FULL RECOMMENDATION
SECTION 7(1), PAYMENT OF WAGES ACT, 1991 PARTIES : TESCO IRELAND LIMITED (REPRESENTED BY MS. MAIREAD MCKENNA B.L. INSTRUCTED BY EOIN O'CARROLL TESCO) - AND - MAREK BALANS (REPRESENTED BY MR. DAVID GEOGHEGAN B.L. INSTRUCTED BY O' HANRAHAN LALLY DALTON SOLICITORS) DIVISION :
SUBJECT: 1.Appeal of Adjudication Officer Decision No(s) ADJ-00010049 CA-00013123-001. This is an appeal under the Payment of Wages Act, 1991, ‘the Act’. Mr. Balans, ‘the Complainant’ is a Warehouse Operative in Tesco Ireland Ltd., ‘the Respondent’. He commenced working for the Respondent in 2012. In 2015 he moved to a full-time hours contract. It is accepted by both parties that this contract contained a mistake. The rate of pay for the category of worker to which the Complainant belonged at the time was €9.89 per hour. In addition, there was a 20% premium for unsocial hours. The rate of pay in the contract was shown as €11.87 per hour, which is the hourly rate plus the 20% premium. The Complainant was paid €9.89 per hour. In October 2016, the Complainant raised a grievance and sought payment of the amount provided in his contract, to which he sought the 20% premium to be added, when relevant. The grievance was not upheld. In May 2017, the Respondent issued a new contract which provided for an hourly rate of €10.29 per hour, (€9.89 plus subsequent rate increases). The Complainant refused to sign the contract. The Complainant lodged a complaint under the Act with the Workplace Relations Commission, ‘WRC’, on 15 August 2017. An Adjudication Officer, ‘AO’ upheld his complaint. The Respondent appealed to this Court, which upheld the appeal. The Complainant appealed to the High Court on a point of law. That Court held that the Court fell into error by conflating the question of what was ‘properly payable’ to the Complainant with the issue of unlawful deduction. The Court determined also that the error in the contract could not be regarded as a ‘computational error’ within the meaning of s.5(6) of the Act. The matter was referred back to this Court for determination. Summary of Respondent arguments. The contract issued in June 2015 contains a mistake. The Respondent did not have a rate of pay of €11.87. The Respondent operates a pay scale applicable to all workers in the relevant category in its warehouse in Donabate, Co. Dublin. The applicable rate was €9.89 per hour. This is called the ‘modern rate of pay’ or ‘MROP’. The only exceptions to the application of this rate is to colleagues who were employed pre 2009, who are engaged on a legacy rate of pay. The new rates were agreed in a collective agreement with the SIPTU trade union, initially at €9.50 per hour and rising by 2015 to €9.89 per hour. This was the rate applicable to the Complainant. In addition, there is a performance-related payment system, ‘PRA’, in place for those on the MROP. The Complainant signed up to this system in 2014. Adjustments to the PRA system are applicable only to those on the MROP. The Complainant has benefited from this. If the Respondent was bound to pay the incorrectly stated higher figure for the cognisable period from 15 February 2017 to 14 August 2017, the Complainant would not be eligible for PRA increases paid to him and he would have to repay €1829.50 to the Respondent. The Complainant could have no reasonable expectation that he would be paid 20% more than all of his colleagues due to a clerical error. The amount of €11.89 is not properly payable to him. The rates of pay properly payable and ‘referable to his employment’ as per the Act are the rates negotiated with the representative unions and the agreed pay models in place. The only issue before the Court is to identify the wages ‘properly payable’ to the Complainant. This is not simply a matter of looking at the contract. The purpose of the Act is to protect employees in the payment of their wages and the Complainant has received what is properly payable to him. InSullivan v. Department of Education, (1998) E.L.R. 217,the Employment Appeals Tribunal noted that the word ‘payable’ in s.1 of the Act was significant and that if an employee did not receive what was properly payable this can amount to a deduction. In the instant case what was ‘properly payable’ was the rate of pay as per the agreed rates and that is what was received. No illegal deduction was made, there was, simply, an administrative error in the contract of employment. InAer Lingus v. Matchett PW/18/18,the Labour Court held that the salary set out in the letter of appointment was not the appropriate salary to pay the Complainant and, consequently, must have been an error, so it was not unlawful for the Respondent to deduct the monies. Under s.4(3) of the Act, a statement that contains an error or omission still complies with the provisions of the Act that requires such a statement to be provided if the error or omission was made ‘accidentally and in good faith’. The Act provides that an assessment of what is properly payable is not exclusive to the terms of the contract. S.1 of the Act refers to entitlements that are ‘referable’ to the employment and that arise by under the contract or ‘otherwise’. The Complainant’s contract provides that he is bound by collective agreements. The High Court stated expressly that it was still open to the Labour Court to find that the complaint had no merit, and it did not determine that issue but, rather, referred the matter back to the Labour Court. Summary of Complainant arguments. In June 2015, the Complainant entered a contract that provided for an hourly wage of €11.87. It provided for a premium of 20% for working outside of normal hours. He was never paid in accordance with his contract. The Complainant raised a grievance under the Respondent’s Grievance Procedure. This was not upheld. He lodged a complaint with the WRC under the Act on 14 August 2017. The AO upheld the complaint and awarded €1712.42. The Labour Court upheld the Respondent’s appeal. The High Court held that the Labour Court had erred in law and referred the matter back to the Labour Court. The Labour Court has to determine what is ‘properly payable’. The Complainant is entitled to be paid his contractual salary. In determining what is ‘properly payable’, the Court cannot disregard the terms of the contract. The Labour Court cannot rectify a contract, that is an equitable jurisdiction reserved to the Circuit and High Court. It is not disputed that the Complainant was not paid his contractual salary. The High Court has held that the reason for the Complainant being paid less than his contractual salary is not ’attributable to an error of computation’ within the meaning of s.5(6) of the Act. It is clear that there has not been a lawful deduction pursuant to s. 5(1) of the Act as the deduction was not required by statute, was not required or authorised by the contract and was not the subject of prior consent by the Complainant. TheMatchettdecision referred to by the Respondent differs from the instant case as, in that case, the employee’s contract was held to authorise the deduction concerned. It follows logically that if the Respondent was not entitled to reduce unilaterally the pay of the Complainant, the 20% premium is payable on top of his base salary of €11.87 per hour. The Complainant should be awarded compensation for 6 months prior to the complaint being lodged on 14 August 2017 at the rate of €11.87 per hour with 20% premia being applied where relevant. Note: The Complainant’s representative stated that he was surprised that the same Division of the Court was assigned to hear the case, that had been referred back by the High Court, as had heard the original appeal, the outcome of which was appealed to the High Court on a point of law. The members of the Court queried this observation and the Chairman asked if the Division was being requested to recuse itself from the proceedings. The Complainant’s representative said that he was not requesting this and was prepared to proceed. The applicable law. Payment of Wages Act 1991 1. “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, 4.— (1) An employer shall give or cause to be given to an employee a statement in writing specifying clearly the gross amount of the wages payable to the employee and the nature and amount of any deduction therefrom and the employer shall take such reasonable steps as are necessary to ensure that both the matter to which the statement relates and the statement are treated confidentially by the employer and his agents and by any other employees. (2) A statement under this section shall be given to the employee concerned— (a) if the relevant payment is made by a mode specified insection 2(1) (f), as soon as may be thereafter, (b) if the payment is made by a mode of payment specified in regulations undersection 2(1) (h), at such time as may be specified in the regulations, (c) if the payment is made by any other mode of payment, at the time of the payment. (3) Where a statement under this section contains an error or omission, the statement shall be regarded as complying with the provisions of this section if it is shown that the error or omission was made by way of a clerical mistake or was otherwise made accidentally and in good faith.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. (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. Deliberation. In light of the judgment of the High Court in respect of this case, the issue for the Court to determine is what was ‘properly payable’ to the Complainant in the period from 15 February 2017 to 14 August 2017. In its consideration of this matter, the Court is not permitted to regard the difference between the amount paid to the Complainant and the amount provided for in his contract as arising from a computational error within the meaning of s.5(6) of the Act, set out above. If the Court was to determine that the amount properly payable to the Complainant was that provided for in his contract then he would be entitled within the terms of the Act to be paid that amount and any lesser amount would be an unlawful deduction as per the terms, set out above, in s.5 of the Act. It follows also that, if the Court was to determine that the properly payable amount was that provided for in the contract, any premium payment expressed as a percentage of the hourly rate would be applicable to that amount. The Complainant argues that his contract makes explicit provision for an amount to be paid. It is accepted by all of the parties that this amount was included in the employment contract in error. However, the Complainant argues that it is not within the jurisdiction of the Labour Court to vary the terms of the contract. In answer to the question from the Court as to what would happen if the error was to the disadvantage of the Complainant, the Complainant’s representative stated that the only legal remedy would be for a complainant to apply to the Circuit Court for rectification of the contract. The Respondent argues that the Court is not obliged under the Act to find that the only applicable rate within the meaning of the Act is that set out in the contract. The Respondent argues that the Court is granted the power to look at all factors referable to the employment; that the Complainant belonged to an identifiable group whose pay was determined through collective bargaining; that there was a rate applicable to that group; that the Complainant has enjoyed the benefits negotiated between the Respondent and the representative union for the group to which he belongs, so much so that if the argument made for the Complainant was accepted and he was not deemed to be covered by the terms negotiated for that group, he would have to refund an amount that is greater than that claimed by him; that his contract provides that he is bound by collective agreements and that the only exceptions to the application of the agreed hourly rates are in respect of colleagues employed before 2009, whose legacy rate of pay is ‘red-circled’ by agreement with the representative union. In response to a question from the Court, the Respondent’s representative accepted that the Court could not ignore the terms of a contract but argued that the Court was required by the terms of the Act to take account of more that just a mistake in the contract in determining what was properly payable. InSullivan v. Department of Education (1998) ELR217,the Employment Appeals Tribunal held that if an employee does not receive what is ‘properly payable’ to him, this can amount to a deduction within the meaning of the Act. TheMatchettcase, to which the Respondent referred the Court, is of no value because it was held in that case that the complainant’s contract made provision that permitted the deduction that was in dispute. There is no such explicit provision in the Complainant’s contract in the instant case. The Complainant cites the case ofBabinskas v. Irish Glass Ltd (2016) IEHC 598to argue that the Court is not entitled to disregard the terms of the contract. However, Hunt J. in that case indicated that the failure of the Labour Court was a failure to ‘provide a clear analysis of the legal basis upon which it considered that the amount liable to be paid was the amount actually paid, rather than the higher amount specified in the written contract between the parties. The Court believes that it is clear from this judgment that if there is a clear legal basis for determining it to be the case, it is not bound to view the application of the Act solely in accordance with the written contract alone and the issue for the Court is whether or not there is legal authority for looking beyond the strict terms of the contract, given the facts of this case. The Court has regard to the terms of s.1 of the Act in its definition of ‘wages’, set out above. It seems to the Court that if the Oireachtas had intended that the terms of a contract were the only factors to be taken into account when determining what is ‘properly payable’ then this would have been reflected in the definition of wages set out in s.1. However, that definition covers all factors referable to the employment and takes account of the contract ‘or otherwise’. If the contract alone was to determine what was properly payable under the Act then, clearly, the moment that any variation was applied subsequently to pay, questions would arise as to whether the terms of the Act could be considered to apply? When this was put to the Complainant’s representative, he argued that on each occasion when pay was varied subsequently by agreement, a new contractual obligation was established within the meaning of the Act. Since the Complainant commenced his employment, there has been a number of agreements with the representative union, each of which involved improvements in the collectively agreed rates and each of which was applied to the Complainant. The basic hourly rate paid to workers in the category to which the Complainant belongs had increased on a number of occasions between his commencement and the lodgement of his complaint. It is to be presumed that it is not being argued for the Complainant that these changes gave rise to new contractual arrangements between the Complainant and the Respondent as the rates were still below the amount provided for in the contract, (they were €10.29 up to 1 May 2017 and €10.50 thereafter). By operation of the same logic, once the rates applicable to the category concerned increased above that provided for in the Complainant’s contract, the Complainant’s representative would appear to be accepting that the Complainant would have no right to have such increases applied to him and that, unless the Respondent agreed otherwise, the Complainant’s pay could be frozen at the rate set out in his contract, even when his colleagues doing like work in the same employment would be benefiting from increases negotiated on their behalf by their trade union . It is not necessary for the Court to deliberate on the potential consequences for future relations in the employment of such a narrow approach to the application of the Act as it is clear to the Court that what is ‘properly payable’ has to be determined by the totality of circumstances referable to the employment. In this regard, a collective agreement in 2009 provided for a rate of pay to apply to all members of the category of worker in the employment to which the Complainant belonged. The agreement provided for an exception only in respect of some employees in employment prior to the agreement. Of course, collective agreements are not, themselves, binding legal contracts. However, it is of significance that the Complainant’s contract, itself, provides that he is bound by collective agreements applicable to him. It might be argued that this provision alone could be held to counterbalance the mistake that was included in his contract. The Complainant’s representative argued, correctly, that the Labour Court does not have the power to correct a contract and that to do so would require a referral to the Circuit Court. However, the issue for this Court is not about making corrections to a contract but, rather, it is about determining what is properly payable under the Act. In principle, it seems to the Court that if a worker was being paid less than an agreed rate of pay applicable to the category of worker to which he belongs and a case was to be made under the Act, the employer would need to show objective grounds to establish that the rate agreed was not applicable to the worker concerned and that to do so an employer would likely have to go beyond any argument that parties were bound by a mistake in a contract. Obviously, if individuals negotiate rates of pay for themselves with their employer, there is every possibility of variations in rates of pay between those individuals. If, however, as in this case, there is an agreed, collective rate of pay that applies to a category then it is clear to all parties that the employer intends to pay that rate of pay to that category of worker and it is reasonable for a worker to expect to be paid the agreed rate, ( it is not necessary for the purposes of the instant case to give consideration to circumstances in which one or other party renounces the terms of a collective agreement). While account has to be taken of all circumstances in every separate case, and the Court is hesitant to over project a hypothesis, it seems to the Court that an employer, in the hypothetical circumstances described, would struggle, unless they could offer other, good objective reasons, to establish an entitlement under the Act to pay an individual less than the rate agreed in a collective agreement where that agreement was accepted by both parties to the agreement to remain applicable. Equally, and for the same reason, it seems to the Court that employers are protected by the Act against being compelled by the terms of the Act to pay an individual more than all of his colleagues in the same category in the same employment unless there are clear, objective grounds to cause the Court to direct otherwise. In the view of the Court, this requires more than an attempt to rely on what is accepted by both parties to be a clerical or administrative error. It is an intriguing aspect of this case that if the Court was to find that the Complainant could depend on a contractual mistake, the financial consequences for him could be negative. I f it is the case that in law, by virtue of a clerical or administrative error, the Complainant has an entitlement to a unique rate of pay then the Respondent argues that agreed arrangements that apply to him because he is on the modern rate of pay, whereby he is eligible for performance related payments, (which when combined with the modern rate, plus 20% premium, bring his current pay to €17.17 per hour), would not be applicable to him. In the cognisable period covered by this claim, the money earned by him due to these arrangements being applied to him exceed the amount sought in the claim before the Court, (the AO awarded a sum of €1712.42, while the Respondent states that, in those circumstances, there would have been an over-payment of €1829.50). The Respondent argues that if the Court was to find for the Complainant, they would, as a result, be entitled to recoup the performance related payments as, in those circumstances, by definition, he would not have been entitled to these payments. However, again, this is hypothetical, and the Court offers no view on the hypothesis. It is a matter for a Complainant to weigh up the risks in taking a case. It is not a matter for the Court. Ultimately, the Court is guided, as it must be, by the terms of the Act and the definition of ‘wages’, in particular, as set out in s.1. It is clear to the Court that this section requires that in determining what is properly payable, the Court is obliged to look at matters referable to the employment and not, merely, a mistake in the relevant contract. The definition itself, states that wages are determined by the contract ‘or otherwise’. In circumstances where there is no argument about the fact that the contract contains a mistake, if, as the section makes clear, the Court is bound to have regard to factors other than the contract then that is what the Court must do. In this regard, the Court cannot ignore that there was an agreed rate of pay that was intended to be applied to the Complainant and that applied to all of his colleagues in that category of worker, with the agreed exception of colleagues who were employed before that rate was agreed. While acknowledging that the relevant collective agreements are not contracts, the Court is mindful that the Complainant’s contract accepts that he is bound by such agreements. Indeed, he has enjoyed the benefits of them such that his actual hourly rate, when all premium payments are included, exceeds the amount provided for in his contract. In referring the matter back to this Court, the High Court recognised the right of the Court to determine the case having regard to the provisions of the Act. In doing so, the Court determines that, for the reasons outlined, the Complainant has not established that the Respondent breached the terms of the Act and, as a consequence, the Respondent’s appeal is upheld. Determination. The decision of the Adjudication Officer is over-turned.
NOTE Enquiries concerning this Determination should be addressed to Therese Hickey, Court Secretary. |