FULL RECOMMENDATION
PARTIES : PMC PAINTING CONTRACTORS LIMITED DIVISION :
SUBJECT: 1.Appeal of Adjudication Officer Decision No(s) ADJ-00009799 CA-00012818-001 The Adjudication Officer decided that the Appellant was not employed under a lawful contract of employment at times material to her complaint. The Respondent did not attend the hearing of the Court. The Respondent’s representative did, in advance of the hearing of the Court, advise the Court that, having received the relevant notifications from the Court, he was without instruction from his client and consequently would not be attending the hearing of the Court. The Court is satisfied that the Respondent, through his representative, was properly notified of the date, time and venue for the hearing of the within appeal. The Appellant submitted that her employment ended on 12thJuly 2017. Preliminary matter The Respondent submitted that the contract of employment of the Appellant was tainted with illegality and that this made the contract unenforceable. The Court decided to hear the parties in relation to this matter as a preliminary matter. Summary position of the Appellant on the preliminary matter The Appellant submitted that: A contract of employment existed between her and her employer, the Respondent. The contract was not evidenced in writing. She was paid in cash by the employer, which method of payment is expressly permitted by Section 2(1)(g) of thePayment of Wages Act, 1991. The employer was responsible for deducting PAYE, PRSI and USC from her wages and remitting the appropriate payments to the Revenue Commissioners. She did not agree to be paid without deduction of income tax, PRSI and USC as alleged by the employer and had no knowledge that the Respondent may have failed to make and pay over deductions in relation to such liabilities. She reluctantly returned to work while on maternity leave against her wishes in circumstances where the employer required her to do so. She submitted that, following the Supreme Court inHussein V Labour Court [2015] IESC 58and the ratio ofHussein v Labour Court [2012] IEHC 364, the Appellant’s contract was inherently lawful rather than a contract which dealt with unlawful matters and, as such, substantively illegal. In circumstances where the contract was inherently lawful it is not open to the Labour Court to adjudicate on whether the contract is rendered void due to matters of alleged illegality or public policy. There was no evidence of the Appellant’s knowledge of or complicity in any fraud or illegality. Any such fraud or illegality arises solely from the Respondent’s breach of its statutory obligations. Summary position of the Respondent on the preliminary matter. The Respondent did not attend the hearing of the Court. However, the Court was provided with a written submission made in advance on behalf of the Respondent. That written submission asserted as follows: The Appellant was engaged in a fraud upon the Department of Social Welfare and Revenue at times material to the complaint before the Court. The Appellant was paid in cash. The Appellant, at a material time, was in receipt of Maternity Benefit payments from the Department of Social Protection and wages from the Respondent. These matters demonstrated that the contract of employment was tainted with illegality and that the Appellant knew of the illegality and was an active participant in the illegality. Having regard to the decision of Laffoy J. inRed sail Frozen Foods Ltd (in receivership) [2006] IEHC 328therefore the contract was unenforceable and the within appeal cannot succeed. Discussion and conclusions on the preliminary matter The Respondent has set forward an allegation that the contract of employment of the Claimant was tainted by illegality. No evidence was tendered by the Respondent to support this proposition. In particular, the Court was not provided with detail of the element or elements of the Social Welfare or Revenue codes / regulations / legislation which was or were contended to have been breached. For example, a primary element of the alleged breach of the Revenue code is the assertion by the Respondent that the Appellant was paid in cash. The Court has not been provided with evidence or clarity as to how receipt by a worker of wages in cash constitutes a breach of any code of the Revenue. Neither has any submission been made to set out where responsibility lies for relevant taxation and related matters and whether the employer in the appeal discharged any such responsibility resting upon it. Similarly, no submission has been made that either the Respondent or the Appellant has been found by either the Department of Social Welfare or the Revenue Commissioners to have breached the Social Welfare or Revenue codes / regulations / legislation at any material time. The Appellant has not disputed that she may have been in breach of social welfare regulations but she has contended, including in oral evidence, that any such breach was not intended by her or known to her and, should it have occurred at any time, resulted from pressure from the Respondent. She has asserted, including in oral evidence, that she had no knowledge of any possible fraud on the Revenue. She submitted, including in oral evidence to the Court, that she had no knowledge of an illegality in the operation or content of her contract of employment at any material time. The Respondent in this appeal did not attend the hearing of the Court and, consequently, was not in a position to provide the Court with evidence of an illegality of contract in the within matter or to tender any evidence to rebut the oral evidence of the Appellant as regards her knowledge of any alleged illegality associated with the performance of her contract of employment. In the view of the Court, it is for the party seeking to rely on inherent illegality in a contract of employment or illegality in the performance of an otherwise lawful contract to prove the existence of the illegality and indeed the knowledge of the worker of that illegality and his or her active participation in such illegality. This Court is not at large to determine by reference to unspecified elements of the Social Welfare or Revenue Codes / regulations / legislation to make determinations as regards illegality in the performance or nature of the Appellant’s contract of employment or indeed to determine liability in respect of any such illegality or breach. The Respondent in this appeal has failed to particularise the element or elements of the Social Welfare or Revenue codes, regulations or legislation which it alleges have been breached in performance of the Appellant’s contract of employment such as to render that contract unenforceable. The Appellant however has given sworn evidence to the Court to the effect that she had no knowledge of or willing participation in any act of illegality in respect of the Revenue or Department of Social Welfare codes, regulations or legislation. The Court therefore concludes that it has not been provided with a basis upon which it can determine that the Appellant is not entitled to pursue her appeal under the Act. An unsubstantiated allegation or unproven assertion that an unspecified regulation, code or law of the Department of Social Protection or of the Revenue Commissioners has been breached cannot remove from the Court the jurisdiction to apply the Act to the facts of the case before it. The appeal before the Court therefore must be decided by reference to the statute under which the appeal has been brought. Substantive matter. Summary position of the Appellant The Appellant, in her brief submission on the matter, submitted that, during the cognisable period for the within complaint, she never received paid annual leave. She submitted that she was entitled to annual leave at the rate of 8% of hours worked in the period on cessation of her employment. She provided an affidavit which asserted that she worked 40 hours per week. She submitted that she had accrued four weeks annual leave in the leave year to 12thDecember 2016 and that she had accrued a further 629.5 hours in the period prior to the termination of her employment on 12thJuly 2017 and therefore was entitled to be paid in respect of that entitlement upon cessation of her employment. Summary position of the Respondent The Respondent submitted that the Appellant was not entitled to any compensation for holiday / annual leave pay. The Respondent asserted that no evidence had been before the Workplace Relations Commission at first instance regarding this alleged breach of the Act. The Respondent submitted that the Appellant was required to provide proof of hours worked to ascertain and quantify any such entitlement. Relevant Law The Act at Section 19, in relevant part, provides as follows: 19.— (1) Subject to the First Schedule (which contains transitional provisions in respect of the leave years 1996 to 1998), an employee shall be entitled to paid annual leave (in this Act referred to as “annual leave”) equal to— (a) 4 working weeks in a leave year in which he or she works at least 1,365 hours (unless it is a leave year in which he or she changes employment), (b) one-third of a working week for each month in the leave year in which he or she works at least 117 hours, or (c) 8 per cent. of the hours he or she works in a leave year (but subject to a maximum of 4 working weeks): Provided that if more than one of the preceding paragraphs is applicable in the case concerned and the period of annual leave of the employee, determined in accordance with each of those paragraphs, is not identical, the annual leave to which the employee shall be entitled shall be equal to whichever of those periods is the greater. Section 20 of the Act in relevant part provides 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— 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. Section 23 of the Act in relevant part provides as follows: Compensation on cesser of employment. 23.— (1) (a) Where — (i) an employee ceases to be employed, and (ii) the whole or any portion of the annual leave in respect of the relevant period remains to be granted to the employee, the employee shall, as compensation for the loss of that annual leave, be paid by his or her employer an amount equal to the pay, calculated at the normal weekly rate or, as the case may be, at a rate proportionate to the normal weekly rate, that he or she would have received had he or she been granted that annual leave. (b) In this subsection — ‘relevant period ’ means — (i) in relation to a cessation of employment of an employee to whom subparagraph (i) of paragraph (c) of subsection (1) of section 20 applies, the current leave year, (ii) in relation to a cessation of employment of an employee to whom subparagraph (ii) of the said paragraph (c) applies, that occurs during the first 6 months of the current leave year — (I) the current leave year, and (II) the leave year immediately preceding the current leave year, (iii) in relation to a cessation of employment of an employee to whom subparagraph (iii) of the said paragraph (c) applies, that occurs during the first 12 months of the period of 15 months referred to in the said subparagraph (iii) — (I) the current leave year, and (II) the leave year immediately preceding the current leave year, or (iv) in relation to a cessation of employment of an employee to whom subparagraph (iii) of the said paragraph (c) applies that occurs during the final 3 months of the period of 15 months referred to in the said subparagraph (iii) — (I) the current leave year, and (II) the 2 leave years immediately preceding the current leave year. Section 25 of the Act makes provision in relevant part as follows: 25.— (1) An employer shall keep, at the premises or place where his or her employee works or, if the employee works at two or more premises or places, the premises or place from which the activities that the employee is employed to carry on are principally directed or controlled, such records, in such form, if any, as may be prescribed, as will show whether the provisions of this F18 [ Act and, where applicable, the Activities of Doctors in Training Regulations ] are being complied with in relation to the employee and those records shall be retained by the employer for at least 3 years from the date of their making. (4) Without prejudice to subsection (3), where an employer fails to keep records under subsection (1) in respect of his or her compliance with a particular provision of this F18 [ Act or the Activities of Doctors in Training Regulations ] in relation to an employee, the onus of proving, in proceedings before a rights commissioner or the Labour Court, that the said provision was complied with in relation to the employee shall lie on the employer. Discussion and conclusion. The Court, while noting the submission of the Respondent, has regard to Section 25 of the Act which makes plain that it is the responsibility of the employer to maintain relevant records and that where an employer fails to keep such records in respect of his or her compliance with a particular provision of the Act in relation to an employee, the onus of proving, in proceedings before the Court, that the said provision was complied with in relation to the employee shall lie on the employer. that the Appellant, having worked for 15 weeks in the period from 1stApril 2017 to 12thJuly 2017, and, according to her affidavit, having worked 40 hours per week in the period, worked a total of 15 X 40 hours which amounts to 600 hours. She was therefore entitled, in accordance with the Act at Section 19(c), to receive annual leave at the rate of 8% of hours worked which in this case amounts to 48 hours. Her hourly rate of pay was €11.00 per hour and consequently, on cessation of her employment, she was, in accordance with the Act at Section 23, entitled to compensation in the amount of €528.00. that in the period from 1stApril 2016 to 31stMarch 2017, the Appellant worked a total of 52 X 40 hours which amounts to 2,080 hours. She was therefore entitled, in accordance with the Act at Section 19(c), to receive annual leave at the rate of 8% of hours worked which in this case amounts to 166.4 hours. Her hourly rate of pay was €11.00 per hour and consequently, on cessation of her employment, she was, in accordance with the Act at Section 23, entitled to compensation in the amount of €1,830.40. The statutory entitlement of the Appellant to compensation on cessation of employment therefore is €2,358.40. The Act at Section 27(3)(c) provides that the Court may award compensation of such amount as is just and equitable having regard to all the circumstances, but not exceeding two years remuneration. The Appellant’s representative, in the Appellant’s submission, submitted that the decision of the CJEU inVon Colson & Kamann v Land Nordrhein – Westfalen[1984] ECR 1891which held that sanctions for breaches of Community Rights must ensure that they are effective and have a deterrent effect and must amount to more that purely nominal compensation has application in the within appeal. Section 23 of the Act provides that on cesser of employment an employee is entitled to be paid the economic value of all outstanding holidays in respect of the leave year, therefore the Court, based on the uncontested submission and oral evidence of the Appellant is satisfied that the outstanding annual leave entitlement due to the Complainant equates to €2,358.40. InVon Colson & Kamann v Land Nordrhein – Westfalen [1984] ECR 1891the CJEU has made it clear that where such a right is infringed, the judicial redress provided should not only compensate for economic loss sustained but must provide a real deterrent against future infractions. The Act is an Act to provide for the implementation of a directive of the EU and consequently the jurisprudence of the CJEU has application in this case. Decision Having regard to all the circumstances of this case and the standard required by the CJEU in Von Colson, the Court measures the appropriate level of compensation which is just and equitable having regard to all of the circumstances to be €3,500 The decision of the Adjudication Officer is set aside. The Court so decides.
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