ADJ-00030850

Complainant

Respondent

Parties

David  Faulkner

Homebond Technical Services Limited

Representatives

  Appeared In Person

 Managing Director

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-00041150-001

19/11/2020

This matter was heard by way of Remote Hearing pursuant to Civil Law and Criminal Law (Miscellaneous Provisions) Act, 2020 and SI 359/2020, which designates the WRC as a body empowered to hold remote hearings.

On 19 November 2020, the Complainant, a Lay Litigant submitted a claim for €3,901.12 gross and €2888.35, nett in unpaid wages. On 5 August 2021, at the commencement of hearing, the complainant withdrew CA-00041151-001 as it was a mirror claim.

Both parties saw no difficulty advancing the case in the aftermath of Zalewski v Adjudication Officer [2021] IESC 24.

At the conclusion of the hearing, the respondent undertook to forward 2018 contract and the extract from the staff handbook on which he had relied.

The Respondent forwarded the requested documentation post hearing, which was shared with the complainant. On 20 August 2021, the Complainant confirmed that he had nothing further to add.

The Complainant had worked full time at the respondent technical services business from 29 January 2018 to 23 October 2020.

He submitted that he had been due a final payment salary of €3,901.12 gross on leaving employment. Instead, he received a Statement of Reconciliation of salary, which withheld payment due to fees paid by the company for a Post Graduate Diploma. The Complainant submitted that there was no contractual basis for this action, and he had not consented to it. The Complainant sought to recoup this amount quoted as €2888.35, nett on the complaint form.

The Complainant exhibited a Pay Slip dated 29 October 2020, an extract from his contract of employment, email 14 October 2019 and a copy of an email from September 2019. 

Complainants Evidence:

The Complainant is seeking a nett payment of €2,888.35 in respect of a deduction made from his final salary. He exhibited a copy of a pay slip which reflected this reduction. The Complainant submitted that he was owed this money by the respondent.

The Complainant outlined that he had been encouraged to undertake a Fire Safety course in July/ August period of 2019. He registered for the course and undertook the course alongside his working life between September 2019 and March 2020.

He had not been informed that he would be liable to repay the fees paid. He had not consented to the deduction made in October 2020, from his final salary.

During cross examination, the complainant disclosed the Managers name, who encourages him to undertake the course.

In response to the Respondents recital of the corresponding clause on leaving employment and a stated commitment to recoup fees, from the 2020 handbook, the complainant responded that he was unaware of this clause on his leaving employment.

The Complainant confirmed that the course spanned September 2019 to May 2020 and had a 3-hr commitment on Friday and Saturdays. The Complainant recalled that he had been docked 3 days holidays

The Respondent has disputed the claim. He has argued that the wages claimed in the case were not properly payable as set against the terms of the Company Professional Development scheme set out in the 2020 staff handbook.

On August 3, 2021, the Respondent submitted the content of an email to WRC. This constituted the address sent to all staff in January 2020.

This document provided an update for staff on amongst other matters, Continuing Professional Development. The staff were requested to review the entire document and revert to the Respondent by 27 January 2020 if any queries arose. The Complainant had not engaged with this correspondence.

The Respondent   submitted that the complainant’s contract of employment provided scope to recoup expenditure on Course fees.

The Respondent submitted that the complainant had availed of the study/exam leave as set out in the Employee Handbook, 2020 in addition to the Performance Appraisal Scheme in 2019 and 2020.

Respondent Evidence:

The Respondent business   employed 22 workers and had a positive history of educational support. The Respondent submitted that the Complainant was bound to have been aware of the company’s right to recoup course fees as it was an express condition of the training course. Detail of this was provided in the staff handbook notified to the complainant.

Early in 2020, the Respondent reviewed the staff handbook to streamline terms and conditions for all staff.  He emailed an update on the 2004 handbook to all staff. The Complainant did not respond.

The Complainant had not activated the grievance procedure in pursuance of the wages now sought at hearing.

The Complainant informed the company that he was leaving in October 2020. The Respondent relied on Section 4 of the staff handbook in relation to the authority for recoupment of course fees.

Following completion of the programme, employees must remain with the company for a two (2) year period, or longer as directed by the Managing Director.

Should an employee leave the Company, before   expiry of the relevant period (for any reason) the Company will seek to recoup the cost from the employee including by way of deduction from salary or expenses owed.

He submitted that the Complainant was notified of this stated intention   to recoup course fees and study leave action as he had not served the required 2-year tenure.

The Complainant had sought clarification prior to his departure. The Respondent followed the provisions of the updated handbook.

On 28 October 2020, he wrote to the Complainant and set out a planned reconciliation exercise:

1 Net Salary      €2, 888.35

2 Bonus paid in error July 2019   €2,000

3 Post Graduate Diploma   re-payable   €5,780.75

The above figures were reconciled, and a closing balance was identified as €892.40. The Respondent offered to waiver this if agreement followed on the reconciliation. The Complainant did not record his agreement. The Respondent confirmed that the October pay slip did not trigger a payment to the complainant.

The Respondent clarified that the Reconciliation had been prepared by Human Resources.

The Respondent contended that if conflict arose between the contract and the staff handbook, the 2020 handbook would emerge as authority, replacing all other agreements or arrangements

The Respondent recited from the contract of employment of 2018 particular to the complainant. The Complainant had sought a review post two years of employment, following which he had been made permanent in February 2020.

I have been requested to make a decision in this claim for unpaid wages. In reaching my decision, I have had regard for all written and oral submissions. I have also reflected on the evidence adduced at hearing.

The claim for unpaid wages on cessation of employment has been strongly contested by the Respondent. The Respondent has relied on the composition of Section 4 of the Staff Handbook of 2020 to defeat the claim. I have identified that while the parties both agreed the facts of the deduction, neither party engaged on this issue within the parameters of the employment. I have found this to be a missed opportunity. I can appreciate that the Respondent was sorry to lose the complainant, however, both parties were fully aware of the company grievance procedure which ought to have focussed minds to at least attempt a mutually acceptable resolution.

An issue on an earlier pension payment arose during the hearing. I am satisfied that this matter is not properly before me and the sole issue for me to determine is whether the salary of €3901.12 was properly payable to the complainant and whether the deduction of this gross amount in his final month of employment amounted to a contravention of Section 5 of the Payment of Wages Act, 1991. The Respondent has submitted that he acted fairly in recouping this amount when set against the terms of the staff handbook.

During the hearing, I expressed some concern that both parties seemed to be reliant on    extracts of larger documents to support their respective arguments. As part of my Inquiry. I sought

1 2018 contract of employment

2 Staff handbook and Policy relied on to support the recoupment of salary in October 2020.

These were received from the Respondent and shared with the Complainant. They did not generate further comment from the Complainant.

The Law on Payment of Wages is set down in Section 5 of the Payment of Wages Act, 1991.

Regulation of certain deductions made, and payments received by employers.

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.

(2) An employer shall not make a deduction from the wages of an employee in respect of—

(a) any act or omission of the employee, or

(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,

unless—

(i) the deduction is required or authorised to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the contract of employment made between the employer and the employee, and

(ii) the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of the wages of the employee), and

(iii) before the time of the act or omission or the provision of the goods or services, the employee has been furnished with—

(I) in case the term referred to in subparagraph (i) is in writing, a copy thereof,

(II) in any other case, notice in writing of the existence and effect of the term,

and

(iv) in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and

(v) in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and

(vi) in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is of an amount not exceeding the cost to the employer of the goods or services, and

(vii) the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than 6 months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.

(3) (a) An employer shall not receive a payment from an employee in respect of a matter referred to in subsection (2) unless, if the payment were a deduction, it would comply with that subsection.

(b) Where an employer receives a payment in accordance with paragraph (a) he shall forthwith give a receipt for the payment to the employee.

(4) A term of a contract of employment or other agreement whereby goods or services are supplied to or provided for an employee by an employer in consideration of the making of a deduction by the employer from the wages of the employee or the making of a payment to the employer by the employee shall not be enforceable by the employer unless the supply or provision and the deduction or payment complies with subsection (2).

(5) 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—

(I) any overpayment of wages, or

(II) any overpayment in respect of expenses incurred by the employee in carrying out his employment,

made (for any reason) by the employer to the employee, and

(ii) the amount of the deduction or payment does not exceed the amount of the overpayment,

or

(b) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, in consequence of any disciplinary proceedings if those proceedings were held by virtue of a statutory provision, or

( c) a deduction made by an employer from the wages of an employee in pursuance of a requirement imposed on the employer by virtue of any statutory provision to deduct and pay to a public authority, being a Minister of the Government, the Revenue Commissioners or a local authority for the purposes of the  Local Government Act 2001 (as amended by the Local Government Reform Act 2014) ], amounts determined by that authority as being due to it from the employee, if the deduction is made in accordance with the relevant determination of that authority, or

(d) a deduction made by an employer from the wages of an employee in pursuance of any arrangements—

(i) which are in accordance with a term of a contract made between the employer and the employee to whose inclusion in the contract the employee has given his prior consent in writing, or

(ii) to which the employee has otherwise given his prior consent in writing,

and under which the employer deducts and pays to a third person amounts, being amounts in relation to which he has received a notice in writing from that person stating that they are amounts due to him from the employee, if the deduction is made in accordance with the notice and the amount thereof is paid to the third person not later than the date on which it is required by the notice to be so paid, or

(e) a deduction made by an employer from the wages of an employee, or any payment received from an employee by his employer, where the employee has taken part in a strike or other industrial action and the deduction is made or the payment has been required by the employer on account of the employee’s having taken part in that strike or other industrial action, or

(f) a deduction made by an employer from the wages of an employee with his prior consent in writing, or any payment received from an employee by an employer, where the purpose of the deduction or payment is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employee to the employer, or

(g) a deduction made by an employer from the wages of an employee where the purpose of the deduction is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employer to the court or tribunal or a third party out of the wages of the employee.

(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.

Firstly, I must consider if the sum claimed of €3,901.12 gross was properly payable to the complainant?

Section 1 of the Act provides a definition on wages

“wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

(a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and

(b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:

The sole contract available in the case, January 2018, describes a salary of €40,000 per annum paid in arrears on the last Thursday of each month. This was accompanied by an annual performance and salary review. The contract was supported by a staff handbook. I accept that the Complainant was made permanent following a review in February 2020.

In Sullivan v Department of Education [1998] ELR 217, the EAT considered the word “payable “in Section 1 to be significant. They held that:

If an employee does not receive what is properly payable to him from the outset, then this can amount to a deduction within the meaning of the 1991 Act

I can safely establish that the complainant had a legitimate expectation of receiving wages covering the last month of his employment. I find that the wages were properly payable, Sullivan applied.

I must now move to consider whether the deduction of that months’ salary fell within actions permitted under Section 5?

In my consideration of the facts of the case, I note that both parties accept that the Staff Handbook from 2004 presided over the commencement of the complainant’s employment. The Post Graduate Study was sanctioned to commence in the first week of September 2019 under the umbrella of this staff handbook.

It is important for me to reflect the clause which prevailed for education supports at that time at page 33.

Where the Company contributes financially to courses, the employees may be asked to commit to the company for a period of time

It is common case, that the complainant was not approached to commit to the company for a period as he undertook the course in 2019 or as he completed the course in 2020. It is the Respondent case that commitment to remain was incorporated as an express term in the revised staff handbook as notified to the complainant.

It is the Respondent case, that the Staff Handbook changed in January 2020 and this change negated any earlier agreements or arrangements. He gave undisputed evidence that this revised handbook was circulated to staff in January 2020 and re-enforced in March 2020 without comment from the Complainant.

Again, I think it important that the wording of the revised content on education supports is reflected in these findings.

The revision of January 2020 reflected that course fees paid upfront could result in an agreement by an employee to repay by way of monthly deductions in salary. This did not apply to the circumstances of this case.

Secondly, the revision   stipulated that following the completion of the programme, an employee was to remain for 2 years or longer at the discretion of the Managing Director.

From my careful reading of the Education Policy, 2020, I noted that it applied to 4 named companies. The Education Policy of 2004 referred to a lone company, that mentioned on the contract of employment.

Thirdly, in the event of cessation of employment “for any reason “

The Company will seek to recoup the cost from the employee including by way of deduction from salary or expenses owed.

I have reflected on the meaning of “will seek to recoup”. I have also reflected on the parties’ responses to this clause at hearing.

I find that “seek to recoup “suggests an invitation to agree terms of deduction rather than   a “fait accompli” of automatic   deduction.

The issue here is that the education package applied to the complainant in September 2019 was not accompanied by a specific approved Training Support Agreement. This has allowed the parties to reflect their individual interpretations of what was agreed. The Complainant understood that he was encouraged and coached to undertake the course by a manager. He invested company and personal time in completing the course, which he believed benefitted the company. The Respondent was full some in the support of the course but had not envisaged the complainant’s resignation from the company occurring so soon. He acted in good faith in believing that the 2020 staff handbook permitted the deduction from final salary.

This situation as outlined above is subject to Section 5(2) of the Act.

I cannot establish that the deduction as made in October 2020 was required or authorised to be made by virtue of a term of the contract of employment.

I have considered the avenue of equity in this case. I find that the support package for the course was governed by the overarching 2004 handbook where a discretion on commitment was announced. I note that this discretion was not declared in relation   to this course. Devlin v ESB [2015] 26 ELR 278  

I appreciate that the handbook changed in January 2020, but that change did not require that a deduction be made. At best, it required an engagement on how the matter of fees paid on conclusion of employment be manged. The term implied an opening position at negotiation not a permission to deduct pay.

I have not established that the deduction made was fair or reasonable. I also note that the deduction made deviated from the implied term of monthly deduction, which was not pursued in this case. Finally, I note that the fee was paid by the Respondent in September 2019, yet the deduction was applied some 13 months after this.

I found some guidance in the Labour Court Case of Citi jet DAC v David Ryan PWD 204, This was a case involving a written training bond from Sept 2016 which pre-existed a transfer to a new contract.

The training bond provided for a pro rata formula for reimbursement of the cost of training should the complainant leave employment within 3 years of the date of completion of training.

It was accompanied by an important rider: No variation of this Agreement will be effective unless it is writing and signed by the parties.

The new contract did not reference the training bond.

The Labour Court found that the deduction of € 3,431 made from the Complainants final salary complied with the requirements of Section 5(2) of the Act as:

The deduction was authorised by the Complainants written contract of employment and it was fair and proportionate having regard for the express terms of the Bond Agreement and the parties’ dealings between the date the complainant tendered his resignation and the date   that the resignation took effect.

I found the facts of the instant case to be distinguished from Citi jet.

I have found that the complainant had earned his salary for October 2020 and the respondent had insufficient grounds to rely on the application of Section 5(2) on this occasion. I found the unilateral deduction in salary to be a step too far. Cleary v B and Q Ireland ltd [2016] 1 IR276

Once more, I add that I found it regrettable that the parties did not engage on an internal resolution in this case before now.

However, based on the facts raised, I find that the complainant experienced an illegal deduction of wages on October 29, 2020.

I find his claim to be well founded.

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.

Section 6 of the Payment of Wages Act, 1991, requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under that Act.

I have found the claim well founded. In accordance with Section 6 of the Act, I order the Respondent to pay the complainant €3,830, gross payment, as compensation, in respect of the contravention of Section 5 of the Act. This sum is subject to statutory deductions.

The claim for expenses is not allowed as expenses are not considered wages in accordance with Section 1 of the Act.

Pay on cessation of employment