PWD2311

1.Appeal of Adjudication Officer Decision No(s)ADJ-00037898, CA-00049306-001

BACKGROUND:

2.This is an appeal of an Adjudication Officer’s Decision made pursuant to Section 7(1) of the Payment of Wages Act, 1991 on 28 March 2023. The appeal was heard by the Labour Court on 3 July 2023 in accordance with Section 44 of the Workplace Relations Act, 2015.

The following is the Court's Determination:

DETERMINATION:

Background

This is an appeal by the Complainant against Adjudication Officer’s Decision ADJ-00037898 given under the Payment of Wages Act 1991(the Act) in a claim by Ms Brennan (Complainant) that she suffered an unlawful deduction from her wages when Tesco Ireland Ltd (Respondent) incorrectly calculated her sick pay. The Adjudication Officer found the complaint was not well founded.

The cognisable period for the purpose of the Act is the 24^thSeptember 2021 to the 23^rdMarch2022, the date the complaint was lodged with the WRC.

Summary of Complainant’s submission

The Complainant has been employed with the respondent since 21^stDecember 2016. The Complainant arising from a cancer diagnosis was out sick from the 13^thJune 2021 to the 19^thSeptember 2021 a total of 14 weeks. Under the Respondent’s sick pay policy, she was entitled to eight weeks sick pay less social welfare entitlements. Initially the Respondent failed to implement their sick pay policy and made no payment to the Complainant. This was later rectified. The Complainant submitted to her employer a Social Welfare Entitlement letter showing that her entitlement for the period of absence was €1 a week. The first two weeks of sick pay ending 10^thand 17^thJuly 2021 were issued correctly and deduction for social welfare began from the 3^rdweek in line with the policy. Because of the initial failure to pay sick leave it was in fact week five, when the social welfare deductions began. From the 24^thJuly the Respondent commenced making a deduction of €121.80 for illness benefit despite the fact the Complainant was only receiving €1. This culminated in a total deduction of €824 to the Complainants wages over the period of her sick leave despite the fact she only received €8 in illness benefit.

The Union on behalf of the Complainant drew the Courts attention to Section F of the sick leave policy which states;“It is a condition of our sick pay scheme that the entitlement is paid less any social welfare entitlement that the colleague might be entitled to. The company recognises that some colleagues may have different entitlements from the Department of social protection and once evidence of this is provided within 2 weeks of the sickness occurring the company will revere the downwards adjustment.”

The Union submitted that this supports their contention that the Complainant was due a refund of €824 which was incorrectly deducted when she was out sick. The Complainant has processed her grievance through the in-house grievance procedure but to no avail. Her grievance was not upheld as the Respondent stated that they were applying the policy correctly. The Union of behalf of the Complainant is requesting that the Court find that the deduction of €824 was unlawful and contrary to the Act.

Summary of Respondent’s submission

The Complainant commenced employment with the Respondent on 12^thDecember 2016 and is employed on a 20-25 hours per week contract earning €13.49 per hour as a Customer Assistant. The Respondent in line with the Complainant’s contract which states that the sick pay is managed in line with the Company sick leave policy, pays eight weeks sick pay. In determining the Complainant’s sick pay entitlements, the Respondent followed the procedures set out in document titled “Staff communications on updates to the Company sick pay process“ which came into effect on 1^stJanuary 2012 and states “From your fourth day of consecutive sickness absence the Company will adjust your pay downwards by the value of the illness Benefit (currently 37.60) per day) for each paid sick day. You will retain any Social Welfare Illness Benefit Cheques received from the Department of Social protection. Absence will be recorded on your payslip, normally the week after you are absent.”

It then goes on to set out exceptions in respect of staff employed before 1^stJanuary 2012. For all staff employed on or after the 1^stJanuary 2012 which is the category this Complainant falls into, it states , “All staff members employed on or after 1^stJanuary 2012 that work less that full time hours that apply in their store, and do not at the time of a period of certified sickness absence have an Illness Benefit entitlement and submit written evidence of this from the Department of Social Protection within two weeks of the start of the sickness absence, to their line Manager will be subject to a reduced (pro-rata) adjustment to their Company sickpay reflecting their actual rostered hours.”

The Respondent submitted that because the Complainant had such a small Illness Benefit award, they had treated her as if she had no Illness Benefit entitlement and applied the pro rata in accordance with the sick leave policy. This was more beneficial to the Complainant. The Respondent submitted a chart setting out actual payments made to the Complainant during the period, the deduction that fell to be made by assuming that she had no Illness benefit and the deductions that would have been made had they factored in her Illness benefit.

The Illness benefit included in the calculation was the current rate at the time of her absence as the amount in the policy is the rate as applied in 2012 when the policy came into effect. Applying the 2012 policy the weekly deduction for Illness benefit is €203 (2021 rates). However, where an employee works less than full hours and does not have a Social Welfare entitlement the figure of €203 is applied pro rata based on the part-time hours previously worked. In the Complainant’s case the calculation is as follows; €203 divided by 39 hours (standard hours) multiplied by 20 (part time hours) giving a deduction of €104 per week. When that is multiplied by eight it gives a total of €832 which is the amount that was deducted from the Complainant. Therefore, the Respondent submitted there was no deduction from the Complainants wages and no breach of the Act.

The applicable law

Section 1 of the Act states:

wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

(a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and

(b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:

Section 5 of the Payment of Wage Act 1991 deals with regulation of certain deductions made and payments received by employers and in particular section5(6)states;

• “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”.
  
  

As set out by the High Court in the case ofMarek Balan’s v Tesco Ltd[2020] 31 E.L.R. 125 the first issue for the Court to consider is what was properly payable. The Respondent has a sick pay policy in place which sets out the treatment of Social Welfare Illness benefits with effect from the 1^stJanuary 2012. There was no dispute between the parties that this was the basis on which sick pay was calculated. The excerpt from the policy as set out above that the Complainant is seeking to rely on states “All details on how to manage this process are provided under the procedures section below”that section lists the Social Welfare process as one of the reference documents. That document states that “the Company will adjust pay downwards by the value of the Illness benefit”which at the time of this complaint was €203. This appears to the Court to be a standard deduction regardless of the value of what the Respondent received. The policy, however, does have a qualification whereby the figure of €203 is applied pro rata based on part time hours where no Illness Benefit is due. In the case to hand the Respondent applied the pro rata option as it was more beneficial to the Complainant and resulted in a deduction of €104 as opposed to €203. On that basis the Court determines that during the relevant period the Complainant was paid what was properly payable in accordance with the sick leave policy.

Determination

The Court having carefully considered the issues set out above and the totality of the submissions from both parties determines that no breach of the Act occurred on the basis that the Complainant was paid what was properly payable during the relevant period. The appeal fails, the decision of the Adjudication Officer is upheld

The Court so determines.

	Signed on behalf of the Labour Court
	Louise O'Donnell
DC	______________________
18 July 2023	Deputy Chairman