Complainant

Respondent

Parties

Jennifer Weldon

Forthside Lodge Ltd trading as Whitford House Hotel

Representatives

Rachel Hartery SIPTU

Self-represented

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-00040631-001

27/10/2020

The complainant has worked as a swimming instructor at the respondent leisure facility since 2007. The complaint relates to payments made by the respondent to the complainant where it only paid the wage subsidy and one cent, which the complainant says represented an unlawful deduction in wages. The respondent states that there was an overpayment of wages in respect of holiday pay paid in July 2020.

The complainant outlined that the respondent had made an unlawful deduction from her wages. She commenced in 2007 and her average wages were €589 per week. In the complaint form, the complainant states that the amount of the unlawful deduction was €715.35, made up of five weeks where she was only paid the subsidy and one cent.  

The complainant said that in 2020, there was a downturn and the employer availed of the Temporary Wage Subsidy Scheme. This scheme would pay a proportion of the employee’s wages and the employer would pay the remainder. This was based on average wages in 2020. She outlined that Revenue had calculated her pay as €493 so she received the middle tier of subsidy.

The complainant outlined that the respondent made a small contribution and had not taken account of the commission that would have been paid over a period of five weeks. She said that another employee was afforded his commission, but not her.

The complainant said that the TWSS lasted for 12 weeks and was an emergency measure, with regularly updated guidance. She referred to document version 18, issued in August 2020. There had been a transitional period from March to May 2020, which paid the wages in full. From May to August 2020, Revenue paid a subsidy, since replaced by the Employment Wage Subsidy Scheme.

The complainant outlined that the TWSS required employers to make ‘best efforts’ to top-up pay to the employee’s normal net income. Here, the complainant was not paid her normal weekly income as what was paid did not take account of normal commission. She outlined that the respondent was correct in what was paid for the first three weeks, but not in the latter five weeks. The respondent had then only paid a top-up of one cent.

The complainant outlined that the respondent had initially proposed to deduct holiday pay for this period but decided not to, following SIPTU’s intervention.

The complainant outlined that the Minister for Finance had rectified the lacuna regarding the wage subsidy available for people on maternity leave. There were other lacunas where employees fell between stools. The complainant referred to the pay slips of her comparator, who is her husband and submitted with his permission.

The complainant referred to the Labour Court authority of Grimes v Irish Rail PW3/1995 which held “the clear intendment behind the 1991 Act is to introduce certainty surrounding the making of deductions from wages of employees so that employers and employees will know in advance the nature and amount of deductions.”

The complainant submitted that section 5(2)(iv) of the Payment of Wages Act must be strictly construed and there was no notice provided to her of the deduction. Section 5(6) rendered any deduction without notice unlawful.

The complainant outlined that the respondent swimming pool was closed from March to sometime in July 2020. The complainant outlined that the respondent received a subsidy of €350 on foot of the complainant’s higher wage, but then determined what it paid her as top-up on the basis of her lower wage, i.e. without regular commission.

The complainant outlined that she was advised to say that they were on lay-off in order to get PUP, but she was not provided with a document to say she was on lay-off.

In reply to the respondent, the complainant said that she had always received commission although this was first written down in 2013. She said that the reduced €5 commission never came into place. She outlined that it was not clear why the respondent had not restarted private swimming lessons as of the adjudication.

The complainant said that she had not given permission for the deduction so the employer cannot rely on this part of the Act.

The complainant outlined that the Revenue guidelines did not supersede the law. The complainant’s average pay was€489 as she would only have earned basic pay for Christmas week and the periods of annual leave (before rectification). Her pay with commission was €11.50 per hour so just above minimum wage.

The complainant said that private lessons were done on shift or off shift. She would do two private lessons while on shift as well as group lessons and then some off shift lessons. She would do 32 hours of on-shift work and about 5 to 8 additional hours per week.

The respondent outlined that it convened a staff meeting on the 15th March 2020 to say that the hotel would close. They had regular email correspondence regarding the lay-off. They said that they would pay annual leave so that staff would not be short. They did not realise how long the lockdown was going to be.

The respondent outlined that commission for swimming lessons was introduced in 2013. The respondent later referred to higher costs and indicated that the commission was too high, to be reduced to €5 per half hour.

The respondent outlined that in early 2020, three weeks of annual leave was paid, and this included commission. On 4th August 2020, the complainant said that the commission should have been included in the holiday pay paid at this time. This was resolved via a grievance.

The respondent outlined that the contract provided the basis for the deductions. Revenue confirmed that TWSS was based on the average earnings in January and February 2020 and the earnings used were correct. The respondent was not in a position to make a top up so did not do so.

Despite their best efforts, the respondent said that there was no business coming in and commission was only paid for completed lessons.

The respondent outlined that it had emailed notification of the deduction and also followed up with two phone calls. It outlined that the comparator had been paid in error and should not have been paid. The complainant was the highest commission earner and the comparator earned less. There was no malice in this.

The respondent outlined that the complainant worked 32 hours per week and was paid €589 per week. While she is employed at 32 hours, her pay was €368 per week. She earned commission within the 32 hours and also during additional hours.

The respondent outlined that it is a small hotel and had to deal with the difficulties of addressing Covid-19. It re-opened in July 2020 but did not then offer swimming lessons.

The general manager outlined that the respondent faced increased rates and gas bills in February 2020. They were under pressure and therefore proposed to reduce the commission paid. The complainant did not agree to this, and it was not put into effect.

The general manager said that the business closed for four months. It continued to incur running costs of €7,000 per month. It froze memberships during this time. When they reopened, they lost out on food and drink income. It increased the number of staff for cleaning duties and to manage social distancing. There were also PPE and additional cleaning costs. It incurred high overheads and the number of members then attending was low as people were not comfortable.

The respondent outlined that it was the only hotel to pay commission for swimming lessons. Customers paid €25 for a lesson, broken down by €10 to the instructor and €15 for the centre. This was irrespective of when it was (i.e. on shift or off shift), so they could also be paid their normal wage. There would be an additional lifeguard on duty.

For a private lesson, the instructor received €15, and the centre received €10. This was why holiday pay was not paid. Commission was only paid for completed lessons.

The Payroll Operator submitted that the complainant was overpaid during three weeks of annual leave as commission was included in the calculation of holiday pay. The Payroll Operator stated that Revenue informed her that the complainant was entitled to the subsidy of €350 and a top-up of €143.07, although the respondent only had to pay 1 cent for the wage subsidy to be paid. It outlined that Revenue had informed the respondent that it was not obliged to pay any additional top-up beyond the one cent. The respondent outlined that it paid the complainant the full top-up for three weeks of holiday paid in July 2020.

The Leisure Centre Manager outlined that Revenue confirmed that the complainant was entitled to a €350 subsidy and that the employer was only required to pay a top-up of 1 cent. The centre was closed and not earning income. This was above the complainant’s flat net pay of €339 for a 32-hour week. She outlined that there were no swimming lessons during the pandemic so commissions were not paid but would resume once lessons resumed.

The Appeal Manager outlined that commission was only payable when there were lessons. There were no lessons, so no commission was payable. In July, August and September 2020, the complainant did not earn commission as there were no swimming lessons.

The respondent exhibits ten payslips for the period 5th July to the 6th September 2020. They show that the complainant was paid the €350 subsidy and €143.05 for three weeks; €350.01 for five weeks and €368 for two weeks (with no subsidy being paid).

This is a complaint pursuant to the Payment of Wages Act. The complainant asserts that an unlawful deduction of €715.35 was made to her wages over five weeks when she was paid 1 cent on top of the TWSS claimed by the employer in respect of the complainant (a weekly amount of €350). The complainant outlined that the respondent did not comply with the notification requirement in section 5. It had paid the full amount to a comparator employee. The respondent denied that there had been an unlawful deduction. The respondent also outlined that it overpaid the complainant in holiday pay paid for three weeks of annual leave taken in July 2020. There are the background issues of the attempt to reduce commission to €5 (which did not take place) and the inclusion of commission in the historic calculation of holiday and public holiday pay (which occurred).

This dispute arose because of the Covid-19 pandemic. The complainant is a well-established swimming instructor based in the respondent hotel. She has worked in the role since 2007. Her success in the role is signalled by her being the highest commission earner at the swimming pool, i.e. she taught the most swimming lessons. Because of the pandemic, the swimming pool closed. The respondent was obviously ‘adversely affected’ and availed of the Temporary Wage Subsidy Scheme in respect of the complainant and other employees. The swimming pool was closed between March and late July 2020. When it re-opened, it did not offer swimming lessons, meaning that the complainant could not earn commission as she then just did the lifeguarding duty.

The Temporary Wage Subsidy Scheme was one of the initiatives introduced by Government in response to the unprecedented societal and economic effects of the pandemic, on top of the very grave public health consequences and the tragic loss of life. The TWSS was given statutory underpinning in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020, an omnibus Act which also inserted the only substantive change in employment law during the pandemic (that a laid-off employee could not trigger their redundancy entitlement until the 30th September 2021). There was no amendment to the Payment of Wages Act, to clarify, for example, how the TWSS interacted with the requirements of the Payment of Wages Act. The Payment of Wages Act does not directly address a wage subsidy or lay-off and such questions have been addressed by considering whether the wages were ‘properly payable’ in the first place.

The Temporary Wage Subsidy Scheme provided support to adversely affected employers to pay the wages of staff. The purpose was to keep staff on employers’ books to preserve continuity and to keep staff available for when restrictions lifted. It was paid in respect of staff who continued to work during the lockdowns (including at home) as well as those on lay-off. Separately, the Pandemic Unemployment Payment was also available.

The Temporary Wage Subsidy Scheme was payable in respect of wages due to the employee. It was assessed according to the employee’s earnings in January and February 2020. While the subsidy was payable as a proportion of wages due, the scheme and the statute underpinning it did not require the full payment of the employee’s wages. Neither was the Payment of Wages Act amended to require an employer to top-up an employee’s wages from the amount of the subsidy to the assessed normal amount. As set out in this case, Revenue required that the employer pay a top-up of 1 cent in order to trigger eligibility for the subsidy. While Revenue guidance referred to an employer making their ‘best efforts’, this was not given statutory underpinning, for example in the Payment of Wages Act.

There are two questions to address in this case. The first is whether the payment of 1 cent and not the full top-up represented an unlawful deduction per the Payment of Wages Act. The second is the correct determination of the amount of holiday pay due to the complainant in the three weeks of annual leave taken in July 2020 and whether an overpayment occurred.

The first issue arises as for five weeks the complainant was back at work and not teaching swimming lessons (as the respondent was not providing them). She was paid €350.01 in these weeks, made up of the €350 subsidy and only one cent from the employer. The complainant’s point is that the subsidy received by the employer was calculated on the basis of her wages with commission, but it was not now willing to top up her wages taking account of this commission. The respondent’s point is that the complainant was not teaching classes so not entitled to commission; her pay with the subsidy and one cent was higher than her normal pay without commission.

I find that there was no breach of the Payment of Wages Act when the respondent paid the complainant €350.01 in the five weeks referred to above. This was the period the complainant had returned to work and was not teaching lessons or earning commission. Over these weeks, the respondent paid the complainant the amount of the subsidy it received and one cent. What was therefore ‘properly payable’ to the complainant was the pay due per the complainant’s contract of employment without any commission being earned, i.e. the complainant’s basic hours (for which she was paid).

Not paying the full top-up of €143.07 was not a breach of the Payment of Wages Act as this was above what was then properly payable to the complainant as she was not earning commission. The calculation used to determine the subsidy did not alter what was ‘properly payable’ above the amount of the subsidy once the complainant had returned to work but was not earning commission. Had the complainant been able to teach lessons and earn commission, this commission would, of course, have been properly payable.

As the wages were not properly payable, there was no requirement for the respondent to notify the complainant of any deduction. The Payment of Wages Act was not amended to require an employer to make their ‘best efforts’ to make up wages above a subsidy paid. In this case, all parties acted in a bona fide way in what were unprecedented and challenging circumstances for all. I note that the comparator (the complainant’s husband) was paid the subsidy plus the full top-up, but this does not, of itself, mean that the subsidy and full top-up became properly payable to the complainant.

In considering the second issue, it is important to recognise that the complainant did not have a set rate of pay. Her pay depended on whether she taught lessons, thereby earning commission. The respondent asserts that the complainant was overpaid holiday pay in the three weeks of annual leave taken in July 2020. The question, however, is how the complainant’s holiday pay for this period should have been determined per the Organisation of Working Time (Determination of Pay for Holidays) Regulations (S.I. 475/1997).

I find that per the Regulations, the complainant was entitled to full pay, i.e. including commission, for the three weeks of annual leave taken in July 2020. I reach this finding because it was not in dispute that the complainant’s income varied according to whether she earned commission. Regulation 3(2) of the 1997 Regulations, therefore, applies. Once Regulation 3(2) applies, Regulation 3(3) provides that the employee’s ‘normal weekly pay’ shall be calculated according to the average over the most recent 13-week period the employee was in employment and at work.

The purpose of the 13-week reference period is to capture variability in pay. Regulation 3(3)(b) provides that if no time was worked in the preceding 13 weeks, the applicable 13-week reference period is the last period of 13 weeks the employee worked. The pool closed in March 2020 and the complainant did not work after the pool closed. When the complainant availed of annual leave in July 2020, the applicable 13-week period was the last 13 weeks she was able to actually go to work, i.e. the 13 weeks before the pool closed. The complainant attended work and earned commission in the 13 weeks preceding the closure of the pool (other than Christmas week). It follows that the complainant was entitled to full pay, and the amount paid in July 2020 was not an overpayment. The complainant shall not be required to refund these monies and any deduction to recover this amount is not permitted by section 5(5) of the Payment of Wages Act as there was no overpayment.

CA-00040631-001

I decide that there was no unlawful deduction to the complainant’s pay in the payment of €350.01 over five weeks between the 25th July and 30th August 2020. I decide that the complainant was entitled to full holiday pay for the three weeks of annual leave taken between the 5th July 2020 and the 24th July 2020 and this holiday pay is determined per the 13-week period prior to the pool closing in March 2020. There was, therefore, no overpayment to the complainant in this holiday pay. 

Payment of Wages Act / Temporary Wage Subsidy Scheme / ‘properly payable’ / Determination of Holiday Pay