Complainant

Respondent

Parties

Mark  Reeves

 Lake Region Medical Limited

Representatives

Rachel Hartery, SIPTU

Duncan Inverarity, Ciaran Lyng, A&L Goodbody Solicitors

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-00040652-001

28/10/2020

The complainant commenced employment with the respondent in February 2012 and is employed on a full-time basis as a manufacturing operative.  Following the introduction of the Covid-19 restrictions and the accompanying measures by the Government the respondent availed of the Temporary Wage Subsidy Scheme (TWSS).  The complaint is in relation to the calculation of the complainant’s average wage under that scheme.  The complainant alleges that a two-week absence in February because of illness has resulted in a payment under the scheme that is significantly less than his normal fortnightly wage.

This matter was heard by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act, 2020, and SI NO. 359/2020 which designates the WRC as a body empowered to hold remote hearings.

The complainant did not receive the amount of wages properly payable to him in respect of payments under TWSS.

During this period the complainant performed the same amount of work for less pay.

The complainant processed his grievance through the agreed procedures and put forward suggestions as to how his loss might be alleviated but to no avail.  

The respondent has correctly implemented and applied the provisions of the TWSS.

The rules that applied to the scheme were set out in legislation and in guidance documents drawn up by the Revenue Commissioners.

The reduction in wages was required by legislation and is therefore permitted under the Payment of Wages Act, 1991.

At the commencement of the hearing it was clarified that the correct title of the respondent is Lake Region Medical Limited and consent was given to it being changed accordingly.

The complainant is employed as a manufacturing operative working a shift system and is paid on a fortnightly basis.  As part of the response to the difficulties brought about by the Covid-19 pandemic the government introduced a Temporary Wage Subsidy Scheme (TWSS) whereby employers received a subsidy towards the wages of employees whilst maintaining their employment.

The respondent met the criteria applicable to the scheme and informed the workforce of their intention to avail of same.  From that briefing the complainant believed that any person suffering a financial detriment could be removed from the scheme. 

The complainant was absent on sick leave (unpaid) for two days on 12/13 February 2020.  The rules relating to the operation of the scheme were set out in legislation in the Emergency Measures in the Public Interest (Covid-19) Act, 2020 and in guidance documents issued by the Revenue Commissioners.  Under these provisions Revenue would calculate the Employee’s Average Revenue Net Weekly Pay (ARNWP) which would be based on the January and February 2020 payroll submissions made to Revenue.  According to the respondent, because of the two days’ absence in February the complainant’s ARNWP was calculated at €614.99 as compared to €638.81 if the absences had not occurred. The respondent had committed to topping up employees’ pay from the level of the TWSS subsidy to the level of the ARNWP.  The subsidy in the case of the complainant was €350.00 per week.  The “operational” phase of the scheme commenced on 4 May 2020.

The respondent implemented the scheme with effect from early July.  The complainant, on noticing a shortfall in his net wages, raised the issue with management and outlined his grievance in an email on 24 August 2020.  The complainant requested that he be removed from the scheme because of the negative effect that he had suffered.  A meeting on the matter took place on 28 August and the respondent’s response was detailed in an email to the complainant on 9 September.  In this reply the management reiterated that they were operating according to the rules of the scheme.  The complainant submitted his complaint to the WRC on 28 October 2020.  The scheme itself finished on 31 August 2020.

The complaint as submitted is to the effect that the respondent is in breach of the Payment of Wages Act, 1991 in that the respondent has paid the complainant less than the amount due to him.

Section 5(1) of the Act states:

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 virtue of any statute or instrument made under statute,

(b)    the deduction (or payment) is required or is authorised to be made by virtue of a term of the employee’s contract of employment including 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.

Section 5(6) of the Act states:

Where –

(a)    the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

(b)    none of the wages that are properly payable to an employee by an employer on any occasion (after making any deductions as aforesaid) are paid to the employee,

then, except as in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction by the employer from the wages of the employee.

The position of the respondent is that any shortfall in payment in this particular instance is covered by the provisions of Section 5(1)(a) of the Act as detailed above.

The Act in relation to the Emergency Measures required the Revenue Commissioners to prepare and publish guidelines on the operation of the TWSS.  A series of such guidelines were duly published containing updates as the scheme was implemented.  In particular, the respondent drew attention to Section 1.6 of the Operational TWSS FAQ Document which states:

“Neither the employer nor the employee may benefit from the scheme where the sum of the payments (subsidy plus any additional gross payment but excluding tax refunds) payable to the employee, in the week being processed, exceeds the lessor of the Average Net Weekly Pay (ARNWP) or €960 (with the exception of where the ARNWP does not exceed €412, the gross pay plus the temporary wage subsidy can exceed the ARNWP subject to a cap of €350 per week.)

The respondent’s position was that it was clear that they could not pay the complainant any sum in excess of the ARNWP, that is €614.99 as calculated under the formula by Revenue.

There is no dispute as regards the facts behind this complaint.  The issue before me is whether or not the reduction in wage suffered by the complainant is allowable under the Payment of Wages Act.  I note that the respondent states in their submission that the TWSS was applied to 754 employees out of a workforce of 890.  There were some employees who were not eligible for inclusion in the scheme either on account of earning over the maximum wage permitted by the scheme or joining after the cut-off point of 29 February 2020.  The respondent did, however, decide to exclude from the scheme employees who had more than 24 hours’ unpaid leave in January / February 2020 as these persons would have had a significantly reduced income under the rules applicable to the scheme.  The respondent accepted that this exclusion was implemented as part of their own policy and not dictated by the rules.

I further note the following points from Section 4.3 of the guidelines for the operation of the TWSS:

“For submissions made during the Operational Phase (from 4 May2020), Revenue will calculate the Employees Average Revenue Net Weekly Pay (ARNWP) and provide this to the Employer in the Employer CSV file.  The Employer must use the ARNWP value provided in the CSV file when calculating the subsidy…”

And later in relation to the calculation of the ARNWP:

“The calculation will result in an Average Revenue Net Weekly Pay for the employee, however, there will be a small number of cases where the calculation will not be fully representative of the employee’s usual weekly wage, the calculated Average Revenue Net Weekly Pay must be used in all cases.”

It would appear therefore that the guidelines anticipated that the operation of the rules governing the scheme would produce situations such as the complainant’s but, nevertheless, insisted that the figure produced under the ARNWP could not be breached.  In the case of the respondent, I note that 143 employees had between 8 and 24 hours unpaid leave in January / February 2020 and that the TWSS was applied to these employees.  The submission on behalf of the complainant noted that some anomalies had been identified by the Government and steps taken to rectify them but the situation that the complainant found himself in was not addressed.

The complainant had objected to the reduction in his pay and had put forward ways of addressing this matter.  One suggestion was that he work reduced hours to reflect his reduced pay and another was that the company withdraw him from the operation of the scheme.  These were rejected by management.

It is a fact that the complainant suffered a reduction in pay.  His contract of employment was not suspended at any time during the period in question.  I accept that the respondent qualified for the scheme and applied the rules of the TWSS for the period between July and 31 August 2020.  When the complainant submitted his complaint in October 2020, however, he had in fact been paid less than the amount due to him under his contract. The application of the rules actually resulted in a saving for the company which could be seen as an additional subsidy. 

The respondent had already partially addressed the anomaly in the ARNWP calculation by removing persons with more than 24 hours’ unpaid absence in January / February.  It would appear to me that the respondent should have also decided to address the situation of those employees with less than 24 hours absence who, because of the operation of the rules, would find themselves being paid less than what they were contractually entitled to be paid.  A balancing exercise at the cessation of the scheme is an obvious means of addressing the issue.  The respondent would still have received the full value of the subsidy but no more than that.

Whilst the operation of the TWSS might have resulted in a shortfall of wages during the operation of that particular scheme, the obligation to pay an employee what that employee is contractually entitled to remains.  The provisions of Part 7 of the Emergency Measures in the Public Interest (Covid-19) Act, 2020, are in relation to the operation of the wage subsidy scheme and were designed to provide assistance to an employer to maintain employees in employment even though they were suffering a reduction in turnover.  The guidelines published by the Revenue Commissioners set out the parameters of the scheme and the details of its implementation.  I accept that in order to avail fully of the scheme and be eligible for receipt of the subsidy the respondent had to apply those rules.  Section 1.6 of the Operational TWSS FAQ states:

“If the employer makes excessive additional gross payments, then either the subsidy value applicable to the employee and refundable to the employer will be reduced, or the employee may not be eligible for the subsidy scheme.”

The object of these rules is to ensure that the employer is eligible to receive the subsidy payment. I do not, however, see anything in the provisions of the legislation setting up the scheme that authorises or requires a deduction to be made from the wages paid to an employee.  There is accordingly an onus on the employer to make good any shortfall in wages that occurs as a result of the operation of the TWSS.  I do not accept that the deduction from the complainant’s wages that occurred in the case before me was allowable under Section 5(1)(a) of the Payment of Wages Act, 1991.  I therefore find this complaint to be well founded.  

For the reasons set out above I find that this complaint under the Payment of Wages Act, 1991, is well founded.  I note that the subsidy was paid on net wages and that income tax and USC were not applied to the subsidy through the payroll.  That presents a difficulty in calculating the amount of shortfall in wages suffered by the complainant.  The operation of the TWSS by the respondent lasted for 10 weeks.  The complainant claims a deduction of €448.60 based on the net figures of his normal weekly wage.  I note that the complainant was on unpaid absence on one day during this period.  Taking everything into consideration, I order the respondent to pay to the complainant the sum of €439.63 as compensation in this regard.