Complainant

Respondent

Parties

Declan  Beagan

Complete Laboratory Solutions

Representatives

Alastair Purdy Alastair Purdy & Co. 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-00040487-001

19/10/2020

The Complainant commenced employment with the Respondent on 25 June 2018, In the role of Contract Analyst.

The Complainant formally submitted his notice to the Respondent on 24 April 2020, having accepted a job offer from a company, which was a client of the Respondent and with which the Complainant was due to take up a contract position, on behalf of the Respondent, the following week.

Issues arose between the Complainant and the Respondent in relation to the termination of his contract. This culminated in the submission of a complaint to the Workplace Relations Commission on 19 October 2020. In his complaint, which was made under Section 6 of the Payment of Wages Act 1991, the Complainant was seeking separate amounts of €2,916.67 and €1,821.77 in respect of wages not paid and holiday pay not received, respectively.

On 23 December 2020, the Respondent notified the Complainant that they had made a payment of €1,889.64 in respect of all monies due. Consequently, on 4 February 2021, the Complainant amended his complaint to the WRC by withdrawing the complaint in relation to holiday pay and leaving the claim in relation to wages unpaid remaining for adjudication.

The complaint in relation to unpaid wages, having been duly delegated to me by the Director General of the WRC, is the subject matter of this adjudication.

Background:

The Complainant submitted that he began his employment with the Respondent on 25 June 2018, in the role of Analyst on Contract. In this role, the Complainant was subcontracted out to other companies on behalf of the Respondent for a period of time.

The Complainant further submitted that on 22 April 2020, he notified the Coordinator of Contract Analysts, (Mr. A), by email, that he had accepted a job offer and intended to leave the Respondent on 22 May 2020, in accordance with the notice requirement of his Contract of Employment.

According to the Complainant's submission, he requested a call with Mr. A to formally discuss his departure. However, the Complainant submitted that as Mr. A failed to respond or acknowledge his emails or his calls, he formally submitted his notice of resignation on 24 April 2020.

The Complainant submitted that, within his notice, he sought clarification as to whether his last day at work would be 22 May 2020. He further stated that he also requested clarification from Mr. A as to whether he was to report to work the following Monday, (27 April 2020), as he was supposed to start a contract with a new company on behalf of the Respondent, on that date. The Complainant further stated that he was instructed by Mr. A not to report to work on 27 April as he (Mr. A) stated there was “no point.”

According to the Complainant's submission, further clarification on his employment status was formally requested in a letter, from his solicitor to the Respondent on 11 May 2020. The Complainant submitted that this letter stated that he was entitled to regard himself as still employed by the Respondent but on garden leave. The letter further requested that if the Respondent disagreed with this that they should provide an explanation of as to the Complainant's current employment status.

The Complainant submitted that a letter received from the Respondent’s solicitors, on 12 August 2020, offered no clarification on his employment status, during the said period and did not dispute the assumption that he was on garden leave.

According to the Complainant's evidence, following the submission of his complaint to the WRC, he received a letter from the Respondent's solicitors, on 28 October 2020. The Complainant stated that, in this letter, it was stated that in accordance with Section 5 of the Payment of Wages Act 1991, they were entitled to deduct from his wages due to contractual provision, that was outlined at Clause 5.2 and Clause 18 in his Terms of Employment.

All correspondence referred to by the Complainant in his submission were presented in evidence to the Hearing.

Conclusion:

According to the Complainant, neither Clause 5.2 nor Clause 18 of his Terms of Employment state that the Respondent has the right to deduct from his wages due to contractual provisions.

The Complainant further submitted that, at no point in the correspondence, up to 28 October 2020, was he notified by the Respondent of a deduction in his wages due to contractual provisions. The Complainant further submitted that, in fact, up to that date the Respondent had been threatening legal action, requesting payment for on-the-job training, for which they now claim they had made the deduction from his wages.

Background:

The Respondent submitted that, on 25 June 2018, the Complainant commenced employment as a Contract Analyst. It was submitted that, in accordance with his Terms of Employment, more specifically Clause 18 thereof, the Complainant would be required to undertake significant training and development. It was further submitted that as part of the said training, the Respondent would cover the costs subject to a number of conditions, the primary of which, clearly stated that if the Complainant was to leave his employment within the first 24 months, the Respondent would be entitled to recoup 50% of the costs incurred by them. It was further submitted by the Respondent that as per Clause 5.3 of the Complainant’s Terms of Employment, the Respondent generally reserved the right to make any appropriate deductions from the Complainant’s salary.

According to the Respondent's submission, between 25 June 2018 and 1 October 2018, the Complainant completed a period of intensive training. It was further submitted that, on 1 October 2018, the Complainant was placed on a contract, through the Respondent, with a client (Company A) and he operated in this role until 29 March 2020.

The Respondents submitted that following his time with Company A, the Complainant entered into a period of paid leave until 6 April 2020. It was further submitted that, on his return to work, the Complainant began retraining with the Respondent, until 21 April 2019, during which time the Complainant's accommodation was also paid for. It was submitted that the purpose of this training was so that the Complainant could take up a contract role with another client of the Respondent’s, Company B.

However, the Respondent submitted that prior to commencing his contract with Company B, the Complainant took up a permanent position with Company B, separate and distinct from that of the Respondent.

According to their submission, notwithstanding Clause 18 of the Complainant’s Terms of Employment, in accordance with Clause 16, the Respondent deducted the amount of €2,916.97 from the Complainant's salary which was inclusive of outstanding monies owed and payment in lieu of notice.

Legal Submission:

In response to the Complainant’s contention that they unlawfully deducted €2,916.97 from his wages, the Respondent referred to Section 5 (1) (B) of the 1991 Act. According to the Respondent’s submission, this provision outlines that an employer shall not make a deduction from the wages of an employee unless the deduction is “required or authorized to be made by virtue of a term of the employees contract of employment included in the contract before and in force at the time of the deduction or payment.”

It was further submitted by the Respondent that, under Section (1) (c), in the absence of a contractual provision permitting such, an employer may obtain the consent of the employee.

Notwithstanding and without prejudice to the foregoing, the Respondent also cited section 5 (2) (a) (i) of the Act which states that an employer shall not make a deduction from the wages of an employee for any act or omission unless subject to a number of conditions, which they set out as follows:

(i)               “The deduction is required or authorized to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the Contract of Employment made between the employer and the employee, and

(ii)              the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of wages of the employee), and

(iii)            before the time of the act or omission or the provision of the goods or services the employee has been furnished with –

(I)               In case the term referred to in subparagraph (i) it is in writing, a copy thereof,

(II)              In any other case, notice in writing of the existence and effect of the term, and

(iv)            in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and

(v)              in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and

(vi)            in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is of an amount not exceeding the cost to the employer of the goods or service, and

(vii)           the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than six months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.

In support of their submission in this regard, the Respondent referred to the decision in Financial Services Union v Gerry Hanna [PWD202], in which the Labour Court noted that: “where a deduction is made in an employee's salary it is incumbent on the employer making deduction to identify the statutory or contractual provision under which that deduction is authorised.”

The Respondent also cited the decision in the case of A Retail Company v A Worker [2020 PW/18/11], where in the Labour Court noted the following: “the court is of the view that, as it is clear that there is a contractual requirement for the agreement, the Respondent cannot compel such a move, in the absence of such agreement. The court did not have the benefit of argument as to whether or when any such agreement might be considered to have been unreasonably withheld, so it must rely solely on the terms of the contract, as written.”

Conclusion:

In conclusion, the Respondent submitted that the deduction of €2,916.97, which was in lieu of training costs incurred by the Respondent, is in fact lawful, due to the prevailing terms contained within the Complainant’s Contract of Employment, which permitted said deduction and the Adjudication Officer was requested to determine accordingly.

With regard to the issues arising in relation to this complaint, the Complainant and the Respondent made written submission and also provided oral evidence at the Hearing. I have carefully considered and evaluated all of the evidence and submissions adduced in this regard in reaching my determinations as set out below.

The Complainant claims that the Respondent’s failure to pay an amount of €2,916.97, which he claims was due to him, as wages, at the termination of his employment, constitutes an unlawful deduction from his wages.

The Respondent claims that the reduction of €2,916.97 represents a recouping of costs incurred in the training of the Complainant for his role and, is, therefore, lawful by virtue of the prevailing terms of the Complainant’s Contract of Employment which permit such deductions.

The Law:

Section 5 of the Payment of Wages Act states

“(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.”

Section 5(6) of the Act states

“5(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 there from 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 insofar 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 that occasion.”

Having carefully reviewed all of the evidence presented in this case, it is clear that the issue relates to the Complainant’s decision in late April 2020, to resign his employment with the Respondent and take up a new position with a company, which was a client of the Respondent and with which the Complainant was due to take up a contracted position, on behalf of the Respondent, the week after he submitted his resignation.

It is clear from the evidence that the Respondent took issue with the Complainant’s actions in this regard, which they considered to be in breach of his Contract of Employment. Correspondence then issued between legal representatives of the Complainant and Respondent. The matter culminated with the Complainant’s submission of his complaints the WRC on 19 October 2020.

The Contract of Employment:

It is clear from the evidence adduced, that, when assessing the validity of the Complainant’s complaint in relation to the withholding of €2,916.97 in wages, the Contract of Employment represents a key determining factor.

In the correspondence which issued between the parties in the immediate aftermath of the Complainant’s submission of his resignation notice, specific reference is made to two breaches of the Contract of Employment.

Firstly, it was alleged that the Complainant was in breach of clause 16.5 of his contract, which states, inter alia, that: “You will not, during the period of six months following the termination date, work for or be engaged by or concerned or interested in any business which operates anywhere in Ireland in competition with any part of the Business being operated by the Company and/or any other associated companies at your termination date or in the 12 month period immediately prior to such.”

The correspondence which issued between the parties in relation to this matter, contained differing opinions in relation to the enforceability of this clause. However, having considered the matter carefully, I am satisfied that any assessment of the Complainant's complaint under the Payment of Wages Act, is not impacted by issues relating to clause 16.5 of the Complainant’s Contract of Employment.

Of much more significance, in relation to the within claim, is the second aspect of the Contract of Employment, which was raised by the Respondent at the time of the Complainant’s resignation. The Clause in question, (clause 18.1) which refers to the investment in training and development of the Complainant, states that: “should an employee wish to terminate their contract within 24 months of the commencement of their employment, the company has the right to recoup 50% of the cost incurred by them.”

The evidence shows that the Complainant was within the 24 months period referred to under Clause 18.1 of the Contract of Employment. While the Respondent submitted evidence showing the total training/development costs amounted to €11,127.17, their correspondence to the Complainant indicates that they were seeking to recoup an amount of €5,000 in this regard. In their submission to the hearing, the Respondent confirmed that they deducted an amount of €2,916.67 from the Complainant’s salary in relation to this matter.

Finally, with regard to the Complainant's Contract of Employment, clause 5.3 states that: “in the event of an overpayment, the company reserves the right to make appropriate deductions from subsequent payments.

Having carefully reviewed the submissions in relation to this matter, I find that the Respondent’s recouping of training and development costs, as per Clause 18.1 of the contract, can reasonably be considered as deductible under Cause 5.3 of the said contract.

Taking all of the above into consideration, I am satisfied that the Respondent's deduction of €2,916.67 from the Complainant’s wages is consistent with Section 5 (2) (a) (i), (ii), (iii) and (v) of the Payment of Wages Act on the basis that (a) the deduction is authorised by virtue of a term of the Contract of Employment, a copy of which the Complainant signed on commencement of his employment, (b) the amount can only be deemed to be fair and reasonable and (c) the amount being deducted does not exceed the established cost to the Respondent.

Consequently, having carefully reviewed all of the evidence adduced, I can only conclude that the deduction of €2,916.97 from the Complainant's wages does not constitute an illegal deduction by the Respondent in line with Section 5 of the 1991 Act.

Having carefully considered all of the evidence adduced and based on the considerations/findings as detailed above, I find that the Complainant’s complaint under Section 6 of the Payment of Wages Act, 1991, is not well founded and is, therefore, not upheld.

Payment of Wages Act

Lawful Deduction