DWT2215

SUBJECT:

1.Appeal of an Adjudication Officer Decision No(s) ADJ-00028656, CA-00035218-002

BACKGROUND:

2.The Employer appealed the Decisions of an Adjudication Officer to the Labour Court on the in accordance with Section 28(1) of the Organisation of Working Time Act, 1997. A Labour Court hearing took place on 9 December 2021. The following is the Decision of the Court.

DETERMINATION:

This is an appeal by Top Security Limited against a Decision of an Adjudication Officer ADJ-00028656 CA-00035218-001 in a complaint made by Mr Brian Scully under the Organisation of Working Time Act 1997 (the Act), dated 31 July 2021.

This case is linked to another claim relating to the same employee 00028656 CA-00035218-002 – DWT2215.

The matter before the Court relates to the calculation of pay for annual leave. The Adjudication Officer found that Mr Scully’s complaint in relation to the calculation of his pay for annual leave was well founded. Top Security Limited lodged an appeal to the Labour Court on 08 October 2021. A hearing of the Labour Court was held on 9 December 2021.

For ease of reading, the parties are referred to in this Determination as they were at first instance. Hence, Mr Scully is referred to as the Complainant and Top Security Ltd is referred to as the Respondent.

Background

The Complainant commenced employment on the 13 December 2018 as a Mobile Supervisor. The Complainant works 12-hour shifts and is paid €13.20 per hour. He submitted a complaint in relation to the calculation of pay for annual leave to the Workplace Relations Commission on 12 March 2020. Section 41(6) of the Workplace Relations Act 2015 imposes time limits for the lodging of complaints under certain employment enactments, including the Act, as follows: -

“(6) Subject to subsection (8), an adjudication officer shall not entertain a complaint referred to him or her under this section if it has been presented to the Director General after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates.”

Therefore, the relevant period for consideration by the Court is the period from 13 September 2019 to 12 March 2020.

Summary of Complainant’s Submission

The Complainant submits that he did not receive the correct payment for annual leave taken in October and November 2019. He was incorrectly paid for a 40-hour working week instead of a 48-hour working week. The alleged contraventions are as follows:

He was paid 40 hours holiday pay for one week’s annual leave taken in October 2019. He should have received 48 hours pay and so suffered a shortfall of 8 hours pay (8 x €13.20).

He was paid 8 hours holiday pay for one day (or shift) of annual leave taken in November 2019. He should have received 12 hours pay, and so suffered a shortfall of 4 hours pay (4 x €13.20).

The Complainant’s contract of employment stipulates that he is paid a flat rate of pay of €13.20 per hour for all hours worked. The contract is silent on hours of work, shift pattern or method of calculation for holiday pay. The contract contains no reference to overtime and his employer does not pay overtime rates, a night-time premium or Sunday premium.

The Complainant is not seeking that overtime is included in the calculation of his annual leave payment, as he does not work overtime. He submits that his normal working week is 48 hours per week and that he is entitled to be paid hisnormal weekly rateof pay when taking annual leave. The Complainant submitted that he was not aware of any hours classed as overtime and no overtime is classified on his payslips. It is an implied term of his contract of employment that he works four 12-hour shifts per week (48 hours). Sometimes he is rostered to work five 12-hour shifts per week (60 hours). He is always paid at a flat rate.

The Complainant submits that his annual leave payment should be calculated at 48 hours x 4 weeks = 192 hours, whereas the Respondent calculates his annual leave payment at 40 hours per week x 20 days per year = 160 hours. To pay employees less than their normal weekly rate of pay when on annual leave would discourage employees from taking annual leave. The Complainant submits that as the breach is a continuing breach, he should be compensated for this.

Summary of Respondent’s Submission

The Respondent’s position is that no breach of the Act occurred, and the Complainant received all entitlements as required by the Act. The Complainant’s working week is comprised of 40 hours per week and 8 hours of regular rostered overtime, worked over a 4-day period. That working pattern is standard in the security industry where regular rostered overtime is expected. The Complainant was aware of this when he signed his terms and conditions of employment.

The Respondent submits that the complainant has no entitlement under the Act to be paid for overtime. The relevant regulation S.I. 475 of 1997 clearly sets out that for the purposes of calculating payment for annual leave overtime of any description is excluded. The language used in the S.I. is sufficiently precise and unambiguous where it states: “the normal weekly rate of his or her pay, for the purposes of the relevant sections, shall be the sum that is equal to the average weekly pay (excluding overtime).”

The relevant regulation S.I. 475 of 1997 does not require an employer to include regular rostered overtime when determining “average weekly pay”. This contrasts with provisions under the current Employment Regulation Order (2017) for the Security industry which provides for the payment of regular rostered overtime when calculating holiday pay.

The Respondent submits that the Organisation of Working Time Regulations set out in S.I. 475 of 1997 cannot be used as a tool of enforcement for the ERO and that this position was endorsed by the Labour Court inMCM Security Limited v Power DWT95/2008when it stated that theOrganisation of Working Time Actis not the appropriate statutory provision for the interpretation or enforcement of an individual contractual terms or an ERO.

The Respondent confirmed that the Complainant is paid at a flat rate of €13.20 for all 48 hours worked and submits that the complainant agreed to this when he signed his terms and conditions of employment. Since the start of his employment in 2016, he has received annual leave of 4 weeks at 40 hours, in accordance with the Act. He has been aware of this payment when booking and taking his annual leave, which in no way has dissuaded him for availing of his annual leave entitlement.

In a further submission to the Court, the Respondent submits that it is well established tradition in the Security Industry that the working week is comprised of 40 hours per week and 8 hours of regular rostered overtime. It submits that the standard working week within the Security industry is best demonstrated through the progress of Employment Regulation Orders over the past 20 years.

The first ERO in 1998 established a standard 40-hour basic week within the industry, where overtime applied for hours worked in excess of an average 40 hours in a roster cycle and was paid at a rate of time and a quarter for the first five hours and time and half thereafter. In 2005, the standard basic week was reduced to 39-hours, with overtime rates applied for hours worked in excess of an average 39 hours. Since 2015, the ERO provides that overtime rates apply to hours worked in excess of an average 48 hours per week and is paid at a rate of time and a half.

The Respondent further submits that, in contrast to the Act, the Security industry ERO provides that regular rostered overtime is included for the purposes of calculating holiday pay. It submits that the intention of including the term ‘regular rostered’ within the ERO reflects the 48-hour standard working week within the Security Industry which includes regular rostered overtime.

The Respondent submits that the Organisation of Working Time Act is not the appropriate statutory provision for the interpretation or enforcement of an individual contractual terms or an ERO.

The Relevant Law

Section 20 of the Organisation of Working Time Act 1997 sets outs provision relating to time and pay for annual leave as follows:

20.— (1) The times at which annual leave is granted to an employee shall be determined by his or her employer having regard to work requirements and subject—

(a) to the employer taking into account—

(i) the need for the employee to reconcile work and any family responsibilities,

(ii) the opportunities for rest and recreation available to the employee,

(b) to the employer having consulted the employee or the trade union (if any) of which he or she is a member, not later than 1 month before the day on which the annual leave or, as the case may be, the portion thereof concerned is due to commence, and

(c) to the leave being granted —

(i) within the leave year to which it relates,

(ii) with the consent of the employee, within the period of 6 months after the end of that leave year, or

(iii) where the employee —

(I) is, due to illness, unable to take all or any part of his or her annual leave during that leave year or the period specified in subparagraph (ii), and

(II) has provided a certificate of a registered medical practitioner in respect of that illness to his or her employer,

within the period of 15 months after the end of that leave year.

(2) The pay in respect of an employee’s annual leave shall—

(a) be paid to the employee in advance of his or her taking the leave,

(b) be at the normal weekly rate or, as the case may be, at a rate which is proportionate to the normal weekly rate, and

(c) in a case in which board or lodging or, as the case may be, both board and lodging constitute part of the employee’s remuneration, include compensation, calculated at the prescribed rate, for any such board or lodging as will not be received by the employee whilst on annual leave.

(3) Nothing in this section shall prevent an employer and employee from entering into arrangements that are more favourable to the employee with regard to the times of, and the pay in respect of, his or her annual leave.

(4) In this section “normal weekly rate” means the normal weekly rate of the employee concerned’s pay determined in accordance with regulations made by the Minister for the purposes of this section.

The calculation of pay for annual leave is governed by the Organisation of Working Time (Determination of Pay for Holidays) Regulations, 1997, S.I. No. 475/1997 (the Regulations) which provides that:

3. (1) The normal weekly rate of an employee's pay, for the purposes of sections 20 and 23of the Act (hereafter in this Regulation referred to as the "relevant sections"), shall be determined in accordance with the following provisions of this Regulation.
(2) If the employee concerned's pay is calculated wholly by reference to a time rate or a fixed rate or salary or any other rate that does not vary in relation to the work done by him or her, the normal weekly rate of his or her pay, for the purposes of the relevant sections, shall be the sum (including any regular bonus or allowance the amount of which does not vary in relation to the work done by the employee but excluding any pay for overtime) that is paid in respect of the

normal weekly working hours last worked by the employee before the annual leave (or the portion thereof concerned) commences or, as the case may be, the cesser of employment occurs.

(3) If the employee concerned's pay is not calculated wholly by reference to any of the matters referred to in paragraph (2) of this Regulation, the normal weekly rate of his or her pay, for the purposes of the relevant sections, shall be the sum that is equal to the average weekly pay (excluding any pay for overtime) of the employee calculated over—

( a ) the period of 13 weeks ending immediately before the annual leave (or the portion thereof concerned) commences or, as the case may be, the cesser of employment occurs,

or

( b ) if no time was worked by the employee during that period, over the period of 13 weeks ending on the day on which time was last worked by the employee before the annual leave (or the portion thereof concerned) commences or, as the case may be, the cesser of employment occurs.

Deliberation

While the parties made extensive submissions on the application of the Directive and European caselaw, the net issue for the Court to determine is what is the Complainant’s normal weekly rate of pay for the purposes of calculating payment for annual leave. While the Respondent sought to rely on provisions of the Employment Regulation Order for the Security Industry, the matter must be decided by the Court on the provisions of the Act under which it is referred, and the statutory regulation made thereunder.

The Organisation of Working Time (Determination of Pay for Holidays) Regulations, 1997 states: “the normal weekly rate of his or her pay, for the purposes of the relevant sections, shall be the sum that is equal to the average weekly pay (excluding overtime).” It is clear from the wording of the Regulations that payment in respect of overtime is not reckonable in the calculation of pay for annual leave.

The complainant submits that hisnormal working weekis 48 hours per week and that he does not work overtime. None of his working hours are classed as overtime. He seeks to be paid hisaverageweekly rateof pay, based on 48 hours work, when taking annual leave. The Respondents contends that the Complainant’snormal working weekis comprised of 40 hours per week with 8 hours of regular rostered overtime, worked over a 4-day period, which it submits is the standard working pattern in the security industry.

In order to determine the Complainant’s normal weekly rate of pay it is necessary to examine what hours he is required to work and what happens in practice. The first port of call in determining what hours the Complainant is required to work is his statement of employment.

The statement of terms and conditions of employment issued to the Complainant on commencing work as a Mobile Supervisor is a short two-page document, which he signed in acceptance on 9 August 2018. In relation to working hours it states that ‘Iwill work shifts as
required by the company on a 24/7 basis.”

The holiday provision states that “I am entitled to a day and two thirds holidays for each month I worked, not more than 10 days to be taken consecutively. Any request for holidays or time off should be made in writing in advance to the Operations Manager.” The Statement goes onto state that “my rate of pay will be €13.20 per hour for all hours worked.”

The statement of employment is silent on hours of work and shift patterns. It makes no reference to overtime working, or when overtime payments, if any, may apply.

The statement does not refer to normal working hours, or expressly state that there is anormal working weekof 40 hours with 8 hours of regular rostered overtime worked over a 4-day period, which the Respondent asserts is the standard working pattern in the security industry. The statement of employment refers to a company Code of Conduct, but otherwise does not seek to incorporate any other documents into the Complainants terms and conditions of employment, nor does it refer to any industry standards or practices. The Code of Conduct was not opened to the Court by either side in support of their respective positions.

On a plain reading of the Complainant’s statement of employment it does not specify that his basic working hours are 40 hours per week, nor does it provide any details in relation to overtime working. The contract as drafted commits the Complainant to work unspecified shifts, as and when the Respondent determines, for which the Complainant will be paid €13.20 for every hour worked. As a result, the Court is satisfied that the Respondent cannot rely on the Complainant’s Statement of Employment to assert that his normal working week is comprised of 40 hours per week with 8 hours of regular rostered overtime.

In order to ascertain what the Complainant’s normal working week is, it is necessary to examine the hours worked by the Complainant. The hours worked by the Complainant in practice each week are not disputed by the parties.

The Complainant normally works four 12-hour shifts per week (48 hours), although on occasion he can be rostered to work five 12-hour shifts per week (60 hours).

The Complainant submits that he is not aware of any hours classified as overtime and all hours that he works are paid at a flat rate. No overtime is recorded on his payslips. The Respondent did not dispute that the Complainant is paid a flat rate for all hours worked and that it does not pay overtime rates, a night-time premium or Sunday premium.

The Respondent submits that while payslips do not differentiate between hours that are basic or overtime, there is no requirement in law that a payslip must make such a distinction.

The Respondent places much emphasis and seeks to rely on the standard working week in the Security industry. It submits that it is a well-established tradition in the Security Industry that the working week is comprised of 40 hours per week and 8 hours of regular rostered overtime. It is accepted that the Complainant’s statement of employment makes no reference to a standard working within the security industry or to the Security Industry ERO. The parties were allowed to make further submissions on how the standard working week in the Security Industry applies in the case of the Complainant.

In further submissions, the Respondent set out that the standard working week within the Security is best demonstrated through the progress of the Security Industry Employment Regulation Orders over the past 20 years.

In 2005, the standard basic week was reduced to 39-hour basic working hours and, since 2015, the ERO provides that overtime rates apply to hours worked in excess of an average 48 hours per week and is paid at a rate of time and a half. The Complainant did not provide a further submission in reply.

Notwithstanding the Respondent’s supplementary submission that the ERO provides for a 39-hour basic week, with overtime rates applying for hour worked in excess of 48 hours, it appears to the Court that these ERO provisions were not applied in the case of the Complainant on occasions that he worked in excess of 48 hours in a week nor were they applied in relation to the calculation of annual leave. However, as the Respondent correctly points out the Organisation of Working Time Act is not the appropriate statutory provision for the interpretation or enforcement of terms set out in an Employment Regulation Order.

The only matter for determination by the Court is whether or not a breach of the Act occurred in relation to the calculation of the Complainants’ pay for annual leave.

Whilst the effect of an ERO is to incorporate into the individual contract of employment of workers to whom it relates the basic terms which the Order prescribes, the case before the Court relates to the Act of 1997 and must be decided by applying the provision of that Act. The Organisation of Working Time Act 1997 is not the appropriate statutory provision for the interpretation or enforcement of an ERO.

While the calculation of pay for annual leave under S.I. No. 475/1997 excludes overtime, the claim before the Court does not relate to the inclusion of overtime payments in the calculation of an annual leave payment. The Complainant is not seeking overtime to be included in the calculation of his annual leave payments.

He submits that his normal working week is 48 hours per week and that he is entitled to be paid hisnormal weekly rateof pay when taking annual leave. No arguments were submitted as to how the Respondent can imply an industry standard regarding regular rostered overtime into the Complainant’s contract of employment, in the circumstances where the Complainant was never notified that overtime whether regularly rostered or otherwise, forms part of his particulars of employment.

Taking account of the Complainant’s statement of employment, the hours that he is required to work in practice, and the lack of any communication to the Complainant about overtime working, the Court is satisfied that hisnormal working weekis 48 hours. In the circumstances of this case, based on the evidence presented to it, the Court finds that the Complainant’snormal working weekis 48 hours per week.

It follows that the Complainant’s claims are well founded.

The Court determines that the Respondent, in complying with Section 20 of the Act, should apply the Complainant’snormal weekly rateof pay, based on a 48-hour working week, when calculating his annual leave payment.

The Complainant was entitled to be paid hisnormal weekly rateof pay of €13.20 x 48 hours when taking annual leave in October and November 2019. The Complainant suffered a shortfall of 8 hours pay for leave taken in October 2019 and a shortfall of 4 hours pay for leave taken in November 2019. The total shortfall for the period encompassed by the claim was €158.40.

The Court requires that the Respondent pay the shortfall due to the Complainant

In addition to paying the outstanding annual leave payment of €158.40 due to the Complainant, the Court requires the Respondent to pay the Complainant a compensation award of €1,250 which it considers to be just and equitable having regard to all of the circumstances. The Court considers that this award is appropriate having regard to the fact that the Complainant did not receive his correct annual leave payment and was required to engage in proceedings in order to secure his statutory entitlement. For the avoidance of doubt the sum of €1,250 awarded is in addition to the outstanding leave payment of €158.40.

The decision of the Adjudication Officer is varied accordingly.

The Court so determines.

	Signed on behalf of the Labour Court
	Katie Connolly
DC	______________________
18 February 2022	Deputy Chairman