Complainant

Respondent

Parties

Iracema  Stramotas

Caremark Galway Home Care Provider

Representatives

  Self

Michael Kingsley BL instructed by Jason O'Sullivan J.O. S 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-00053922-001

29/11/2022

This case is concerned with a complaint about deductions from the final pay of the Complainant when she was leaving the employment. There were two elements to the deductions as described by the Respondent: an overpayment of holiday pay and a deduction based on a section of the relevant employment contract where the employment was of less than six months duration.

The Complainant commenced employment with the Respondent in January 2022 as a healthcare worker, signing a contract entitled ‘’Fixed Term Full - Time Contract of Employment for Overseas Recruits.’ That contract contained the following terms which are relevant to the complaint:

 8.6 ‘The Company will deduct from your wages any money owed by you as aresult of overpayments of wages, holidays or expenses, uniform costs and any salary advances or agreed costs of QQI Healthcare qualifications. The amount of the deduction may be agreed with you in advance.’

8.8.’As per clause 8.6 in the event of resignation before 6 months the employee will be obliged to discharge the amount of €500 to the Company and/or the said amount will be deducted from the Employees wages as an expense for two weeks rent, electricity usage, welcome pack, introduction training, Mandatory training, Manual handling Training.’

On 30 May 2022 the Complainant was promoted to the position of Field Supervisor at which time she received a further contract and an increase in pay. The new contract contained the same terms as the initial contract in relation to deductions as those set out above (8.6 and 8.8).

In October 2022 the Complainant gave notice of her intention to resign effective 28 October 2022. On 20 October she attended a meeting with managers at their request. She received an email on 24 October 2022 reminding her of the restriction clause in her contract at section 21.1. On 27 October the Complainant received her payslip which showed total deductions of €1041 It is the deduction of €1041 which she is contesting.

Submission and Evidence of the Complainant

When she met with the management on 19 October 2022 at their request-no mention was made of the deductions from her pay. She know nothing of the deductions until she received her payslip. The deductions caused her great emotional distress and financial hardship at the time. When she queried the deductions, she was told that the deduction related to her six-month probation period as a field supervisor. However, she regards this al not legal as she made a verbal agreement with the Respondent to reduce her probation period to three months at which time, she also received an increase in pay. A witness she had to support her evidence was not available on the day of the hearing. She was told that it was not necessary to agree a new contract on these terms. On the holiday pay, she maintains that she took only 12 days holiday-in August/September 2022 and four days prior to that.

The Respondent provided a comprehensive programme of training to the Complainant. The deductions from the final wages were in line with the contract at section 8.6 and 8.8 of the May contract as set out above. Section 5 subsections (1) and 2 of the Payment of Wages Act 1991 were cited in support of the Respondents position allied to the terms of the contract which provided for the deductions taken from the final payment. Such deductions were expressly permitted under Section 5(1) of the Payment of Wages Act 1991: “(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,”.

The deductions made by the Respondent were lawful.

In their submission post the hearing, the Respondent provided a reconciliation of the holiday payments made throughout the employment-using the 8 % calculator as the basis of the amounts due, taken and finally deducted . This was requested as the basis of the calculations was unclear from the information provided to the hearing. Also, the contract of employment specified a figure of 18 days as the holiday entitlement-less than the statutory entitlement of 20 days. The reconciliation provided post hearing left a balance of an over deduction of €7 from the final payment.

Witness Evidence

Mr Ben Habibi is a manager at Caremark. His principal evidence related to the training provided to the Complainant under the second contract when she was promoted to Field Supervisor. That training was a mixture of office based and on-site supervision. Responding to the Chair, he agreed that the terms of the contract at clause 8.6 in the second contract were a direct copy of the same clause in the first contract. Asked which of the elements of the same clause applied to the deduction of €500, Mr Habibi clarified that it was the training element only, that the remaining elements did not apply to the Complainant.  

The incoherent format of the final payslip which does not for example specify the basis for the deductions or refer to annual leave calculations together with the absence of any prior discussion with the Complainant regarding the intention to deduct have undoubtedly contributed significantly to this complaint occurring in the first instance. Responsibility for the lack of dialogue and compliance with their own contractual commitments lies solely with the Respondent.

Both parties move between gross and nett figures in their calculations which means that the calculations below are based on the available information and are net payments in each instance.

Deduction for Holiday Pay-€541

The calculation of the annual leave entitlement based on total earnings over the course of the employment is incorrect where the rate of pay, while it varied over that period, was a set rate of pay on three separate occasions: the starting salary and two increases subsequently. What the employer has attempted is to consolidate lower and higher rates of pay into one total-and then use the 8% multiplier-a formula which is only to their advantage.   The correct rate of pay to use at the time of termination was the rate of pay at that time as any outstanding entitlement would have been paid at that rate.

While the contract of employment specifies a calendar annual leave year, the only statutory basis for the calculation of holiday pay is the Organisation of Working Time Act which contains the only statutory annual leave year i.e., April in one year to the end of March the following year. As the Complainant commenced her employment in January-I cannot see where she received excess holidays during the leave year to the end of March 2022. Her full entitlement for three months would be five days for that period. Even if she did receive more (or less) than her statutory entitlements, as neither party cited an agreement to carry forward annual leave from one leave year to the next, any shortfall or surplus of leave did not carry forward into the leave year commencing April 2022.

In the statutory leave year 2022/2023, based on 1.66 days per month, the Complainant was entitled to 13 days annual leave. In their supplementary submission, the Respondent relied on a total amount of 19 days holiday pay taken in total from January to October and the 8% multiplier to justify the deduction of €541 in holiday pay from the final payslip. If the amount of leave accumulated in the leave year 22/23 amounted to 13 days it is difficult to see how the Respondent justifies the deduction of €541 at the point of termination, other than that they crossed over between the two statutory leave years and then used the 8% multiplier so as to lower the total amount due to the Complainant. They did not explain in either submission how many days the Complainant was entitled to, took and was paid for-they simply gave figures for wages paid against pay periods and multiplied the total gross figure by 8%. While noting also that the Respondent experienced some difficulties in providing records due to a cyber-attack, when the appropriate calculator is used with the rate of weekly pay at the time of termination, it seems to me in any event, any overpayment, where there was one, does not amount to €541 gross or nett. Section 5 of the Payment of Wages Act does allow for deductions in respect of overpayments:

Regulation of certain deductions made and payments received by employers.

5.— (1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

Subsection (5) sets out the type of payment which may be lawfully deducted from an employees wages.

(5) Nothing in this section applies to—

(a) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, where—

(i) the purpose of the deduction or payment is the reimbursement of the employer in respect of—

(I) any overpayment of wages, or

(II) any overpayment in respect of expenses incurred by the employee in carrying out his employment,

made (for any reason) by the employer to the employee, and

(ii) the amount of the deduction or payment does not exceed the amount of the overpayment,

As holiday pay forms part of wages and as, on balance, I will albeit reluctantly, accept that the Complainant was overpaid in respect of her holiday pay in the leave year 2022/2023, then Section 5 subsection (5)(a)(i)(ii) clearly applies in this case, rendering the deduction of the overpaid holiday pay not unlawful under the Payment of Wages Act 1991. However, given the failure to discuss the matter with the Complainant in advance as provided for in her agreed terms at clause 8.6 and the general difficulty in reconciling the various figures provided by the parties, in terms of the amount to be deducted I consider that €241 nett was a more correct figure leaving the amount of €300 net compensation due to the Complainant as an over deduction in respect of her holiday pay from her final wages.

Deduction for training: €500

Allowing that section 8.8 of the contract of May 2022 does allow for certain deductions, the question to be decided is whether the deduction of €500 was reasonable,  taking into the basis provided for the deductions  in the second contract of employment and  the absence of any prior notification to or discussion about the intended deductions with the Complainant It is also noted that the same Respondent went to the trouble of meeting with and subsequently notifying the Complainant of her own restricted obligations under the same contract-but failed to mention those other parts of the contract concerned with deduction and which they intended to apply.

The application of the term reasonable is based on the provisions of the Payment of Wages Act, again at Section 5:

5.— (1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

(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,

(2) An employershall 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.

(3) (a) An employer shall not receive a payment from an employee in respect of a matter referred to in subsection (2) unless, if the payment were a deduction, it would comply with that subsection.

This case does not hinge on whether her probation in the promoted position ended early, as Complainant contends. Counsel for the Respondent made it clear that they were relying on that part of section 8.8 which refers to ‘in the event of resignation before 6 months’ as providing for the deductions. Mr Habibis evidence means in effect, that from a list of items of which only introduction training was provided to the Complainant upon her promotion, the full deduction of €500 was taken although none of the remaining items of rent, manual handling, electricity usage or a welcome pack applied to the Complainant during the period of her second contract with the Respondent which ran from May to October 2022. By October five of the six months had elapsed. Again, there was no prior discussion with the Complainant at or after the meeting with her on October 20th convened by the Respondent. Even if the spirit and the terms of the contract were found to have been applied reasonably, I would have serious concerns that an employer could be of the view that they were entitled to deduct for manual and mandatory training provided to employees in the health sector, at any stage. The maximum deduction for the final payment which I consider to be reasonable in the circumstances, and then only because it was provided for in the agreed terms, is €100. 

Based on the forgoing conclusions I am satisfied that the complaint of unlawful and or unreasonable deductions amounting to €1041 in the Complainants final wages is well founded. The adjusted amount of €341 leaves a balance owed to the Complainant of €700 net in total.

CA-00053922 Payment of Wages Act 1991 The Complaint brought by the Complainant Ms Iracema Rose Stramotas against the Respondent Caspian BMP Ltd trading as Caremark Galway is well founded. The Respondent is to pay the Complainant €700 nett compensation.

Deductions from Pay on Termination/Holiday Pay/Training and other contractual terms