Complainant

Respondent

Parties

Raymond  O'Connor

A O C Services Ltd

Representatives

David Pearson, JW O'Donovan LLP

David Gaffney, Gaffney Solicitors

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-00035023-001

04/03/2020

This case involves a deduction to wages.

It is common case, after some discussion on the preliminary point, that the deduction occurred in the amount of €459.92 weekly, on an ongoing basis, since February 14th, 2022 (as the Complainant was paid one week in arrears).

The WRC complaint herein was filed on March 4th, 2022.

The Complainant submits that the deduction is unlawful, while the Respondent advanced the argument that while it did not dispute that the deduction had occurred, it submitted that it is not unlawful.

There was a preliminary point raised by the Respondent as to the scope of the complaint. It was submitted that there is nothing in the Payment of Wages Act 1991 which allows for the re-instatement of someone’s salary, and that the complaint herein, taken at its height, is limited to the short time-period it covers only, which the Respondent submitted was three weeks.

The Adjudication Officer, at the hearing, enquired of the representatives as to whether the case of McDermott applied [Health Service Executive v John McDermott [2014] IEHC 331] in this case, in their view? Both agreed that it did.

It was therefore common case that this complaint, as filed, pertained to the time period covered by it only, i.e. the fact the deduction is ongoing is not the subject matter of the complaint herein. The Complainant was seeking a finding in relation to the complaint, as filed.

The correspondence, which was submitted, was common to the parties, but there was dispute between the parties as to the construction of the contents of the correspondence. The Solicitor for the Complainant submitted that the assertion that the grievance was heard is not correct – he said that the Complainant asked for his grievance to be heard but was offered an appeal only; there was procedural disagreement, and no grievance or appeal of the grievance went ahead.

As per the Complainant’s written submissions:

        1.            GENERAL

Mr. Raymond O’Connor has made a complaint against his current employer, AOC Services Limited, under Section 6 of the Payment of Wages Act 1991. 

The Complainant’s salary was unilaterally reduced from €75,915.84 per annum to €52,000 per annum with effect from 21st February 2020. 

        2.            EMPLOYMENT HISTORY

The Complainant commenced employment with AOC Services Limited on the 1st of April 1984. His position within the Respondent company has been that of “Garage Manager” for the past circa 38 years. This role entails overseeing the Test Centre and Repairs Garage of AOC Services Limited. 

The Complainant’s late brother, Mr. Aidan O’Connor founded AOC Services Limited and acted as

Managing Director from 1984 until his untimely passing on the 7th of February 2014. Mr Padraig

O’Connor was subsequently appointed as Director in February 2014 and remains the Managing Director of AOC Services Limited today. The unlawful deductions were made by Mr Padraig O’Connor.

On the 18th of July 2016, Mr. Padraig O’Connor hired his father-in-law Mr Brian McKnight to occupy the role of “Operations Manager”. The Complainant’s roles and responsibilities as Garage Manager continued after the appointment of Mr McKnight. The Complainant was not offered or asked to apply for the role of Operations Manager, he was not told what the functions of the Operations Manager might be and was not told his own role would be affected.

        3.            UNILATERAL REDEDUCTION IN WAGES 

Mr. Padraig O’Connor presented the Complainant with a letter on the 21st November 2019 outlining two Options for the Complainant to consider. 

        •     Option 1: Redundancy

Redundancy package of €33,236.00 + re-engagement of employment with a new salary of €21,658.00.  

        •     Option 2: Reduced Salary

Reducing the Complainant’s salary by 31.5% from €75,915.84 gross per annum to €52,000.00 gross per annum.  

Neither option was acceptable to the Complainant. The Redundancy offered is less than the statutory redundancy payment required to be paid by an Employer when making an employee redundant. The statutory redundancy payment entitlement was €43,404.00 and not €33,236.00 as offered by the Respondent. 

The Respondent unilaterally and without agreement reduced the Complainant’s annual salary from €75,915.84 gross per annum to €52,000.00 gross per annum from the 21st February 2020. This was a reduction of €1,459.92 gross per week to €1,000.00 gross per week. The Complainant has continued to be paid €1,000.00 gross per week since the 21st February 2020. 

        4.            ROLES AND RESPONSIBILITIES 

It is submitted that while Mr Padraig O’Connor sought to guise the reduction in wages as a

restructuring, the Complainant’s roles and responsibilities never changed. Mr Padraig O’Connor stated in his letter to J.W. O’Donovan LLP of 10th February 2020 that the Complainant’s original assigned managerial duties no longer include “vehicle test centre control or organisation, with the exception of providing required supplementary assistance but any organisation decisions, staff arranging, human resource responsibilities or matters relating to all plant and machinery are handed by Operations Manager”.  

The Complainant submits this is entirely false. The Complainant continues to deal with all Test Centre operations. AOC Services Limited employs two full time Vehicle Testers who report directly to the Complainant. Apart from being responsible for the day-to-day operations of the Vehicle Test Centre, the Complainant approves annual leave, being the point of contact if an employee is unable to attend work and ensuring the Test Centre has adequate staff to ensure continuing efficient operation by moving qualified test centre operators from the garage to the test centre. The foreman in the garage reports to the Complainant in respect of much of the work done within the garage including keeping the complainant informed of people out sick or on holiday, overtime requirements and the general functioning of the garage. 

The Complainant reiterates his responsibilities as Garage Manager have not changed since his appointment approx. 38 years ago. 

Section 5 of the Terms of Employment (Information) Act 1995 provides whenever a change is made or occurs in any of the particulars of the statement furnished by an employer the employer shall notify the employee in writing of the nature and date of the change as soon as may be thereafter, but not later than 1 month after the change takes effect. 

The Respondent never provided any such notice in writing as required by Statute and for the avoidance of doubt never provided that notice orally or at all.

        5.         RELEVANT LAW:

The Payment of Wages Act, 1991 at Section 5 set out as follows:

5. (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 the employee has given his prior consent in writing to it”.

5. (2) An employer shall not make a deduction from the wages of an employee in respect of—

(a)  any act or omission of the employee, or

(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,

unless—

(i)               the deduction is required or authorised 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 the 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) 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 services, 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 6 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. Section 5(6) of Payment of Wages Act, 1991 goes on to identify a deduction as follows:

“(b) None of the wages that are properly payable to an employee by an employer on any occasion (after making 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”.

The Complainant submits that he is entitled to receive an annual salary of €75,915.84 gross, paid weekly in the sum of €1,459.92 gross. The unilateral deduction in the Complainant’s wages was not authorised to be made by virtue of a term of his contract nor has the employee given his consent to the reduction. 

Raymond O’Connor gave evidence on his own behalf, at the hearing.

Evidence of Mr. Raymond O’Connor – the Complainant.

The Complainant outlined that he had been working with the company since 1984, that the company was owned by his brother. He said that he had started as a garage foreman in 1986, and then was promoted to garage manager in 1989 (that there were only 4 or 5 people working there, at the time and another garage foreman was hired). He said the company then got the test centre (similar to an nct but for commercial vehicles). He said that both the test centre and the garage exist today. He said that it was a Scanly (make of truck) agency, since 1994. He said that there were approximately 35 employees at the moment. He explained that in 2014, his brother (Aidan) died and two of his nephews took over the business, and one of those remains (Padraig).

He was asked whether, since his brother died, his role had changed. He said: “No, it has not.” He was asked whether he was ever informed of any change, by Mr. O’Connor? He said: “No, I was not.” He said that in 2016, his nephew’s father-in-law (Mr. McKnight) was hired in the business. He confirmed that he was not involved in that appointment. He confirmed that he was not told his role would be changing, at the time, or ever, that there was no written statement to that effect. He was asked whether prior to this dispute arising, whether he had ever been told. He confirmed he had not. He said that his pay was reduced on 21/02/2020 – reduced to €1,000 per week. He said that it remained at €1,000 per week.

In 2019, the Complainant received a letter from Padraig O’Connor, dated November 21st, 2019, (copy of document submitted), which referred a meeting of November 12th, 2019, outlining that the company was re-structuring. He said that Mr. Brian McKnight’s, (Padraig O’Connor’s father-in-law), title was “aftersales operations manager.”

He outlined that he was not informed that his responsibilities had changed, and said that his responsibilities did not, in fact, change. He said he was “doing exactly what I was always doing.”

He said that he got the letter and that the “options” [the two options outlined in the letter] were explained to him. Option 1 was a proposed redundancy from his existing role and taking up a new role at a much-reduced salary in the company. He was asked how Mr. Padraig O’Connor had arrived at the figure of €33,236 [in relation to a proposed redundancy package (Option 1), which represented a figure lower than the Complainant’s statutory redundancy entitlement]? He said: “To tell you the truth, I don’t know.”; The second part of Option 1 was a proposed full-time role at a salary of €21,658 as a “service advisor” – the witness said that he “wasn’t told what a service advisor was.” Option 2 was a proposed reduction in salary and a new salary of €52,000.

It was submitted that meetings took place, that no minutes were taken or provided. The Complainant declined either option 1 or option 2, which resulted in Mr. Padraig O’Connor writing to him by letter dated 23rd January 2020, (copy of correspondence submitted) stating that it was necessary for him to ‘impose a reduction in your salary as previously stated in the amount of 31.5%.’ Correspondence from the Solicitor for the Complainant, dated January 30th , 2020, was highlighted, wherein it set out, inter alia, “Any unilateral reduction in salary is unlawful and it is not open to an employer to interfere with one of the fundamental terms of employment.”

The Complainant reiterated, in terms of his role: “I’m doing exactly now what I was doing prior to 2014.” In terms of his role, the Complainant outlined his duties – and went through the items listed in the correspondence - including that he did all the invoices for the test centre, nominated the workers to do the testing (light or heavy), five (5) trucks - organising, managing the test centre. In terms of annual leave, he said the workers asked him first, then Mr. McKnight gets a formal request. He said in terms of the roster, that it used to be the garage foreman who did the roster, now Mr. McKnight does it and the Complainant approves it. In terms of wages, he said that over-time sheets were submitted to him - he signs them off, then Mr. McKnight signs them off also. In terms of equipment upgrades, he said that he was never responsible for it. He said that the general upkeep of the garage is the garage foreman’s responsibility. In terms of ‘tool talks’, he said that there were no ‘tool talks’ prior to Mr. McKnight coming on the scene. He said that Aidan, his late brother, looked after costs and budget – that the Complainant never did that. He said that in relation to the calibration of repairs of tools - the garage foreman looked after that. He said that he did not attend management meetings – that was correct. He said that in 2016, Brian McKnight took over.

It was also clarified that the meeting referred to as the “appeal meeting” of February 19th had initially been scheduled for February 12th.

On Cross-examination

It was put to the Complainant that he was “not happy with either of the two options?” He confirmed that he was not. It was put to him that he had sought legal advice and that his Solicitor wrote letters on his behalf, which he accepted. He was asked what his understanding of a grievance was, and he said that it was a way of dealing with things when people are unhappy. It was put to him that it was a formal process, not a casual thing; and that it was in writing, and “important.” He accepted that. It was put to him that “nonetheless, you weren’t happy with what was being done?” He confirmed that “Yes” he was “not happy.”

It was put to him, that in the handling of the grievance he was “not given Mr. (Padraig) O’Connor”, that he was instead “given the opportunity to talk to somebody else subsequently – Mr. Anthony O’Connor.”

The company’s internal policy was put to him, and it was put to him that the policy had been applied – that he had set out in writing (formal) the reasons he was unhappy. He was asked would he not accept that by the mater being referred to Mr. Anthony O’Connor that the Complainant would be talking to a different person, and that the reason for this, was that the Complainant was not happy with the decision being made by Mr. Padraig O’Connor. The Complainant said that Mr. Anthony O’Connor had previously worked in the business and that he was “not happy with it being Anthony.”

He was asked: “What happened then with that?” The Complainant said: “I was advised not to attend that meeting.”

He was asked: “So, why didn’t you attend?” He said: “Because I was advised not to attend.”

It was put to him that: “You were offered a couple of dates?” and that “No changes made to your salary in the meantime, until you met with Anthony O’ Connor.” It was put to him “But, [the meeting] didn’t happen”, that he had been “given two (2) dates – two (2) options. You didn’t attend.” He was asked: “So, what did you expect the company to do?”

He said: “I was advised not to attend the meetings. I was only doing what I was told. I was never been in that position before.”

It was put to him: “If you don’t go, you never know what might have happened? You accept that you don’t know what might have happened, if you had had the meetings?” The Complainant accepted that: “Yes.”

The issue of minutes was raised. It was put to him that he was “not provided with the minutes”, which he confirmed: “No.” He was asked whether he had asked for the minutes. He said: “No, I did not.”

Concluding remarks by the Solicitor for the Complainant

Mr. Pearson, Solicitor for the Complainant said the matter, if you “distil it down”, it is a “net point.” He quoted the text of the s. 5 Payment of Wages Act 1991, stating that “prior consent in writing” was required under the legislation and he submitted the Respondent “has not produced evidence.” He said that “no consent was given.” He said that there was “evidence on the non-use of the appeals process - nothing which says that you can make a deduction.” He submitted that “after the employee goes through a grievance procedure, the Respondent didn’t apply its own grievance procedure.” He submitted that the Respondent employer “seems to think it was entitled to go straight to the appeals process” but that “the procedure requires stage 1” and “the appeals process is stage 2.”

He said that the Respondent employer made “a unilateral decision on January 23rd”, that “a grievance was raised on January 30th”, that the “employer is required to follow its own procedure” and that the correspondences as set out, which was entered into evidence and opened, “makes it very clear.”

He submitted that the “appeals process was a red herring”, that “an independent person should have been appointed.” Mr. Pearson submitted that the appeals process is “entirely irrelevant in the context of s. 5 of the Payment of Wages Act 1991”, that the Complainant’s “role never changed” and that “even if it did change, a change of role is not a justification for an imposition of a salary cut under section 5.”

No written submissions were made by the Respondent.

At the hearing, Mr. Padraig O’Connor (Director of the Respondent since 2014) gave evidence on behalf of the Respondent, at the hearing.

Evidence of Mr. Padraig O’Connor, for the Respondent

He outlined how his father started the company. He was asked how this situation, involving the proposed re-structuring came about? He outlined that there was “a period of uncertainty around BREXIT”, “that profit margins were getting squeezed”, so they “had to look at costs, re-structure so that the company would be on a firm footing going forward.” He said that they “reduced personnel and reduced salaries.” He said that there were redundancies (panel beater). He said: “We determined that the body shop was not profitable” and added that “a member of our spare parts department was made redundant too.”

It was put to him that the Complainant says that his duties never changed at all. The witness disagreed with this and said that there were a number of changes: “Hiring, firing etc.” as well as some of the managerial duties. He said that “holidays don’t go to him for approval”, “he doesn’t discipline (time, attendance, bringing people up for poor workmanship)” He said that “the Operations Manager does that since 2016.” He said that in relation to rosters, there is “interaction” with the Complainant “but they are not subject to his approval.” He said that annual leave goes “directly to the Operations Manager – he makes the decision on them.” He said that they then go on the communal calendar, as soon as they are approved.

He said that the purpose of the salary reduction was to reasonably reflect what his role is. He was asked whether he thought the manner in which he had approached the reductions was “fair and transparent”, which he said he did. He said that he had five (5) or six (6) meetings with the Complainant. He said that the “ultimate goal was to do this fairly.” He was asked whether he was “open to any suggestions he [the Complainant] might make?” He said: “Yes, absolutely.” He said: “I wouldn’t have minded as long as we achieve the goal we had to do, in terms of savings for the business.”

He was asked about corresponding with Mr. Pearson, Solicitor, acting on behalf of the Complainant. (Correspondence in Complainant’s booklet) He was asked: “What made you think that this was an appeal?” He said that the correspondence was “very formal”, and was going through a Solicitor, on behalf of the Complainant. He was asked why he was going to send all the relevant documentation to Mr. Anthony O’Connor? He said that “the purpose was to appeal my decision, that was the purpose of sending it to Anthony.” He said that the Complainant had stated “he was unhappy with it.” The witness said that “the correspondence I got back was that they were not going to attend the meetings to have his case heard by Anthony.”

He was asked if he sent on the grievance procedure. He confirmed that he had. He asked whether the Complainant attended the appeal. He said: “No.” He stated, in terms of Mr. Anthony O’Connor’s role that: “Anthony was a director of the company as well, at the time, so he had as much say as I did. He had not been previously involved.”

He was asked about correspondence from the Solicitor for the Complainant (dated February 17th 2020) which set out that: “The fact that you are fully satisfied that you believe Mr. O’Connor has been dealt by you extremely fairly does not negate or override the company’s obligations under its own policies and under Law.” He said: “I wasn’t sure what that meant. Because as far as I was concerned we had followed the procedure.” The witness outlined that the company needed to make savings in the region of €200,000 per year, that they had an internal accounts department and they engaged an external advisor after they had made their own calculations on it.

On Cross-Examination

It was put to the witness that “Mr. Raymond O’Connor did not agree to any deduction.” He was asked “Who decided to make these changes?” The witness said: “The management team – me, Anthony;  Yes, so, these were decisions made by the directors.”

He said that there were “no other board members.” Mr. Pearson stated that it “was discussed at board level.”

The witness was asked: “Was Anthony involved or not?” The witness said: “Yes, he was consulted.”

He was asked about the appeal procedure: He was asked: “When did you make your decision to impose the deduction in salary – what date?” He said: “February 19th, as per my letter. The final decision.” It was put to him that “the decision was made earlier, in January 2020.” He said that “the deduction didn’t take place until after.” It was put to him that he had issued correspondence stating that it is “now necessary for me to impose a deduction in salary”, that the Solicitor for the Complainant’s firm had written to him by letter dated January 30th asking for the grievance procedure, which he provided, that what was proposed next was an appeal. It was put to him that he had not implemented the grievance procedure, as set out. The witness disputed this, saying: “I would argue that I did” and stating that he and the Complainant “had several conversations.” He was asked “on what date did you have a grievance meeting?” He said: “I don’t have a date.” He was asked: “Did you invite him to attend a grievance meeting?” He said: “The door was always open.”

“When after that did you set up the meeting under stage 2 (formal stage) and where is the documentation?” “There was no formal meeting.” It was put to him that “Your process has three (3) stages – informal, formal, appeal” The witness said: “It’s in the correspondence.”

He was asked when he started working with the company? He said that he was “around the company all my life, but officially in 2009.”

He disputed some of the Complainant’s assertions in respect of hiring, disciplining and firing.

He said that the Complainant dealt with invoicing, takes phone calls from customers and takes bookings in the workshop.

He was asked whether when he hired Mr. McKnight, if he had met with the Complainant to tell him that he was changing his employment. It was put to him that there was no meeting, that he did not write to him, that there were no minutes.

He was asked who had made the decisions. He said it was the board of directors, which comprised himself and his brother.

In relation to the two options set out in correspondence to the Complainant, he was asked how he came up with the two options and where the redundancy figures came from. “The figure that we came up with, was what it was.” He was asked whether he had sought advice. The advice he had sought was financial advice, not legal advice. He was asked in relation to the redundancy calculator provided on a government website, and whether he had access it, he said he could not recall.

He was asked whether he had sought legal advice in relation to deductions and the Payment of Wages Act, prior to making the deduction, and he said that they had not.

He was asked if they had taken the course of action they had because they “needed to protect the income of the business?” and the witness confirmed: “Yes.”

The companies accounts year-on -year were put to him (copy of documentation provided), and the fact that they actually showed an increase. It was put to him again that there was “no consent.”

In response to an enquiry from the Adjudication Officer, the witness outlined that in 2014, he took over the business and that he was finding his feet. Mr McKnight was appointed for several reasons, he said, – he was “an experienced manager”, “experienced at managing people”, he was an “ideal candidate”, the witness said he “couldn’t do it all myself.”

Concluding comments on behalf of the Respondent

The Solicitor for the Respondent submitted that it is accepted that the deductions did not have the consent of the Complainant but it is not accepted that they were unlawful. He referred to the “sheer volume of correspondence” and said that “efforts” were being made, that “there was very clear intent to try to make things work.” He said that required engagement by the Complainant, but that “ultimately, could not be achieved.”

He suggested that it suited both the Complainant and the Respondent. He said that the “grievance procedure was sent”, he contrasted this with the position of other employees who he said were “made redundant” or had their “pay cut” or their “hours cut.”

He said that there was “open and honest communication”, that “an employee must take reasonable steps to attend any meeting arranged to hear their grievance.” He said that the meeting was set up in good faith and that “the only way you can find out what happened at the meeting is to attend”, that you “can’t know otherwise”, and that even the Complainant “admitted that, in his evidence.”

He said that the “day-to-day” operations were being dealt with by Mr. Padraig O’Connor, not Mr. Anthony O’Connor who was a director. He submitted that “no employer wants to have to go through this” and that Mr. O’Connor had “made it clear it was for the future viability of the company.”

He said that there had been “discussions, consultations, five/six meetings, that the Complainant was asked for his suggestions.” He submitted that no other suggestions were forthcoming, that the Complainant “never came up with anything else” and suggested that he “didn’t bother trying.”

The Solicitor for the Respondent submitted that “the only option available” to the Respondent, which he submitted was “fair and reasonable”, which “had to do with the viability of the company”, was the approach the Respondent took.

He emphasised that the Complainant “never went to that meeting” which he suggested was “an opportunity missed” by the Complainant which he submitted “shouldn’t have been.” He suggested that “if there was a clear intention to make that work, [the Complainant] would have attended.” He suggested that there was “no encouragement for him to get legal advice”, which he submitted “shows transparency”, that there was “no intent to force redundancy or anything like that”, that “nearly everything involved him staying there, keeping him working.” But, he said, unfortunately the Complainant had filed a Payment of Wages claim. He said that what had occurred (the pay-cut) was a “necessity, which was justified for a number of reasons in all the circumstances.” He submitted that it was “fair and reasonable.”

I find that payment of wages is a fundamental term of a contract of employment.

I find that no consent was given, by the Complainant, for the deductions made.

I therefore find that the deductions were unlawful and that they are in breach of s. 5 of the Payment of Wages Act, 1991.

I find that the deductions were made unilaterally.

I find that the grievance/appeals process is irrelevant to this claim, under s. 5 of the Payment of Wages Act, 1991.

I find for the Complainant.

I find that the deductions were unlawful under s. 5 of the Payment of Wages Act 1991.

I direct the Respondent to pay the Complainant €1,379.76 (€459.92 x 3) within 42 days of the date of this decision.

Payment of Wages; Unlawful deduction; Pay-cut; Unilateral; Relevance of Grievance/appeals procedure;