms that the Company was exercising its right under Clause 14.2 of the agreed terms of employment i.e. to pay in lieu of notice. The letter went on to say that the Complainant was paid €12000 in ‘advance commission payments’ describing these as overpayments of commission’. These it said, ‘were made on the expressunderstanding that any earned commission/bonus on future car sales would be reduced to reflect the advances(sic) commissions payments on these sales which were already made to you.’ Allowing for earned bonus payments of €1000 on sales for 2018-leaving a balance of €11000 due to the Respondent. The period used for calculating pay was 5-14 February 2020. It then went on the list overpayments of commission based on prospective sales between March and November 2019 which did not complete leaving a total amount of €12027.12 described as an overpayment.

The contents of the letter dated February 21st 2020 and the statement of terms of employment agreed between the parties, together with the terms of the relevant legislation were reviewed in arriving at a decision in this case.

Payment of Wages Act 1991-2017

In general terms the withholding of wages is classified as a deduction under the terms of the Act of 1991-2017.

This complaint does not stem from a dispute as to whether the Complainant was due certain wages in lieu of notice, save for the deductions made although there is a difference calculation period used by each party. The issue for consideration under this legislation is in part the amount calculated, but mainly whether the deduction taken by the Respondent can be classified as an overpayment in which case it was lawful or if not, an overpayment was authorised by an agreement between the parties to allow for that deduction.

In relation to the reckonable period for the wages element of the complaint, the period 1 February 2021 to 5 May 2020 is accepted based on the evidence of the Complainant that the last time he was paid was the end of January 2020. In effect there were two weeks worked unpaid plus 12 weeks of the three-month calendar period agreed in the terms of employment for the notice period.

The nett pay for this period would have amounted to €2550 per month by 3 months plus one week or €8238 nett.

Section 5 of the Act sets out the basis on which the employer may make deductions from wages, the relevant sections which are for the purposes of this complaint:

‘(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless –

(b) the deduction is required or authorised to be made by virtue of a term of the employee’s contract of employment included in the contract before, or 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 to it.’

In this complaint, there is no term in the employee’s contract which provides for the deduction of the payments amounting to €12000 as an advance commission, or the deduction of payments made for commission on the basis of sales described by the Respondent as ‘prospective’ sales. Aside from the contract, no other evidence was provided to support any entitlement of the Respondent to deduct payments from an agreed contractual term, the three months’ notice period, based on an agreed arrangement. Acknowledging that such an agreement can be made and the payment of commission on sales is frequently covered by a policy or written system of payment and how and when they will be made and including deductions for sales which are not completed, there is no evidence of such a policy or agreement in this employment and in respect of the Complainant to which he agreed.

In summary, applying the terms of section 5 (1) to the available evidence, the Respondent had no agreed basis for making deductions from the Complainants pay on termination or pay in lieu of his notice period and wages in respect of what he has termed advance payments of commission and sales which were not completed for reasons outside of the Complainants control.

Moving on to apply Section 5(5) of the Act of 1991 to the available evidence, the findings are linked to those in the application of Section 5(1). The Respondent appears to have exercised this section of the Act where it states:

‘Nothing in this section applies to-

(a)    A deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, where-

(i)                  the purpose of the deduction or payment is the reimbursement of the employer in respect of-

(ii)                any overpayment of wages….

That there was any agreement between the Complainant and the Respondent that the payments made in 2018 or again in 2019 would be repaid, or how they would be repaid is disputed by the Complainant. What appears to have happened is that the Respondent did use the term bridge payment, but that payment was to top up the wages of the Complainant as the Respondent Company was unable to provide him with a basis either for sales or for a margin of profit. Either way, to describe these payments as an overpayment in 2020 when they were made in 2018(bridge payments) and 2019(sales which fell through) is in itself unreasonable in the circumstances and the Complainant quite reasonably questions why, if they were agreed as an advance of wages and were to be deducted from his wages-why wait until 2020 in respect of the so-called bridge payments and not commence those deductions in 2019?

There is neither any evidence of an agreement or a reasonable basis for the treatment of the bridge payments in 2018 and/or the 2019 commission payments as overpayments to be deducted in 2020 or at all.

Overall having reviewed all of the available evidence the conclusion is that this was a case of sharp practice by an employer who, exercised his entitlement to remove the Complainant from the payroll under an agreed contract, knowing full well he would not be making the payments naturally expected by the Complainant, but rather would be exercising unagreed and unwritten terms contrary to the written terms of contract to deny the Complainant his entitlement to pay in lieu of notice and wages.  This conclusion is consistent with the interactions between the named Respondent in this case and the WRC where he professed ignorance about the complaint and the complainant in circumstances where it was he who dealt with the Complainant about the termination of his employment and had personally informed him that he would not be receiving the agreement terms of his contract in respect of notice provisions. It is for these reasons and having regard to the terms of Act, it is appropriate to exercise Section 6(1)(b) which follows from 6(1) which refers to a finding that a complaint is well founded and that the Adjudication officer shall direct the employer to pay to the employee compensation of such an amount(if any) as he considers reasonable in the circumstances-in this case I consider the complaint well founded and consider it reasonable to direct the employer to pay twice the amount deducted by him.

(b)    If the amount of the deduction or payment is greater than the amount referred to in paragraph (a), twice the former amount.

The Decision in this case reflects the application of section 6(1)(b) of the Payment of Wages Act.

Organisation of Working Time Act 1997

The complaint for holiday pay is for the period to May 5th, 2020 during which he was placed on pay in lieu of notice with effect from February 14th, 2020. The Complainant was in receipt of €3125 gross and €2550 nett per month. He worked 39 hours per week. The agreed annual leave year was January to December. In January 2020 he had one day of annual leave. The employment ended on February 14th, 2020 when the Respondent exercised his entitlement to pay in lieu of notice under Section 14.2 of the agreed terms of employment.

In accordance with Part 111 Section 19(1) of the Organisation of Working Time Act, the Complainant is entitled to have his annual leave calculated on his hours worked through the application of one of the formulae set out in Section 19, with repeated emphasis on the word worked. Therefore, the reference period for the calculation of his annual leave is the period 1 January to February 14th, 2020 when he ceased work. Using the formula of 8% of his hours worked, the calculation is 39 x 6 x 8% = 18.72 hours – 7.8 hours for a day in January = 10.92 hours holiday pay due. This is calculated as €165 nett.

Payment of Wages Act 1991-2017 CA-00035614-001

The complaint made by the Complainant regarding unpaid wages on termination of employment is well-founded. The Respondent is to pay the Complainant €16476 nett.

Organisation of Working Time Act 1997 to date CA00035614-002

The complaint by the Complainant for non-payment of holiday pay on termination is well founded. The Respondent is to pay the Complainant €165 in holiday pay.

Deduction from pay on termination/wages; holiday pay on termination