ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00030784
Parties:
| Complainant | Respondent |
Parties | Conor Simpson | Auto Claims Services Limited |
Representatives | Not represented | Not represented |
Complaint:
Act | Complaint Reference No. | Date of Receipt |
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991 | CA-00040938-001 | 11/11/2020 |
Date of Adjudication Hearing: 11/06/2021
Workplace Relations Commission Adjudication Officer: Catherine Byrne
Procedure:
This complaint was submitted to the WRC on November 11th 2020 and, in accordance with section 41 of the Workplace Relations Act 2015, it was assigned to me by the Director General. Due to the closure of the WRC as a result of the Covid 19 pandemic, a hearing was delayed until June 11th 2021. I conducted a remote hearing on that date, in accordance with the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 and Statutory Instrument 359/2020 which designates the Workplace Relations Commission as a body empowered to hold remote hearings. At the hearing, I gave the parties an opportunity to be heard and to present evidence relevant to the complaint. The complainant represented himself, as did a director of the respondent company.
At the opening of the hearing, I alerted the parties to the judgement of the Supreme Court in the case of Zalewski v Adjudication Officer and WRC [2021] IESC 24 which was delivered on 6th April, 2021 with a further ruling on 15th April 2021. I informed them that, from April 6th 2021, hearings at the WRC may be held in public and that it is likely that the parties will be named in the published decisions. I also informed them that evidence may be heard under oath and that existing legislation will be amended to provide for prosecution for the giving of false evidence. The parties to this hearing confirmed that they were willing to proceed in these circumstances.
Background:
The complainant joined the respondent’s insurance business on December 5th 2019. He was employed as a senior claims handler and his annual salary was €40,000. On April 8th 2020, following the onset of the Covid 10 pandemic, the employer availed of Revenue’s Temporary Wage Subsidy Scheme (TWSS). The complainant was paid a top-up of the TWSS for 10 weeks from April 8th until June 17th 2020, when he became ill and was absent from work. He had not returned to work by the time his job was made redundant on October 9th 2020. This is a complaint about how the top-up of the complainant’s wages was calculated, and about his entitlement to holiday pay at the termination of his employment. |
Summary of Complainant’s Case:
The Temporary Wage Subsidy Scheme and the Top-up of Wages The complainant’s annual salary of €40,000 resulted in monthly gross wages of €3,333 and net pay of €2,640.24. He was out sick for three days in January and two days in February 2020, with the result that his gross and net pay was reduced. In January, his net pay was €2,384.75 and in February, it was €2,491.94. in March, when he was at work every day, his net pay returned to €2,640.24. In April 2020, due to the effect of the pandemic on the respondent’s business, they applied to Revenue for assistance to pay wages in the form of the TWSS. Payments were approved and, as instructed, the payroll department moved all employees to weekly pay. Payslips submitted in evidence show that the complainant received €379.30 from the TWSS and €162.55 as a top-up from his employer, a total of €541.85. TWSS was not taxable at the time of payment, and the payslips submitted in evidence show that, because of a tax credit, the complainant’s net weekly pay from April 8th until June 17th 2020 was €578.81. The complainant claims said that his normal (pre-Covid) monthly net pay of €2,640.25 is equivalent to €586.72 per week. (In the section below, on “Findings and Conclusions,” I find that the complainant’s normal net weekly pay is €609.29.) If he had been taxed on his post-Covid gross pay of €541.85, he estimates that this would have resulted in net pay of €504.89. BAsed on this estimation, he claims that he suffered a reduction of €81.83 in his net take-home pay for 10 weeks from April 8th until June 17th 2020. The complainant said that when he brought this to the attention of his manager, she contacted the payroll department. She was advised that the complainant’s TWSS payment was calculated from his January and February 2020 wages, which was reduced due to his absences. The complainant said that, having contacted Revenue, his manager told him that his wages could not be topped up any further and that he would be reimbursed when the TWSS scheme ended. By the time his employment was terminated in October 2020, he had not been reimbursed and he submitted this complaint to the WRC on November 11th 2020. Holiday Pay When the complainant’s employment was terminated on October 9th 2020, he did not receive any pay in lieu of holidays not taken. He said that, before he went out sick in June 2020, he had taken 14 days’ holidays. His annual entitlement, as set out in his contract of employment, was 22 days. He claims that he is entitled to pay for four or perhaps five days that he did not take before his employment ended. |
Summary of Respondent’s Case:
The Temporary Wage Subsidy Scheme and the Top-up of Wages At the hearing, the director said that, as a result of the Covid pandemic in 2020, their business was reduced by 70% and that they applied for government assistance through the TWSS to keep their staff employed. As set out in the previous section, the complainant received €379.30 from the TWSS scheme and this was topped up by €162.55 by the employer, giving him weekly gross pay of €541.85. Following a query from the complainant about the amount of the top-up, a manager got in touch with Revenue. In August 2020, the company was informed that the wages used to calculate the TWSS payments and the top-up payments were the complainant’s wages in January and February 2020, when he had been absent for three days and two days respectively. It is the respondent’s case that they followed the instructions from Revenue with regard to how much they were to top up the complainant’s wage and that he has been paid in accordance with those instructions. The director who attended the hearing suggested that the complainant wasn’t working full-time during the weeks that he was being paid the TWSS, as the business had been so drastically reduced; however, the complainant disputed this. Holiday Pay With regard to holidays due at the termination of the complainant’s employment, the director said that the human resources department advised that holidays did not accrue during absences due to illness and that the complainant was not entitled to pay in lieu of holidays not taken. |
Findings and Conclusions:
The Temporary Wage Subsidy Scheme and the Top-up of Wages The Emergency Measures in the Public Interest (Covid-19) Act 2020 (“the 2020 Act”) was enacted on March 27th 2020 to mitigate against the adverse economic consequences arising from the spread of Covid 19. Part 7 is concerned with the putting in place of a temporary wage subsidy scheme to support employers to keep their staff employed in the context of a closure or downturn in their businesses. Section 28(2) provides that an employer may be eligible to apply for the TWSS where, “(a) the business of an employer has been adversely affected by Covid-19 to a significant extent with the result that the employer is unable to pay to a specified employee the emoluments the employer would otherwise have normally paid to him or her, (b) notwithstanding the existence of the circumstances referred to in paragraph (a), the employer has the firm intention of continuing to employ the specified employee (and to pay to him or her emoluments accordingly) and is making best efforts to pay to the employee some of the emoluments referred to in paragraph (a) during the applicable period, and (c) the employer has satisfied the conditions specified in subsection (4).” (These conditions refer to the employer’s submission of certain returns to Revenue.) It seems to me that this section provides that, where there was a downturn in a business due to Covid 19 and, where employees were not as fully occupied as they were before the pandemic, an employer may have been be eligible for TWSS support and that these payments may have been topped up so that an employee’s wages were a combination of TWSS and pay from the employer. It would appear from the legislation that there was an obligation on an employer to make an effort to pay employees “some of the emoluments” that they would normally be paid. The 2020 Act makes no provision for the top-up to be such that it brings an employee’s wages up to the level of normal pay. The guidance notes on www.revenue.ie state that the combination of TWSS payments and the employer’s top-up may not exceed 100% of normal weekly net pay. Logic would dictate that, unless otherwise agreed, an employee who is occupied to the same extent that they had been before the pandemic, would receive their normal weekly wages. Section 28(3) of the 2020 Act provides that an employer qualified for the TWSS scheme if, between March 26th and August 31st 2020, their business was reduced by at least 25%. At the hearing of this complaint, the director said that the motor insurance industry was drastically affected by business closures and that their company’s activity was reduced by 70%. On this basis, I assume that, as a senior claims handler, from the onset of the pandemic until he went out sick in June 2020, the complainant was not as fully occupied to the extent that he had been in the previous months. Section 28(1)(a) of the 2020 Act defines an employee who will be entitled to the TWSS payment as: “…an individual who was on the payroll of the employer as at 29 February 2020, and the following is the case, the employer – (i) has submitted to the Revenue Commissioners a notification or notifications of the payment of emoluments to the employee in February 2020 in accordance with Regulation 10 of the Regulations, and (ii) has submitted the return required under section 985G of the Act for the month of February 2020 on or before the return date (within the meaning of section 983 of the Act) for that month.” It is apparent therefore, that, for the purpose of calculating the amount of an employee’s TWSS payment, their wages for February 2020 is the benchmark to be used. The complainant was absent due to illness for two days in February and his gross and net pay were less than what he would have received if he had not been absent. Because of the rules of the TWSS scheme, from April 8th 2020, the complainant was paid weekly, although he was previously paid monthly. For comparison, in the table below, I have inserted the weekly equivalent of the complainant’s wages, based on (monthly pay x 12) ÷ 52.
In his submission to the WRC, the complainant said that he noticed that his weekly pay “was not adding up to the amount I should be receiving.” From April 8th 2020, his weekly gross pay was €541.85. There was no tax liability on the TWSS element and this resulted in a tax credit of €30.96. From April 8th until the complainant went out sick on June 15th 2020, his weekly net pay, at €578.81, was higher than his weekly gross pay during the same period. The complainant argues that, if tax had been deducted from his TWSS payment, he would have received net pay of €504.89. He calculated his pre-Covid weekly net pay as €586.72; however, in my view, this is incorrect, and his normal weekly net pay, based on his normal monthly net pay of €2,640.24, was €609.29. Taking his argument at face value, and using my calculations, he claims to have suffered a reduction in his wages of €104.40. I have arrived at this figure on the basis of the following: €604.29 Normal weekly net pay -€504.89 Estimate of the complainant’s post-Covid weekly net pay if tax had been deducted €104.40 Estimate of the shortfall in weekly pay (incorrect estimate was €81.83) Findings Two issues impacted on the complainant’s net pay from April 8th 2020; the first is that the extent of his employer’s top-up of his wages was impacted by the Revenue rule that February 2020 was the benchmark month, when his wages were reduced by two days’ pay. Secondly, the complainant’s net pay was affected by the Revenue regulation that the TWSS payment was not taxed at source, and may have been taxed at the end of the year. It is apparent from the calculations above that the difference in net pay between a “normal,” pre-Covid week and a TWSS post-Covid week was a reduction of €30.48 (€609.29 - €578.81). On the other hand, if we follow the Revenue regulation and use the complainant’s February 2020 wages as the benchmark, his net pay was higher by €3.75 per week. At the end of 2020, the complainant may have had a tax liability on his TWSS income. By the date of this hearing, June 11th 2021, he would have been informed if he had such a liability, but he offered no information in this regard. Due to illness, he has not been able to work since June 2020, and,, for this reason, he may have had no tax liability. My role as an adjudicator does not extend to deciding on tax matters and I intend to focus on the facts in front of me and the issues over which I have jurisdiction. The complainant argues that he was effectively penalised by his employer, because they used February 2020 as the benchmark month for calculating his TWSS payment. Again, this was done by the respondent in accordance with section 28(1) of the 2020 Act. The effect of using the February wages as a benchmark meant that TWSS was calculated off a lower amount of wages compared to his normal wages, resulting in a lower TWSS subsidy and a lower amount of top-up payment. The overall effect was a reduction in his net pay of €30.48 for 10 weeks. From the perspective of his complaint under the Payment of Wages Act, I must consider if, in contravention of section 5(1) of that Act, this was an illegal deduction. In the first instance, it is clear to me that the respondent operated in accordance with Revenue regulations on the TWSS payments, and correctly used the complainant’s February 2020 wages to calculate his TWSS payments. The guidance note on www.revenue.ie states that, “An employer could make an additional payment to the employee. Additional payments, when added to the wage subsidy, could not exceed the employee’s average net weekly pay.” It is clear from this that there was no requirement for an employer to top up an employee’s wages to their previous average net weekly pay. In any event, if we take the complainant’s February wages as the benchmark, his net pay when the TWSS payment is included is €3.75 higher than his normal weekly net pay. Taking his March 2020 wages as the benchmark, the complainant’s weekly net pay was reduced by €30.48 per week, equivalent to 5% of his normal net pay of €609.29. I understand that the business of the employer was reduced by as much as 70% and, based on this, I presume that the complainant’s workload was also reduced, perhaps by slightly more than 5%. It is my view that the complainant was paid for all the hours that he worked during the relevant 10-week period. In conclusion, I find that the application of the TWSS and the calculation of the top-up payment to the complainant was in accordance with Revenue’s rules and guidance notes, as prescribed by the rules of the 2020 Act. I can find no basis for the complainant’s claim that the respondent was in breach of section 5 of the Payment of Wages Act 1991 and I am satisfied that there was no illegal deduction from his wages. Holiday Pay In 2015, to bring the treatment of holidays in Ireland into line with the jurisprudence of the Court of Justice of the European Union, a new section, 19(1A) was inserted after section 19(1) of the Organisation of Working Time Act 1997 (“the OWT Act”). This amendment changed the law in relation to the accrual of annual leave. The Act now provides that annual leave is accrued during periods of absence due to illness: “(1A) For the purposes of this section, a day that an employee was absent from work due to illness shall, if the employee provided to his or her employer a certificate of a registered medical practitioner in respect of that illness, be deemed to be a day on which the employee was - (a) at his or her place of work or at his or her employer’s disposal, and (b) carrying on or performing the activities or duties of his or her work.” The complainant was absent on certified sick leave from June 17th until the termination of his employment on October 9th 2020. He had a contractual entitlement to 22 days’ holidays every year. Section 23 of the OWT Act deals with pay in lieu of holidays not taken when an employee who has been absent due to illness does not return to work: “(1) (a) Where - (i) an employee ceases to be employed, and (ii) the whole or any portion of the annual leave in respect of the relevant period remains to be granted to the employee, the employee shall, as compensation for the loss of that annual leave, be paid by his or her employer an amount equal to the pay, calculated at the normal weekly rate or, as the case may be, at a rate proportionate to the normal weekly rate, that he or she would have received had he or she been granted that annual leave.” The complainant said that, up to his termination of employment on October 9th 2020, he had taken 14 days’ holidays. On that date, he had been employed and also absent due to illness for a combined period of 40 weeks. He was therefore entitled to 17 days’ holidays ((22/52) x 40). At the termination of his employment therefore, the complainant was entitled to pay in lieu of three days’ holidays that he did not take before he was made redundant. |
Decision:
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.
I have decided that the complainant’s claim that his employer made an illegal deduction from his wages during the period of the payment of the TWSS between April 8th and June 17th 2020 is not well founded. I decide that his complaint regarding the non-payment of three days’ holiday pay is well founded and that he is entitled to compensation of €461.55. I have based this calculation on the deduction of the same amount due to three days’ absence in January 2020. In accordance with section 6 of the Payment of Wages Act, as amended, I am required to direct the respondent to pay compensation as a net amount. I decide therefore, that the respondent is to pay the complainant a net amount of €350.00. |
Dated: 9th July 2021
Workplace Relations Commission Adjudication Officer: Catherine Byrne
Key Words:
Temporary wage subsidy scheme, holiday pay |