Complainant

Respondent

Parties

Zack Brennan

ASC Airport Services Consolidated Limited

Representatives

Seán Heading, Connect

Mairéad McKenna, BL

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-00043504-001

10/04/2021

The complainant is an airfield electrician and he has been employed by the respondent since July 2017.  In October 2020, arising from the failure of the Connect union to accept proposals on new ways of working, the respondent reduced his working week to three days a week and his pay to 60% of the normal rate.  The union argues that the reduction in wages is a breach of section 12 of the Airport Act 2014, a breach of the complainant’s contract of employment and a breach of section 5(1) of the Payment of Wages Act 1991.  The respondent’s position is that the reduction in working hours was a proportionate and reasonable response to the impact of Covid-19 on the company’s revenue and that the complainant was paid the wages which were properly payable at the time.

Before examining each side’s position in more detail, I wish to set out a brief chronology of the events that led to the reduction in hours and pay in October 2020.

Discussions commenced in June 2018 between the company and the Connect and Unite unions on a target operating model for craft workers in the DAA group.  In February 2020, when the discussions concluded without agreement, the unions referred the issues in dispute to the conciliation service of the WRC.  The Covid-19 pandemic intervened in March 2020.  Travel restrictions at the onset of the pandemic meant that there was very little activity at Irish airports, resulting in a drastic reduction in revenue.  On April 26th 2020, all employees, apart from airfield electricians, airport police and airport duty managers were moved to a four day week and pay was reduced to 80%.  As an airfield electrician, the complainant remained on 100% of his hours and pay.   

In June 2020, proposals on New Ways of Working, “NWOW” were finalised between the DAA group of companies and the unions representing employees across the group.  At the beginning of the pandemic, it was agreed that there would be no compulsory redundancies or permanent changes to core terms and conditions.  NWOW provided options such as career breaks, reduced hours and a voluntary severance scheme.  New ways of working were proposed for employees who decided to remain with the company.  The changes were summarised under five headings: follow the work, roster changes, teamworking, sanitization and the embracing of technology and associated processes.

On September 11th, at a “town hall” meeting hosted by the then chief executive officer, Mr Dalton Phillips, employees were informed that, if the NWOW proposals were rejected, hours and pay would be reduced.  On September 16th, airfield electricians were sent a proposed 60% roster, which, the airfield manager stated was intended “…to meet the needs of the business and our staff during this challenging time for all.”

The following day, a Connect representative, Mr Wayne Rooney, wrote to the airfield manager challenging the construction of the draft 60% roster and the proposal to cut hours and pay.  However, from the correspondence of September 17th which was submitted at the hearing, it is apparent that Mr Rooney gave some consideration to the proposed three-day week, on condition that employees could seek alternative work or avail of social welfare benefit.  In part of an email to the head of asset care, Mr Ian Devine on September 17th, Mr Rooney wrote,

“As previously stated, due to Social Welfare entitlements and the obligatory requirement for staff to seek work, can you please sit down with your team and system managers to come up with a workable 3 day shift that adheres to the current agreements between the company and trade group.  If staff have to work a 3 day week, so be it, but we shall not be denied our right to seek work or claim social assistance.”

On September 26th 2020, Mr Heading wrote to Mr Brendan O’Hanlon, head of employee relations at DAA, confirming that the NWOW proposals would be recommended for acceptance, “as the best alternative to no agreement.”

Balloting on the NWOW proposals started on Tuesday, October 6th 2020 and the outcome was due to be confirmed on Friday, October 9th.  On October 6th, Mr Devine wrote to the complainant and his colleagues, telling them that, if the NWOW proposals were rejected, the first step to manage the financial challenges facing the company would be that, with effect from Sunday, October 11th, hours and pay would be reduced to 60%.  Of around 2,000 employees who participated in the ballot, 93% voted to accept the NWOW proposals.  The ballot of Asset Management Delivery Trade teams in Dublin, which includes the complainant, was not in favour of the proposals.  On October 9th, he was informed that, commencing on October 11th, his hours would be reduced to 60%.

For the remainder of 2020 and into 2021, the majority of employees remained subject to 80% working hours and pay.  A Frequently Asked Questions document issued in January 2021 contained the following question and answer:

“What needs to happen for my working hours to be returned to 100%?

In areas where new ways of working and structures are agreed and fully implemented, then, from March 28, employees will move back to 100% pay and hours.

In areas where new ways of working are not agreed, employees will remain on 60% pay, until NWOW have been agreed and implemented.

This is to avoid the introduction of changes to employee’s core terms and conditions and the need for compulsory redundancies.”

On January 25th 2021, the complainant wrote to the HR department and clearly set out his position on the reduction in his hours and pay.  He said that he did not agree “to this unnecessary reduction in my weekly hours…”

Connect referred the 60% reduction in hours and pay to the conciliation service of the WRC.  With no resolution emerging after three meetings in late 2020, a hearing took place at the Labour Court on March 19th 2021.  The Court recommended that,

“…the Employer puts in train the process to restore the Worker’s pay and hours.  That, over a four-week period commencing no later than Monday, 29th March 2021, the parties, with the assistance of a representative from the Irish congress of Trade unions, have intensive discussions with a view to reaching a solution to the issues…”

Mr Liam Berney of the Irish Congress of Trade Unions was appointed by the Court to liaise with the company and the union and to provide a report on how the dispute would be resolved.  Two further Court hearings took place in April and May 2021 and a recommendation was issued on May 18th.[1]  The Court recommended that,

“The Unions should accept the New Ways of Working and in particular the employer’s proposals in respect of rosters, to include the carparks team, team working and following the work across the campus to include technicians working as technicians in Terminal 1 and the proposals in respect of the MIS system.  The Parties should establish a joint Union / Employer small group to oversee the rollout of these changes and to oversee any local tweaking of the rosters.  The Court recommends that co-operation with new technology and the assurances sought be as set out above in this recommendation.

In return for the Union’s co-operation with these changes which the Court believes are significant both in terms of the benefits they will provide to the smooth operation of the DAA and the impact they will have on this cohort of workers, the Court recommends that on acceptance of this recommendation by their Union, the workers be restored to 100% hours and pay with immediate effect and the voluntary severance scheme in line with management’s proposal be made available to them.”

Connect members did not vote on this recommendation.  The outcome from the ballot of Unite members was split and therefore, the result was inconclusive.  In August 2021, the parties re-engaged on the NWOW proposals and came to an agreement.  The hours and pay of Connect and Unite members were restored to 100%.

The Unions’ Submission

In his submission, Mr Heading recalled that, like all travel-related organisations, DAA was significantly affected by the Covid-19 pandemic.  Cost-reduction measures were introduced which impacted on employees across the company, including a blanket reduction to 80% of hours and pay.  Due to the nature of their work, the hours and pay of airfield electricians was not reduced – until the outcome of the ballot on NWOW produced a “no” vote on October 9th 2020.

As part of the cost-reduction strategy, unions representing the different categories of workers engaged with the company to seek agreement on five work-related pillars which would form part of the NWOW agreement.  These have been referred to in the previous section as, follow the work, roster changes, teamworking, sanitization and the embracing of technology and associated processes.  Agreement was concluded on September 25th 2020.  A copy of the final proposal was included in the union’s book of documents at the hearing.  When the proposals were rejected by Connect and Unite in October 2020, the parties engaged in conciliation and, when matters were not resolved, they attended hearings at the Labour Court in the spring of 2021.  The Labour Court issued a recommendation on May 18th 2021.  This was also referred to in the previous section. 

The unions’ position is that the 60% reduction in hours and pay was implemented before the agreed dispute resolution procedures were exhausted in breach of the Airport Act 2014 and the complainant’s contract of employment.  Mr Heading suggested that the reduction was a tactic to force union members to accept the NWOW proposals and was also a breach of section 5(1) of the Payment of Wages Act 1991 and an unlawful deduction from the complainant’s wages.  In his submission, Mr Heading noted that the complainant lost €18,095 in earnings because of the cut in hours and pay.

Discussion at the Hearing

Mr Quigley argued that there is nothing in the complainants’ contracts of employment that gives the employer a right to reduce hours and wages.  During the period of the reduction, there was work that could have been done by Connect and Unite members and the company was paying contractors to do work that they could have done.  He claimed that there were 3,300 open corrective jobs on the airfield maintenance system.  Mr Quigley said that there was no need for the respondent to introduce the hours and wages reductions.

Claiming that the company acted outside normal industrial relations procedures, Mr Quigley said that when people voted against the proposals, they thought there was the option of referring the issues on to the WRC and the Labour Court.

Mr Heading referred to email correspondence between him and the employee relations manager, Mr O’Hanlon on September 8th 2020 in which Mr Heading said that both unions were available for immediate local discussions to resolve the issues preventing the NWOW proposals from being recommended for acceptance.  Mr Heading said that this indicates that they were 80% of the way towards getting agreement on the outstanding issues.  He said that the company imposed the 60% regime on the unions’ members because they rejected the proposals.  The unions were prepared to continue to engage and the employer’s action has had a very souring effect.

Mr Heading said that the respondent unilaterally decided to reduce hours and pay to 60% in circumstances when work was continuing at the airport terminal.  He said that the union referred the dispute about the NWOW to the WRC on October 9th 2020, the day that the ballot result emerged.  He said that the company stepped outside normal industrial relations procedures when it imposed the cut in hours and pay.  He argued that the cut was imposed not because of the impact of Covid-19 on the business, but because the unions rejected the NWOW proposals. 

Mr Alan Deighan, who is a member of Connect, said that he and his colleagues were required to be at work on a full-time basis until they rejected the NWOW proposals on October 9th 2020.  Then it appears that they were no longer essential.  He said that airfield police and the fire service remained at work 100% of the time as they were essential services.    

Mr Heading referred to the recommendation of the Labour Court on April 27th 2022 concerning the employer’s decision in 2020 not to pay increments or pay progression payments[2].  He claimed that this was another example of the company’s failure to follow procedures for dealing with disputes.   

Submission of the Respondent

The respondent’s submission provided a chronology of the progress of discussions on NWOW up to the ballot of Connect and Unite members on October 9th 2020.  This chronology is summarised in the “Background” section above.  At the hearing, Ms McKenna said that there was active and ongoing communication with union members up to the ballot taking place and employees were clearly informed that if the proposals were rejected, cost-savings would have to be achieved by cutting hours of work and pay to 60%.  It was submitted that the complainant was always aware of the ongoing negotiations and of the consequence of a rejection of the NWOW proposals.

Ms McKenna said that the reduction in working time was because of the impact of Covid-19 on the company’s revenues, with passenger numbers down by 78% at Dublin and Cork Airports, with a resulting decline in turnover from €935m in 2019 to €291m in 2020.

It is the company’s position that there was no unlawful deduction of wages that contravened the provisions of the Payment of Wages Act.  The complainant’s pay was not reduced, but he was assigned to reduced working hours.  Ms McKenna submitted that, at all times, the complainant was paid the wages that were properly payable to him.

Ms McKenna referred to clause 11 of the complainant’s contract of employment, under the heading, “Right to Lay-off / Short-time,” which provides that he may be laid off or his hours may be reduced “if…this is necessary for any reason.” 

The company argued that the Covid-19 pandemic and government restrictions led to instances where passenger numbers were reduced to such an extent that a full team was not required to work.  The reduction in working hours was therefore justified and provided for in the complainant’s contract of employment.  The company’s position is that the reduction in working hours was a proportionate and reasonable response to the Covid-19 pandemic on revenue and available work. 

Ms McKenna cited several precedents as authority for the company’s position that the reduction in hours and pay was not a breach of the Payment of Wages Act.  I have considered these precedents and I will refer to them in the next section where I consider them to be useful.

Discussion at the Hearing

Up to August 2020, Mr O’Hanlon said that there was swift engagement with the unions and that it was agreed that dispute resolution procedures would be set aside to reach a speedy conclusion on the NWOW.  A weekly call was held every week with the unions and the chief executive officer and the chief financial officer.  From the outset, the company met the unions collectively to agree how to deal with the crisis.  Early on, it was agreed that there would be no compulsory redundancies or permanent changes to terms and conditions of employment.  Mr O’Hanlon said that, in certain respects, this “hamstrung” the company with regard to options for dealing with issues. 

If the NWOW proposals were accepted, efficient ways of working would be introduced and a voluntary severance package had been agreed for those who wanted to leave the company.  The proposals were accepted by all the union groups, apart from 130 members of Connect and Unite.  Mr O’Hanlon said that the management was clear all along that, if the proposals were rejected, then less palatable measures would have to be taken.  He said that the decision to reduce hours and pay to 60% was not a unilateral decision.  Members of the two unions were informed early on of what the outcome of a “no” vote would be.  He said that there were no surprises in this respect.

Mr O’Hanlon said that four different sets of proposals were presented to Unite and Connect.  When the NWOW proposals were rejected at the ballot, two further workshops were held and then other issues were raised.  Three visits to the Labour Court produced no outcome when Connect members didn’t put the recommendation to a ballot and the outcome from the Unite ballot was a split vote.  He said that, at that point, the executive of DAA believed that relations with the two unions had broken down. 

Mr O’Hanlon disagreed with the union’s argument that the jobs of airfield electricians were essential.  He said that the company made a judgement call and decided that asset management jobs were not essential during the period of the pandemic. 

Responding to the union’s argument about the use of contractors, Mr O’Hanlon said that contractors did not do the work of unionised employees.  He said that, in truth, with no passengers or staff at the airports, there was work for around 10% of employees.  Responding to Mr Deighan’s argument that the 60% working arrangement put people at risk, Mr O’Hanlon said that there were no accidents and no health and safety issues when the asset management team were on reduced hours.

Negotiations on New Ways of Working

This complaint about loss of earnings due to reduced hours of work occurred in the course of an industrial relations process to introduce changes across the DAA group of companies.  In October 2020, members of Unite and Connect unions voted to reject the NWOW proposals.  While I acknowledge and understand the industrial relations challenges faced by both sides when the 60% working week was introduced, this is a complaint under the Payment of Wages Act and my job therefore is to consider the lawfulness or otherwise of the employer’s action.

The Relevant Law

Section 11 of the Redundancy Payments Act 1967 (as amended) defines “short-time” as a week when an employee is paid less than one half of their normal weekly pay, or when their hours of work are less than one half of their normal weekly hours.  When the complainant’s hours and pay were cut to 60%, he was not on “short-time” as defined by the Redundancy Payments Act.  This may have had implications for an employee who applied for job-seeker’s allowance, but the complainant did not raise this as an issue.  Employees on a three-day week were not prevented from working elsewhere, or from working for themselves.

Section 1 of the Payment of Wages Act 1991 (“the Act”) provides a definition of “wages:”

[W]ages 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 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 remainder of this section deals with the issue of expenses which are not wages and is not relevant to the complainant’s case.  The definition of wages is broad and encompasses “any sum payable” to an employee related to their job, whether that payment is governed by a contract or otherwise.

Section 5(1) of the Act provides that an employer may not make a deduction from an employee’s wages, except in certain circumstances:

(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.

Sub-sections (2) to (5) of section 5 are not relevant to this complaint.  Sub-section (6) provides that, to ground a claim under the Act, wages must be properly payable:

(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.

The respondent relies on the decisions of the High Court and the Labour Court in the case of Marek Balans v Tesco Ireland Limited[3].  I understand that the critical element of the decision of Mr Justice MacGrath provides a direction to me, as the adjudicator to determine in the first instance, the wages that were properly payable to the complainant when he was on a three-day week between October 2020 and August 2021.  The first issue to be decided is, when the complainant was working 60% of his normal hours, was 100% of his wages properly payable? 

Wages Properly Payable

In her submission, Ms McKenna referred to the decision of the former Employment Appeals Tribunal (EAT) in Sullivan v the Department of Education.[4]  Ms Sullivan did not suffer a reduction in hours, and her complaint was about her entitlement to an allowance.  However, the Tribunal’s reference to a deduction in wages is useful:

“…the Tribunal considers that if an employee does not receive what is properly payable to him or her from the outset then this can amount to a deduction within the meaning of the 1991 Act.  We take ‘payable’ to mean properly payable.”

The Act does not define the concept of “properly payable” andI must reach a conclusion on this by reference to objective criteria and with due deference to previous findings of the Labour Court or other authorities.  In the complainant’s case, his wages were reduced because his hours of work were reduced.  I must consider therefore, if his employer has a right to reduce his hours of work.  The complainant’s contract of employment was included in the respondent’s book of papers and contains the following at clause 11:

“Right to Lay-off / Short-time:

The Company reserves the right to lay-off employees without pay or to reduce your normal hours of work if, in the view of the Company this is necessary for any reason which might include, but is not limited to, instances where passenger numbers reduce to such an extent that a full team is not needed for duty or the occurrence of an event which forces the closure of the airport for an extended period of time including but not limited to an act of terrorism, an incident of nature or a fire in the terminal building or buildings.

The Company will consider all alternative options for employees including training, area maintenance or allowing employees to take annual leave. You will be given not less than 24 hours' notice of any such lay off or reduction of your normal working hours.”

It is apparent that the complainant’s contract provides for a reduction in his hours for any reason that the company thinks is necessary, and specifically, when passenger numbers are reduced.  While the condition “without pay” is not inserted after the clause “or to reduce your normal hours of work,” the inclusion of “without pay” in the previous clause related to lay-off implies that the reduction in hours is also without pay.

Mr Heading asked me to consider the decision of the Labour Court in the case of Kostal Ireland GMBH and Mr Gabriel Delee[5].  Mr Delee’s working time was reduced to three days a week and he complained of an illegal deduction in his wages.  His contract contained no provision for reducing his hours of work and the Court was not satisfied, based on Stefan Chmiel and others v Precast Concrete Limited[6]that the practice of reducing his working time was “reasonable, certain and notorious.” 

In its decision on Mr Delee’s complaint, the Court relied on a 1984 decision of the High Court in Industrial Yarns v Leo Greene[7].  Mr Greene was seeking payment of wages for a period when he was on lay-off.  Mr Justice Costello held that,

“If there is no contractual power (expressed or implied) in the Contract of Employment to suspend the operation of the contract for a limited period, then by ceasing to employ an employee or refusing to pay him wages, the employer is guilty of a serious breach amounting to repudiation of it.”

If it is the case that, the absence from a contract of employment of a provision to reduce working hours means that, if an employee’s hours are reduced, the employer has repudiated the contract, then the inverse must also be true.  It must follow that, if there is a provision in a contract to reduce working hours, then, if the employee’s hours are reduced, this does not amount to a breach of contract. 

I have examined the complainant’s contract and I am satisfied that it contains a provision to reduce his normal hours of work and that this provision is clear and unambiguous, particularly in relation to the reduction in passenger numbers.  Based on this contractual provision, I am satisfied that the respondent was entitled to reduce the complainant’s working hours and that, when his hours were reduced, 100% of his wages was not properly payable. 

Conclusion

I am satisfied that the provision in the complainant’s contract to reduce his normal hours of work also provides that, when his hours are reduced, the wages properly payable are the wages for the hours worked.  I find therefore, that, between October 2020 and August 2021, when he was working for three days a week and paid for three days, there was no deduction from his wages.

I have concluded that the respondent did not make an illegal deduction from the complainant’s wages and that, on this basis, there has been no contravention of section 5 of the Payment of Wages Act 1991.  I decide therefore, that this complaint is not well-founded.

Reduced working hours, reduced wages, three-day week