ADJ-00038058

Complainant

Respondent

Parties

Rafael  Santos Do Canto

XS Direct Insurance Brokers Limited (in receivership)

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-00049510-001

04/04/2022

The complainant was a Sales Executive for the respondent who commenced employment in November 2018. The complainant was on the basic rate within the respondent company. 

On 30th May 2019 he received an e-mail from the Director of Product Design setting out a planned increase in his salary on completion of his exams. He completed the exams in January 2020 and then received the salary increase for February and March 2020. His salary at this point in March 2020 was €29,000 plus a bonus ranging from €3,000 to €3,500. 

On 15th April 2020, the CEO issued an e-mail to all staff advising of a 15% reduction in gross pay and bonuses due to the impact of COVID 19 on the business. The e-mail was seeking agreement from staff on the pay cut. The e-mail also outlined that the business would be availing of COVID government supports. 

On 23rd April 2020, the Head of Human Resources issued an FAQ document to all staff stating the agreement of staff on the 15% pay cut was not necessary. The FAQ also updated staff on government supports to the business and the need to maintain productivity. 

On 30th July 2020 an e-mail issued from the CEO stating that the pay reductions were extended for a further six months. 

On 5th January 2022, a staff notification outlined that the consultation period on achieving necessary redundancies would commence. The complainant left the employment through redundancy on 16th February 2022.    

The complainant gave direct evidence of his employment history with the respondent. Although he outlined that it was a good place to work initially, he then felt hard done by due to the imposed pay cuts. He outlined that despite being on reduced pay, he was expected to maintain productivity throughout the period of pay reduction. He stated that he did not consent or agree to the pay cuts. He gave evidence that over this period there were many zoom calls with line managers and the CEO who portrayed the business as being solid. Staff were encouraged to maintain and increase productivity on the basis that they would be compensated for the sacrifice of having their pay reduced. He gave direct evidence and provided pay slips to demonstrate his gross salary for February and March 2020 was €2706.66 per month which was reduced by €439.18 euro per month from April 2020. The total reduction of pay and bonus over the period was €9,661.96.

The respondent did not make a submission and did not appear at the hearing.

The Relevant Law

Section 5(1) of the Payment of Wages Act 1991 sets out the parameters according to which deductions may be made from an employee’s wages:

“(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.”

It is clear from this section that, apart from statutory deductions of tax, PRSI and USC, or those permitted by contract, before any other deduction is made from an employee’s wages, they must provide their written consent.

Section 5(6) addresses the circumstances in which wages which are properly payable are not paid:

“(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 therefrom 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 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 from the wages of the employee on the occasion.”

We know from section 5(1) above that, apart from tax, PRSI and USC, unless there is a provision in an employee’s contract of employment to deduct wages, an employer may not make a deduction from an employee’s wages, unless consent has been given in advance.

From the direct evidence and e-mails opened during the hearing, there was no consent from the complainant for a deduction to be made from his pay. The e-mails from the CEO and Head of Human Resources also demonstrate that matters were constantly under review with the prospect of staff being compensated at some future stage. The complainant gave evidence and opened an e-mail of 17th May 2022 that demonstrates that pay was restored with effect from February 2022. Unfortunately, this was too late for the complainant who had already left the respondent at that stage. Although pay restoration occurred subsequent to the complainant referring the complaint to the Workplace Relations Commission, it does confirm his assertions that pay, and bonus cuts were under continuous review and specifically that he would be compensated for the sacrifice of the period of reduced pay. The potential for pay to be restored and compensation paid for past productivity is consistent with the evidence given from the complainant regarding the numerous zoom meetings with line management and the CEO who requested for productivity levels to be maintained.

Findings

I find that the complainant’s wages and bonus were properly payable and that a contravention of the Payment of Wages Act occurred when the deductions were made by his employer from April 2020. Despite the matter remaining under continuous review with the prospect of the pay sacrifice being made up, the complainant was not compensated for the imposed pay cuts. Each undertaking to make up the pay sacrifice and the consequent failure to do so amounts to a contravention of the Act and fall within the cognisable period.

CA-00049510-001

I find that the complaint pursuant to the Payment of Wages Act to be well-founded and that the respondent shall pay to the complainant compensation of €9,661.96

Payment of wages, compensation