Complainant

Respondent

Anonymised Parties

An Employee

A Technology Company

Representatives

  Self-represented

Claire Bruton B.L. instructed by  Mason Hayes & Curran

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-00038858-001

23/07/2020

The Complainant has been employed by the respondent since 1st of June 2004.   The Complainant became disabled in September 2006 and has been in receipt of income in the form of an income protection policy provided by an Insurance company which according to her contract was to provide 2/3 of her salary and increase by 3% per annum.  

The payments from the income protection policy have now been capped at 75% of her original salary and have only increased at the rate of inflation, the complainant  referred a complaint to the Workplace Relations Commission on 23rd of July 2020 in respect of this matter alleging the Respondent has breached Section 6 Payment of Wages Act, 1991 – 2015.    The cognisable six-month period which is covered by the claim dates from the 24th of January 2020 to the 23rd of July 2020.

It was agreed at the outset of the hearing to amend the respondent name as above.  This is reflected in the named decision that will issue to the parties in relation to this complaint.

The complainant submits that

She became disabled in September 2006, her contract provided her with a Disability benefit provided by an Insurance company which according to her contract was to provide 2/3 of her salary and increase by 3% per annum,

This disability benefit has now been capped at 75% of her original salary and has only increased at the rate of inflation,

the complainant submits that the cap at 75% of original salary will completely erode any income over time,

The complainant receives the disability benefit via the respondents payroll every month,

The complainant submits that the amount due under the scheme is equal to Two-thirds of salary at date of disablement less the single person's  disability benefit under the State scheme.  It is submitted by the complainant that this amount is payable until  you  recover, die, or reach your normal retirement date and will increase by 3% per annum.

In addition, the company will continue its contributions (and take over your contributions) for core retirement and death benefits. This means that on reaching age 65 her pension would be fully provided.

The respondent submits that

the Complainant’s claim which is taken under the Payment of Wages Act 1991 relates to the calculation of payments made to the complainant  under an income protection policy provided by a named insurance company,

the basis for and calculation of payments made to the Complainant are  within the insurance company’s knowledge,

the Respondent’s position is that it has no responsibility for the calculation of the amount payable under the PHI policy, which is undertaken by an insurance company pursuant to the terms of the PHI policy,

The insurance company forwards the payments to the respondent and the respondent merely facilitates payment of the relevant benefits payable under the policy to the Complainant as a beneficiary under the policy,

The respondent contends that it is not the correct respondent to a claim in respect of the amount payable to the complainant under the insurance company disability benefit scheme,

The respondent also submits that the claim does not relate to wages ‘properly payable’ to the complainant as she has not worked since 2006 and has been in receipt of disability benefit in the form of income protection insurance since that time.

The Act at Section 5(6) provides as follows:

5(6) 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 by him 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 such deductions as aforesaid) are paid to the employee,

then, except 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 made by the employer from the wages of the employee on the occasion.

Subsection (6)(a) of section 5 of the Act provides, in effect, that where the total amount of wages properly payable to an employee is not paid, the deficiency or non-payment is to be regarded as a deduction.    

The Complainant is contending that wages properly due to her were not paid and that this failure constituted a deduction in accordance with Section 5 of the Act.  She contends that, as set out in the Act at Section 5(6)(a), the wages paid to her were less than the wages that were properly payable to her.   The Complainant further contends that this deduction was unlawful having regard to Sections 5 and 6 of the Act.

The respondent advised the hearing that under the PHI policy there is a ‘limitation of benefit’s clause which applies to the PHI benefits received by the complainant.  This means that there is a ceiling on the payments to the complainant capped at 75% of her pre disability earnings less social welfare payments received.    In relation to this payment, once the ceiling is reached no escalations/increase of 3% per annum applies and rather the rate of inflation is applied.    

The respondent submits that it has no responsibility for the calculation of the amount payable under the PHI policy as that is entirely undertaken by the insurance company therefore the money sought by the complainant for the cognisable period does not constitute wages  ‘properly payable’ within the meaning of section 5(6) of the 1991 act.

Section 5(6) of the Act states that the wages must be “properly payable”.   The respondent in support of its case cites the case of Dunnes Stores Cornelscourt Ltd vs Lacey where the High Court made it clear that in considering a claim under the 1991 act an Adjudicator must have regard to the importance of establishing what remuneration was ‘properly payable’.    In addition, it is submitted that more recently the High Court has held, in light of the Dunnes Stores judgement, the proposition that the first matter to be addressed should be  to determine what wages are “properly payable”.

The position of the respondent in the present case is that the complainant received income continuance payments as per the calculations and interpretation of the relevant policy as provided by the insurer.  The respondent submits that there are no wages properly payable to her.   In addition, it is submitted that Section 5(6) provides that the responsibility for unpaid wages or deductions relates solely to the actions of the employer who for example has miscalculated the wages payable or has sought to make an unlawful deduction for an act or omission on the part of the employee.    By contrast the respondent in this case submits that it has no responsibility for the entitlements of the complainant under the PHI policy operated by the insurer.

Section 5(6) states

 (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 by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

In considering this claim it is clear that consideration must be given to the question of the amount of wages ‘properly payable’ to the Complainant in the six-month period, which is covered by the claim, i.e.  from the 24th of January 2020 to the 23rd of July 2020.

It is clear from the evidence adduced by both parties that the complainant in this case has not actually returned to work and has since 2006 been in receipt of income from an income continuance policy operated by an insurance company.     The complainant submits that the income continuance benefit was to increase by 3% annually on an indefinite basis until retirement or death.  She submits that the insurance company should not have capped the benefit at 75% of her salary increasing only at the rate of inflation after that.   

I am satisfied from the evidence adduced that this income protection policy is paid to the complainant through the respondent employer but that the amounts paid, and calculations of the amount come from the insurance company as a form of disability benefit.  The respondent advised the hearing that the terms of the policy and the benefits payable under that policy are dictated by the Insurance company who operates the policy.    The respondent added that it had however contacted the Insurance company on behalf of the complainant to request information in respect of calculations applied and had passed that information on to the complainant.

The respondent also submits that the Complainant has failed, refused and/or neglected to particularise the amount of the unlawful deduction from wages she alleges are owing to her.

I note that the claim form lodged by the complainant does not specify an exact monetary amount of the alleged unlawful deduction but takes issue with the basis of calculation used by the insurance company in calculating her income continuance payments, her claim centres on the fact that these payments which are based on 2/3 of her salary and had been increasing at 3% per annum have now been capped at 75% of her salary only increasing at the rate of inflation.  

I note that this claim has been lodged against the complainants employer and I also note the respondent employers position that the amounts payable to the complainant under the income continuance scheme are calculated by the insurance company which operates the scheme.   In considering this matter I note that no assertion is being made that the complainant was entitled to be paid wages by the Respondent while not working.

Thus, having considered the totality of the evidence adduced by both parties, I am satisfied that the income received from the income continuance scheme does not amount to wages for work carried out by the complainant or wages ‘properly payable’ for the purpose of Section 5 (6) and thus any alleged shortfall or reduction in the amount of that income cannot be considered as an unlawful deduction from wages properly payable for the purposes of Section 6 of the Act as set out above.

This is a complaint under the Payment of Wages Act, 1991.   For the reasons set out above I find this complaint to be not well founded.