Complainant

Respondent

Parties

Cristian  Gheorghiu

 Sienna Star Ltd  T/A The Address  City West Hotel.

Representatives

  Self-represented

 Terence J O'Sullivan Solicitors

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00039553-001

02/09/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00039553-002

02/09/2020

The complainant has submitted a complaint under the Payment of Wages Act, 1991, stating that the respondent made unlawful deductions from his wages in June 2020 and from July to September 2020.

He has been employed as a reservation’s manager with the respondent hotel since 10/5/2015.

The complainant earns €730 a week, gross and receives a net weekly salary of €588. He works a 39-hour week.

 He submitted his complaint to the WRC on 2 September 2020.

CA-00039553-001. Complaint under section 6 of the Payment of Wages Act, 1991.

 The complainant gave evidence.

The complainant gave differing sums on the amount of the deduction, but ultimately agreed that the sum of €117 was the correct amount. The complainant contends that the respondent is in breach of the Act of 1991 by deducting the sum of €117 from his weekly wages for the period 23/07/2020 up to 18 August 2021.

The arrival of Covid -19 in March 2020 meant that the hotel in which he works as the reservation’s manger closed on 20 March 2020. From the 20 March to the 12 July 2020 the complainant received his net pay of €588, made up of the €350 Temporary Wage Subsidy Scheme amount, with the remaining €238 per week coming from the employer. The Temporary Wage Subsidy Scheme was a government sponsored scheme to enable businesses to pay employees and keep their companies afloat in circumstances where the effects of Covid-19 had collapsed revenue.

By way of a letter dated 9 July, the respondent notified the complainant that they would have to reduce the top-up down to €120 per week, effective from 13 July, with no end date for these reduced wages, which when added to the TWSS subsidy of €350 would leave him €117 per week below his net wage of €588. Though asked to give his consent in writing, he declined to do so as the respondent failed to consider any other options for the complainant, such as working from home, or reduced hours or redundancy. The respondent failed to factor in the complainant’s additional receptionist work - duties normally undertaken by the hotel receptionist. The respondent was thus spared that weekly wage cost of €119 for the receptionist.

The complainant pointed to the company’s €16 million investment in a rebranding and development project for their three hotels as evidence of their profitability.

In cross – examination the complainant accepted that there were exceptional circumstances with the hotel sustaining losses, but he felt his service and opting to do additional duties should have dissuaded the respondent from making the deduction.

 CA-00039553-002. Complaint under section 6 of the Payment of Wages Act, 1991.

 The respondent wrongfully deducted the sum of €467 over a period of 12 weeks, commencing on the 2 April 2020 and running up until the 18 June. The complainant submitted salary slips showing tax refunds reaching the cumulative sum of €467 on the 18 June.

 Starting on the 2nd of April, the employer took up the wage subsidy scheme and paid the complainant his pre-pandemic net wages of €588 on a weekly basis. However, part of the €588 was made up of tax refunds that should have been paid to the employee on top of the usual amount of wages (€588). The Revenue guidelines, Irish Tax and Customs, Frequently Asked Questions on: Operation of the Transitional Phase of the Covid -19: Temporary Wage Subsidy Scheme states

“This refund of income tax is paid to the employee, in addition to the subsidy payment and any additional payment, and should not be included in the employer’s calculation of the allowable additional payment”

 The total amount of tax returned to the employee starting the 2nd of April on a weekly basis until the 18th of June is €467.18 euro. The complainant raised the concerns with the Financial Controller of the company and the General Manger of the Hotel and the underpayment was confirmed in writing by the Financial Controller. But they chose not to make a refund of €467 to him.

CA-00039553-001. Complaint under section 6 of the Payment of Wages Act, 1991.

 The respondent’s solicitor stated that the reduction in salary from July was €117 a week. It was due to exceptional circumstances.

The respondent’s solicitor stated there was no written notification to the complainant of the amount that the respondent would pay as a top up to add to the TWSS sum of €350.

The respondent states that the emergence of Covid-19 resulted in a massive reduction of revenue from €3m in 2019, to €1m for the 2020 year.

Thirty-one other employees were asked to take the cut and did so. The pay cuts were applied across the board in the respondent’s three hotels and were intended for the purpose of keeping the hotel afloat.

 Evidence of HR manager.

 The witness stated that she was HR manager for the respondent’s three hotels.

Staff went back to work on 31 July until 27 September when a further lockdown occurred

Seventy to seventy five percent of revenue was lost on room sales and an equivalent loss occurred in food and beverages.  They considered all options put to them by the complainant, but they were not feasible. The witness disputes the complainant’s claim that he was doing the receptionist role as there was a cross over in many of the duties of the two roles. Many of the functions of the receptionist’s role fall within the role of reservations manager and business was much reduced with fewer demands on employees.

CA-00039553-002. Complaint under section 6 of the Payment of Wages Act, 1991.

 The respondent stated that the salary slips do not classify the amounts claimed by the complainant as tax deductions.

Revenue kept changing the rules as did the TWSS scheme.

The HR manager in evidence accepted that the cumulative sum of €467 deducted over a twelve-week period from the 2 April to 18 June 2020 was a tax rebate.

CA-00039553-001. Complaint under section 6 of the Payment of Wages Act, 1991.

 The question for determination is whether the respondent’s unilateral deduction of € 117

 per week for the period 23 July to August 2021 contravened section 5(1) of the Act of 1991.

The cognisable period for the reckoning of the deduction is the 27 July to 2 September which is the date on which the complainant submitted his complaint to the WRC.

Relevant Law:

 (c) in the case of a deduction The Act at Section 5 provides as follows:

“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

, the employee has given his prior consent in writing to it”.

 Section   5 (6) of the Act of 1991 goes on to identify a deduction as follows:

“(b)None of the wages that are properly payable to an employee by an employer on any occasion (after making 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”.

 Properly payable wages.

The complainant gave conflicting figures but did accept in cross examination that the amount of the wrongful deduction is €117 per week.

In order to succeed in a complaint under this Act, the complainant must demonstrate that the full salary of € 558 a week is ‘properly payable ‘to him. Thereafter, he must prove that the failure to pay this amount leading to a deduction of €117 per week over the period 27 July to 2 September was a cumulative, unauthorised  deduction of €1286 contrary to section 5 (1) of the Act of 1991.

 To demonstrate that the amount of €1286 was properly payable, the complainant must, as a preliminary point, identify a contractual entitlement or an entitlement on some other basis as per section 5 (6) of the Act.

I accept that the complainant had a contractual entitlement to an annual salary of €38,000 which yielded a weekly, net salary of €588. Hence as he had a contractual entitlement to this sum, I find the sum of €117 to be properly payable for the period 23 July to 2 September 2020.

 The deduction

I find that the complainant did not receive the amount of wages to which he was contractually entitled. I find that the complainant though notified in writing of the intended deduction and asked to give his consent to the deduction, declined to do. I find that the deduction did not conform to the requirement set out in section 5(1)(c) of the Act.  I find that the deduction was an unlawful deduction. I find the complaint to be well founded.

Section 6 (2) of the Act    sets out the next steps to be taken where a complaint is deemed to be well founded.

“Where a rights commissioner decides, as respects a complaint under this section in relation to a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is well-founded in regard to the whole or a part of the deduction or payment, the commissioner shall order the employer to pay to the employee compensation of such amount (if any) as he thinks reasonable in the circumstances

I have considered the evidence advanced by the complainant. The complaint points to the planned €16 investment in rebranding and redeveloping the respondent’s three hotels, but that plan, announced in August 2020, was in gestation before the arrival of Covid -2019 in March, 2020, and the extraordinarily long duration of the pandemic was inconceivable at that stage. The evidence does not support his assertion that he was doing two jobs given the downturn in business and fewer customer demands.

I have considered a number of decisions taken under the Payment of Wages Act, 1991 concerning Covid 19 – driven salary cuts where the complaints were upheld.

In A project Manager / Translator v An Interpretation and Translation Group, ADJ 38367, the adjudicator stated

“The evidence presented to me was that while the Respondent expected a downturn in income, the ultimate outcome was not as bad as expected. Revenue for 2020 was down 12% on 2019.  The Respondent for a period implemented the Temporary Wage Subsidies Scheme (TWSS). However, it did not meet the eligibility criteria and repaid the amount it received to the Irish Exchequer.”

So also in A Project Co-ordinator v A Translator/Interpretation Service, ADJ 28317, the adjudicator found

“they were subsequently found not to have met the eligibility criteria for the (TWSS) scheme, which was a 25% reduction in turnover. Also, when the complainant proposed that the temporary reduction in salary should be matched by a corresponding reduction in working hours, she was informed that this could not be facilitated as the respondent required full employee capacity for busy days.”

Furthermore, the pay cut in this case was imposed from April 2020 when it was too soon to know the effects or to quantify the potential impact on the business in the Complainant’s work location.

In Ian Martyniak v XS Direct Insurance Brokers Limited, ADJ 3210, the adjudicator noted that the company no longer qualified for the TWSS schemes, their reduction in turnover being less than 25%.

These three decisions which found in favour of the complainant are distinguishable from the instant case, and it is the evidence specific to this complaint that must guide me.

It is accepted that hotels were the hardest hit and more especially so in Dublin. The evidence that their turnover was down 70-75% was uncontested and is credible. These other decisions concern industries who on the evidence hadn’t suffered an equivalent downturn in income, whose work was continuing, or who acted prematurely. I accept the evidence that the company revenues fell drastically. I accept that the respondent made the pay cuts so that the hotel could survive the consequences of the pandemic and retain its employees on the payroll.

 In Ian Martyniak, the respondent cited the Employment Appeals Tribunal case of O’Byrne and Others v South West Doctors on Call Limited, where the HSE had cut the funding to the service. The Tribunal found that the reduction in wages was lawful and that the employees had consented. The Tribunal also found that, given the drop-in funding of the employer’s business by the Health Services Executive, the reduction in wages was proper and reasonable and no compensation was awarded. The decision of the Rights Commissioner in Tony O’Neill v James McMahon Limited concluded that the employer was in breach of the Payment of Wages Act, 1991, but that the financial circumstances of the company were such that the reduction in wages was justified.

In the case of a Community Development Worker and a Community Development Organisation, the wages of the employees on FÁS-supported programmes were unilaterally reduced.  The Employment Appeals Tribunal found that there was no contravention of the Act of 1991.

While I find the complaint to be well founded, I make no award as provided for in the phrase “ if any” ,  which relates to the amount of compensation payable, and  set out in section 6(2) of the Act of 1991. I make this decision based on the evidence and the authorities and I conclude that the deduction was not unfair, unreasonable or disproportionate given the circumstances confronting the respondent.

 CA-00039553-002

 I find that the complainant did not receive the amount of wages to which he was contractually entitled. I find that the respondent did make an unlawful, aggregate deduction of €467 over the period 2 April to 18 June 2020 in that the respondent erroneously used three components, the subsidy, the top -up and the tax rebate to build up his weekly salary to the sum of €588.

 I find this complaint to be well founded.

 In accordance with section 6(2) of the Act of 1991, I decide that the respondent should pay the complainant the sum of € 467 subject to all lawful deductions.

CA-00039553-001. Complaint under section 6 of the Payment of Wages Act, 1991.

 I find this complainant to be well founded. I make no award of compensation.

 CA-00039553-002. Complaint under section 6 of the Payment of Wages Act, 1991.

 I find this complaint to be well founded and I require the respondent to pay the sum of €467 to the complainant subject to all lawful deductions.

Covid – driven salary deductions; complaint under the Payment of Wages, Act; nil award