ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00024013 & ADJ-00024015

Parties:

Complaint:

Date of Adjudication Hearing:  15/11/2021

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Procedure:

This complaint under Section 6 of the Payment of Wages Act 1991 was referred to the Workplace Relations Commission (hereinafter ‘WRC’) pursuant to Section 41 of the Workplace Relations Act 2015 on 28th August 2019.  The Complainant was represented by McInnes Dunne Solicitors whilst the Respondents were represented by IBEC.  The hearing of this complaint was stalled by the Covid-19 Pandemic and the introduction of the Workplace Relations (Miscellaneous Provisions) Act 2021 to meet the Supreme Court’s requirements in Zalewski 2021 IESC 24.  Following delegation to me by the Director, I inquired into this complaint and gave the Parties an opportunity to be heard and to present any relevant evidence.  I heard this complaint by remote hearing on 15th November 2021. 

The Complainant gave evidence under oath/affirmation.  The Respondents’ Representative was invited to call evidence on behalf of the Respondents and declined same.  Thereafter, the Parties were afforded time to make post-hearing legal submissions and a further time lapse arose pending receipt of submissions from one of the Parties and/or transmission to this Adjudication Officer.

This hearing was also held in public pursuant to Section 41(13) of the Workplace Relations Act 2015, as substituted by the Workplace Relations (Miscellaneous Provisions) Act 2021.  The Parties were made aware that their names would be published within this decision.  It was confirmed that the Complainant was employed by the First Respondent [DHL Express (Ireland) Ltd] and seconded to the Second Respondent [DHL Hub Leipzig Gmbh], an associated company.  The First Respondent was confirmed as the Complainant’s employer for the purposes of this complaint, being responsible for discharging his wages.  At the time, the Parties were negotiating a contract to fully transfer the Complainant’s employment to the Second Respondent but this had broken down owing to a number of issues including the subject matter of this complaint.  A separate complaint was filed against the Second Respondent under ADJ-00024015, and for the sake of clarity and completeness both are included within this decision and CA-00030553 is treated as being withdrawn.  All of the evidence, documentation and submissions on behalf of both Parties have been fully considered herein.

Background:

The Complainant is employed by the First Respondent as a Flying Loadmaster which entails significant travel abroad.  He contends that his remuneration package included a ‘Time Away From Base’ (TAFB) Allowance which was paid separately to his travel, food and accommodation expenses.  He maintains that from the end of April 2019, payment of the TAFB Allowance ceased without any agreement (either verbally or in writing) in contravention of Section 5 of the Payment of Wages Act 1991, giving rise to an unlawful deduction from his wages and leaving him at an ongoing loss.  He sought to have this payment reinstated along with an award of compensation for his losses to date.  The Respondents accept that this payment had been made to the Complainant until it was withdrawn from April 2019 but contend that he had no contractual entitlement to same.  It is further contended that it constituted ‘expenses’ and that any reduction arises from a company change from flat rate to vouched expenses.  As such this does not fall within the definition of ‘wages’ for the purposes of the Act and the WRC’s jurisdiction and therefore this complaint is not well-founded.

Summary of Complainant’s Case:

The Complainant gave oral evidence outlining the factual background to this complaint and confirming the contents of the written submissions made on his behalf.  He commenced employment with the First Respondent as a courier on 23rd October 1985.  He held a number of positions within the DHL Group until 2000, when he was promoted to his current position as a Flying Loadmaster on an annual salary of €50,873 per annum.  This role requires the Complainant, amongst other tasks, to supervise the safe loading of cargo onto aircraft owned by the DHL Group for transportation to various destinations around the World, and to prepare the necessary flight dispatch documentation.  Following this promotion, the Complainant was seconded to associated companies and most recently to the Second Respondent from March 2018 to date.  The First Respondent continues to pay the Complainant’s wages and to assume administrative responsibility for him in certain respects, albeit that he is subject to the direction of the Second Respondent.

The Complainant contended that as his position required him (and the other Loadmasters employed within the DHL Group) to spend a significant amount of time travelling and working abroad, with the consequent unsocial hours and disruption to routine and family life, the DHL Group, including the Second Respondent, introduced a number of new terms and conditions of employment in recognition of this, effective from 1st May 2013.  These were set out in a document entitled ‘Loadmaster Policies’ (a copy of which was submitted) including what became known as the ‘Time Away From Base’ (TAFB) Allowance or ‘Per Diem’ payment in respect of time spent working abroad. 

The Loadmaster Allowances section provided as follows: “Allowances for Loadmasters start as follows:  • 45 minutes before rostered flight departure time from- / EMA/LEJ if positioning.  • Once duties commence as dictated by AIMS if required pre-flight.  End of allowances:  • Once duties have ceased if required post flight.  • At arrival time at base if positioning.  All Duty Pay is calculated by AIMS the computerised rostering system.  Duty Pay is paid one month in arrears and an ‘achieved roster’ will be issued to each Loadmaster.  Duty Pay is £2.62 per hour, or part thereof.  An incidental overnight allowance of £5 domestic and £10 overseas shall be payable calculated by dividing time away from base by 24 hours.”  This payment was expressed in sterling and consisted of two distinct elements being: (i) Duty Pay and (ii) Overnight Allowance.  Under this arrangement, Loadmasters were entitled to Duty Pay of £2.62 per hour or part thereof, above their regular salary, commencing either 45 minutes before the rostered flight departure or once duties commenced as dictated by the AIMS computerised rostering system.  The entitlement to this additional payment terminated once the duties of the Loadmaster ceased post flight or at the arrival time at base if positioning.  In addition to Duty Pay, each Loadmaster was entitled to a payment of £5 per night spent in the UK and £10 per night spent in any other country away from home, by way of ‘incidental overnight allowance’.  Equivalent rates in euros were agreed by the First and Second Respondents and applied for the benefit of the Complainant in or around August 2013, as evidenced from the email exchanges between the First and Second Respondents and the Complainant (also submitted herein).  These equated to €3.85 per hour for every hour spent away from Dublin, plus €5.75 per night for every night spent in the UK, and €11.50 per night for every night spent in any other country.

The Complainant confirmed that the TAFB Allowance (comprising of the Duty Pay and the Overnight Allowance) was paid at a flat rate determined by reference to the time (number of hours) and country spent away from home.  It was not qualified in any way, nor subject to the production of receipts or vouching.  Neither was it specified that it was for expenses and the normal expenses usually associated with working abroad, namely accommodation (including breakfast) and local travel (taxis, etc.) was paid by the First Respondent in addition to the TAFB Allowance.  Nor was this Allowance necessary for sustenance in circumstances where the Respondents provided hot meals for employees, including the Complainant, on night flights over two hours in duration, long haul flights and daytime charter flights for the Respondents’ other customers.  The Complainant also had free canteen facilities available to him at DHL facilities based at East Midlands in UK, Vitoria in Spain and a subsidised canteen at Leipzig in Germany.  In short, the Complainant was free to do absolutely as he pleased with the entirety of the TAFB Allowance.  It was common case that the Complainant had received the TAFB Allowance a month in arrears without issue until withdrawn from April 2019. 

Separately, the Complainant had sought clarification regarding his reporting line and other matters of an administrative nature and he had received a draft new contract of employment in early 2019.  This proposed that the Second Respondent would unambiguously be his employer and made several other material changes to the terms and conditions of his employment.  These included a significant reduction in his annual leave entitlement, and a provision that he could be permanently relocated to a new place of work at the Second Respondent’s discretion.  The proposed new contract was silent on the matter of the TAFB Allowance.  It was subsequently confirmed by his Line Manager that TAFB Allowance was being removed, and a new policy was being introduced to provide specifically for expenses incurred by staff whilst on the Second Respondent’s business in respect of meals, accommodation and transport.  This was based upon stated spending parameters and a copy of the expenses policy to be effective from March 2019 was furnished to the Complainant and submitted herein with the draft contract.  The Complainant rejected the proposed new contract by email of 24th February 2019 to his Line Manager.  A meeting was held between the Complainant and the First Respondent’s Human Resources Manager to ascertain whether or not the Complainant’s concerns regarding the new contract and the removal of the TAFB Allowance could be addressed.  This proved inconclusive and whilst a number of the contractual matters discussed at the meeting were subsequently resolved, several others, including the TAFB Allowance were not.  Ultimately, it was agreed that referral to the WRC, subject to any right of appeal therefrom was required to determine the issue.  Accordingly, the Complainant referred this complaint to the WRC on 29th August 2019. 

The Complainant confirmed that the new employment contract remained unsigned by him.  The Respondents have not paid TAFB Allowance to him from April 2019 to date leaving him at an ongoing loss.  In the interim, the Complainant has kept a detailed running record of his losses with reference to his rosters worked showing what he would have received by way of TAFB Allowance.  The losses are ongoing and vary between several hundred and over two thousand euro per month.  The Complainant’s Solicitors updated this complaint and running loss in writing on a regular basis.  As of the month of October 2021, it was not in issue that the Complainant would have received €31,217 based upon his work abroad had his entitlement to TAFB Allowance not been in dispute.

None of the aforesaid facts were put in dispute under cross-examination of the Complainant aside from whether it was agreed that he does not submit any expenses until this matter was determined.  He agreed that the TAFB Allowance had not been taxed but said that it still appeared on his payslip. 

Legal Submissions

Section 1(i) of the Payment of Wages Act 1991 defines “wages” for the purposes of the Act as follows: “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)…’  The definition of wages expressly excludes, inter alia, any payment in respect of expenses incurred by the employee in carrying out his/her employment as follows: “Provided however that the following payments shall not be regarded as wages for the purposes of this definition: (i) any payment in respect of expenses incurred by the employee in carrying out his employment,”  Section 5 of the Act relates to the regulation of “deductions” made by employers to an employees’ wages and provides that: “(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.”  Section 5(6) goes on to state that: “(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.”  Section 6 of the Act sets out the procedure for referral to the WRC and remedies.

The Complainant rejects the Respondents’ contention that he is not contractually entitled to the TAFB Allowance and that the TAFB Allowance constitutes ‘expenses’ which are excluded from the definition of wages under Section 1(i) of the Payment of Wages Act 1991.  The Complainant claims that the failure of the Respondents to pay him the TAFB Allowance to which he was entitled from April 2019 to date, constitutes a contravention of Section 5 of the Payment of Wages Act 1991, giving rise to an unlawful deduction from his wages and leaving him at an ongoing loss.  The withdrawal of TAFB Allowance was not authorised by him, either in writing or otherwise, and is therefore in clear breach of Section 5 of the Act.  The Complainant requests a finding from the WRC to this effect, together with reinstatement of this payment and/or compensation in respect of same. 

In rebuttal to the Respondents’ contention that this complaint turns on whether the document entitled ‘Loadmasters Policies’ constituted the Complainant’s contractual entitlement to the payment of TAFB Allowance, it was submitted that this document was only the starting point.  Along with the email exchanges, it was entirely consistent with the calculation of the TAFB Allowance which had been paid from 2013 to 2019 without any requirement that it be used for expenses.  Hence, there could not be any question as to the Complainant’s contractual entitlement to same.

Further legal submissions were received on behalf of the Complainant setting out the relevant authorities addressing the interpretation of “any payment in respect of expenses incurred by the employee in carrying out his employment” as contained in Section 1(i) of the Payment of Wages Act 1991 in this jurisdiction and the similarly worded Section 7(2)(b) of the Wages Act 1986 in England and Wales.  It was submitted that London Borough of Southwark -v- O’Brien [1996] I.R.L.R. 420 is the leading authority on the wages / expenses issue.  In this case, the English Employment Appeal Tribunal (EAT) considered the meaning of the wording: “payment in respect of expenses incurred by the worker in carrying out his employment” in Section 7(2)(b) of the Wages Act 1986, which like the Irish definition of ‘wages’, serves to exclude expenses from the definition of wages.  The English EAT overturned the finding of the Chairman of the Industrial Tribunal that the deduction of the payment of a mileage allowance to the applicant by his employers was an unlawful deduction contrary to the Wages Act 1986 on the basis that “the mileage allowance constituted wages because it was a benefit over and above expenses.”  Mummery J. adopted a broad interpretation of expenses as defined under Section 7(2)(b), applying it to both ‘true’ expenses and to those expenses which, in reality, contain an element of remuneration: “…But when asking ‘ Is the payment in respect of expenses incurred by the employee”?, it is not necessary for the payer to show that what he has paid is precisely a reimbursement of the sum expended by the worker.  “In respect of” means “referring to” or “relating to” or concerning in a general way, whereas the expression used by the Chairman in his decision “payment of expenses” would appear (wrongly, in our view) to equate the statutory provision with reimbursement of a precise amount.”  Mummery J. also agreed with the submission that where a payment is dressed-up as 'expenses' but is, in reality, simply remuneration, it is open to the Tribunal to conclude that ‘expenses’ is a misdescription of the payment actually being made. 

The English case of Mears Ltd -v- Salt (Unreported, United Kingdom Employment Appeals Tribunal, 1 June 2012) UKEAT/0522/11/LA involved the question of whether the Tribunal’s finding that there had been an unlawful deduction from the wages of five employees was well founded and it had the jurisdiction to hear their complaint relating to the removal of an historic travel allowance.  The appellant employer contended that the ‘electrician’s travel time allowance’ (ETTA) at issue was a payment in respect of expenses meaning that the Tribunal at first instance had no jurisdiction to hear the claim.  At first instance, the Tribunal had made a number of findings on the nature of the ETTA.  The payment had, initially, been based on a complex schedule of travel costs between the various depots at which Birmingham City Council’s electricians were based.  Allowances were calculated based upon the specific costs involved in travelling between depots by bus and a specific allocation of time required to make each relevant journey.  The Tribunal had found that the objective of the ETTA was to compensate for the loss of productivity bonuses caused by electricians being required to travel to a depot other than their original base.  The Tribunal had further found that the ETTA no longer compensated the employees for time spent, or productivity impaired as a result of the configuration of the depots in modern times.  They concluded that the ETTA was no longer contingent, or conditional, upon travel time being incurred or productivity being impaired.  At some point the ETTA had become a fixed daily premium payment in respect of each day worked.  Wilkie J. noted that one of the employees had referred to the payment in her claim form as a ‘disturbance allowance.’  The Tribunal had determined that the ETTA, in its modern incarnation, was a specific allowance payable by reference to days worked and not by reference to any specific travel undertaken or expenses actually incurred.  It was therefore not a payment in respect of expenses, but an emolument and hence within the scope of the statutory unlawful deduction from the wages regime.  Wilkie J. concluded as follows: “But in this case, what was being claimed in the modern incarnation of the ETTA, was an allowance.  It crystallised its previous incarnation which had been an agreed form of payment to compensate for loss of opportunity to earn a productivity bonus because of the time, otherwise available for productive work, which was taken up by travelling.  In our judgment, the Employment Tribunal was right as a matter of fact and degree, to conclude that, neither in its original form, for its original purpose, nor in its modern form, could it sensibly be said to be a payment in respect of expenses...”  The deduction in Mears involved the daily payment of a historic travel allowance which had become consolidated into a contractual payment unrelated to actual travel.  On behalf of the Complainant herein, it was submitted that this was authority for the proposition that an allowance can be treated as wages unless the allowance actually involves the payment of an expense incurred by the employee in the course of his or her employment.

The passage from Mummery J. in O’Brien cited above was quoted with approval by the Irish High Court in Cleary & Others -v- B&Q Ireland Limited [2016] 1 I.R. 276 which involved an appeal on a point of law from the EAT by a group of B&Q employees against (i) the retrospective and prospective discontinuance of a bonus scheme and (ii) the withdrawal of a ‘zone allowance’ of 41 cent per hour payable to staff working at the respondent’s stores in the Dublin region in addition to their wages because the cost of living in Dublin was deemed to be higher than in other regions.  In his Judgment, McDermott J. determined that the EAT had erred in law in finding that the respondent was not entitled to withdraw the bonus scheme in respect of payments which had accrued to employees and were properly payable within the meaning of the Payment of Wages Act 1991.  The wages / expenses issue arose during his determination of the ‘zone allowance’ element of the appeal.  The EAT had found that the ‘zone allowance’ had been paid separately from the amount paid for basic salary for the purpose of “compensation for working in a particular area” and was properly to be regarded as an expense based upon a wider definition than the more familiar vouched expense.  Whilst McDermott J. acknowledged that “the zone allowance in this case is clearly not a payment in respect of expenditure by an employee in carrying out the duties of his or her employment which was then recouped from the employer”, he noted that it was not open to the Court, on appeal, to enter upon a de novo hearing of the facts of the case.  In this respect, he was satisfied that there was a sufficient evidential basis upon which the EAT was entitled to make its findings of fact in respect of whether the payment was an expense or not and that it had not been established that these findings were unsustainable.  However, in line with O’Brien, and citing Mears, McDermott J. recognised that a payment designated as an expense by an employer may, in fact, be found to be wages for the purposes of the 1991 Act: “There may be cases in which a payment designated by an employer as an expense may be properly regarded as part of the wage payable to an employee.  For example in Mears Ltd. v. Salt (Unreported, United Kingdom Employment Appeals Tribunal, 1 June 2012) the United Kingdom Employment Appeals Tribunal held that a travel allowance paid as a daily allowance to employees, irrespective of whether travel expenses had been incurred, constituted wages rather than expenses because in fact no expense was incurred.”

It was submitted that the High Court’s finding that the EAT had not erred in law in treating the ‘zone allowance’ paid to the appellants as an expense is difficult to understand.  B&Q employees working in the Dublin stores, where the cost of living was higher, received an additional payment from their employer which gave them a higher level of remuneration per hour than their co-workers elsewhere.  This was entirely unvouched, increased in accordance with the number of hours worked, and was paid to all employees working in the ‘zone’ regardless of any particular expenses incurred.  This allowance is clearly better characterised as ‘wages’ than a payment in respect of expenses incurred by the Dublin-based B&Q employees in carrying out their employment.  As Bruton notes: “It is difficult to see on any analysis how such a payment, which is effectively an uplift in wages, could be classified as an expense such as to fall outside the parameters of the 1991 Act.” (A Briefing from the Editor Claire Bruton [2016] 27 E.L.R. ix. 12)  McDermott J. himself had recognised the very limited precedential value of the High Court’s decision in determining whether a particular payment constitutes wages or a payment in respect of expenses incurred, emphasising that each case must be decided on its own facts: “I acknowledge that the nature and extent of the types of payment made to employees vary widely and the decision in this case, on this issue, has very limited value as a precedent: each case will be decided on its own facts.” [2016] 1 I.R. 276 at 297, para 67 11

Another High Court Judgment in McKenzie & Anor -v- Minister for Finance & Others [2011] E.L.R 109 involved Judicial Review Proceedings arising from a Government decision to reduce rates of expense allowances for motor travel and subsistence payments to public servants owing to the economic downturn.  On foot of this decision the Government reduced payments made under a special allowance called the ‘RDF allowance’ payable to non-commissioned members of the Defence Forces under their terms and conditions of service, if involved in training duties with the Reserve Defence Force.  This payment was separate to and distinct from the usual travel and subsistence payments and was specifically intended to cover expenses including subsistence incurred by members of the Defence Forces involved in such duties.  This allowance was stopped by an amendment to the Defence Force Regulations.  As part of their Statement of Grounds, the applicants contented that the Minister for Defence had acted in breach of and/or ultra vires the Payment of Wages Act 1991 in enacting legislation whereby the RDF allowance had been stopped.  They also contended that the variation in the RDF Allowance constituted a deduction within the meaning of Section 5 of the Act.  The respondents submitted that the reduction in the RDF allowances was not a ‘deduction’ from wages payable, but a reduction of the allowance payable and the Act did not apply to reductions, as distinct from deductions.  It was further submitted that the question of non-compliance with Section 5 of the Payment of Wages Act 1991 was not properly justiciable before the Court, as the legislature had provided a statutory enforcement mechanism.  Edwards J. agreed that the Payments of Wages Act 1991 was not justiciable before the High Court in circumstances where the Act provided a specific enforcement mechanism in another forum.  By way of obiter dictum, Edwards J. also held that the reduction in the RDF allowance was not a ‘deduction’ from wages payable but a reduction of the allowance payable.  It is notable that this Judgment makes no mention of the definition of ‘expenses’ within the meaning of the Act, and there was no reference to any submission in this regard having been made to the High Court.  This obiter distinction between impermissible deductions and permissible reductions caused enormous confusion in subsequent EAT and Rights Commissioner determinations under Section 5 of the Payment of Wages Act 1991.

The later High Court Judgments in Earagail Eisc Teoranta -v- Doherty [2015] IEHC 347 and Petkus -v- Complete Highway Care Limited [2017] IEHC 12 sought to nullify the impact of the McKenzie decision by limiting it to its own facts.  Earagail Eisc Teoranta involved an appeal on a point of law to the High Court from the decision of the EAT that a 10% reduction in payroll costs was a deduction contrary to Section 5(1)(b) of the Payment of Wages Act 1991.  The appellant, in reliance on McKenzie, had submitted that the 10% pay cut was a general, across the board ‘reduction’ to salary and therefore not a ‘deduction’ under the Act.  In distinguishing McKenzie, Kearns P. emphasised the distinction between ‘wages’ and ‘expenses’ incurred by an employee in the course of his/her employment: “The Court is also satisfied that the decision in McKenzie is distinguishable from the facts in the present case in a number of respects.  The Court accepts the submissions of the respondents that the remarks of Edwards J. in relation to the ‘reduction v. deduction’ were obiter.  Furthermore, McKenzie related to the reduction in an allowance payable in respect of motor travel and subsistence.  The definition of ‘wages’ in the 1991 Act expressly excludes any payment in respect of expenses incurred by the employee in carrying out his employment and so the finding by Edwards J. that the ‘RDF Allowance’ did not come within the scope of a deduction under the Act relates to an entirely different situation to the present case where employees salaries were reduced.  I am satisfied therefore that the Tribunal was entitled to proceed to consider the complaints on the basis that the reduction to the employees wages in the present case may have constituted a deduction in breach of the 1991 Act.”

Petkus also arose from an appeal to the High Court on a point of law from a finding of the EAT that based on McKenzie, the Payment of Wages Act did not apply to a 10% downwards adjustment of the appellants’ pay.  The EAT had found that the 10% pay cut was a reduction, and not a deduction, on the grounds that the employees’ statutory liabilities (PRSI, USC, PAYE) had been altered accordingly as a result of the pay cut.  This analysis was rejected by White J.: “Because an Employer arbitrarily reduces the wages of an employee, without the consent of the employee, and alters the amount of PAYE, PRSU, and USC accordingly does not necessarily remove the reduction from the jurisdiction of the Payment of Wages Act 1991, entitling the Employer to ignore it’s [sic] provisions.”  White J. cited Earagail with approval during a discussion of the difficulties caused by the McKenzie decision, wherein he referred to the impact of McKenzie on a series of EAT and Rights Commissioner decisions: “Unfortunately the McKenzie case has caused particular confusion to the determinations of Employment Appeals Tribunal and Rights Commissioners on the issue of Section 5 of the Payment of Wages Act 1991…. It is unfortunate that an obiter sentence in a judgment of this Court which did not relate to the payment of wages at all and which was put into practice by way of statutory instrument has caused such confusion.  The judgment of Kearns P. in Earagail Eisc Teoranta v Doherty of 5 June 2015 has clarified that issue.  The McKenzie case is not precedent to allow a reduction of wages which does not offend s. 5 of the Payment of Wages Act 1991.”  Along with other decision-making deficiencies, White J. concluded that the EAT had fallen into an error of law in failing to consider the entirety of the circumstances and had failed to properly consider or apply the correct interpretation and intention of that legislation protecting the payment of wages of workers under the Act and the Constitution.  The matter was remitted back to the EAT for further determination. 

It was submitted that it is clear from both the Earagail and Petkus Judgments that the obiter dictum in McKenzie is very much limited to its own particular facts, and that there is no distinction to be drawn between a reduction in wages and a deduction in wages.  A reduction in wages is the same as a deduction in wages and is therefore not permitted under the Payment of Wages Act 1991. 

It was submitted that the following principles can be distilled from the authorities set out above:

(i)  If a payment to an employee is not to be regarded as wages under Section 1(i) of the Payment of Wages Act 1991, it must be in respect of expenses incurred by that employee in carrying out his/her employment.  (AO’s Note: There are other exceptions which do not apply in the instant case.)

(ii)  It can sometimes be difficult to determine whether a particular payment is one of expenses or wages. (Harvey on Industrial Relations and Employment Law, 2010, para 352.03)

(iii)  The assessment of whether a payment is by way of wages or expenses is, in each case, one of fact and degree. (London Borough of Southwark -v- O’Brien [1996] I.R.L.R. 420)

(iv)  Each case must be determined on its own facts.(Cleary & Others -v- B&Q Ireland Limited [2016] 1 I.R. 276)

(v)  Expenses can apply widely to cover both ‘true’ expenses and expenses which include an element of indirect remuneration. (London Borough of Southwark -v- O’Brien [1996] I.R.L.R. 420)

(vi)  A payment in excess of actual expenditure incurred does not cease to be in respect of expenses merely because it is generous. (London Borough of Southwark -v- O’Brien [1996] I.R.L.R. 420)

(vii)  There may be cases in which a payment designated by an employer as an expense may be properly regarded as part of the wages payable to an employee. (Cleary & Others -v- B&Q Ireland Limited [2016] 1 I.R. 276)

(viii)  An allowance paid as a daily allowance to employees, irrespective of whether expenses have been incurred, constitutes wages rather than expenses because no expense has been incurred. (Mears Ltd -v- Salt [Unreported, United Kingdom Employment Appeals Tribunal, 1 June 2012] UKEAT/0522/11/LA 25)

(ix)  There is no distinction to be drawn between a reduction of wages and a deduction of wages. (Earagail Eisc Teoranta -v- Doherty [2015] IEHC 347 & Petkus -v- Complete Highway Care Limited [2017] IEHC 12)

Applying the law to the facts herein, it was submitted that the ‘Loadmasters Policies’ document provides for the payment of two allowances to the Complainant, namely, Duty Pay and Overnight Allowance, which together constitute the TAFB Allowance.  Section 1(i) of the Payment of Wages Act 1991, which removes expenses from the definition of wages, cannot apply in circumstances where there is simply no nexus between a payment to an employee and any expense being incurred.  Under the Loadmasters Policies, the Complainant is entitled to Duty Pay, calculated at an hourly rate, regardless of whether any expense is incurred by him or not.  Significantly, there is no link between the payment of Duty Pay to the Complainant and any expense whatsoever being incurred by him during his employment.  There is no stipulation in the documentation or email exchanges as to how the Duty Pay was to be spent.  Thus the Duty Pay must be treated as ‘wages’ under the Act.  Whether the Overnight Allowance payment constitutes wages or a payment in respect of expenses is a question of fact and degree.  The Overnight Allowance was paid to the Complainant regardless of whether any expense was actually incurred by him during his employment, and in circumstances where all normal expenses had already been covered by the Respondents elsewhere.  Like his salary, the Complainant was free to do whatever he wished with the money from these payments.  There was no requirement for any vouching documentation or receipts to show that he had incurred any actual expense in order to receive payment of the Allowance.  Furthermore, normal items of expenditure which an employee might be expected to incur during such trips had already been covered by the Respondent.  The Complainant’s accommodation (including breakfast) and local travel expenses were paid by the Respondents in addition to the Overnight Allowance.  The Complainant was also provided with hot meals on certain flights and had access to canteen facilities in other countries.  There is no stipulation in the documentation or email exchanges as to how the Overnight Allowance was to be spent and accordingly, this must also be treated as ‘wages’.

Based on the aforesaid caselaw, it was reiterated that neither element of the TAFB Allowance, being Duty Pay and Overnight Allowance are payments in respect of expenses within the meaning of Section (i) of the Payment of Wages Act 1991.  It follows that the entirety of the TAFB Allowance must be regarded as wages for the purposes of Section 1(i) of the Act.  It also follows that the withdrawal of the TAFB Allowance from April 2019, without any authorisation by him is therefore in clear contravention of Section 5 of the Act.  The Complainant requests a finding from the WRC to this effect, together with reinstatement of this payment and/or compensation in respect of same. 

Summary of Respondent’s Case:

The Respondents declined an invitation to adduce evidence and submitted a written submission disputing the Complainant’s complaint under Section 6 of the Payment of Wages Act 1991.  The Respondents’ Representative submitted that there are no facts in issue and it was accepted that the TAFB Allowance had been made to the Complainant.  However, the burden of proof rested with the Complainant to show that he was contractually entitled to this payment which turned on the document entitled ‘Loadmasters Policies’.  It was submitted that this document did not constitute a contractual entitlement owing to the fact that it was marked ‘DRAFT’, the Parties are not named, it contains no date or signatures and it is a ‘UK document’.  Aligned to this was a contention that the payment was in respect of expenses expressly excluded under the 1991 Act and any shortfall arose from a change in the manner in which expenses were calculated from a flat rate to a computerised vouching system.  In support of this contention, the TAFB Allowance had not been subject to income tax.  Although this Adjudication Officer pointed out that the document itself was not necessarily determinative of the issue of contractual entitlement to this payment and/or indeed whether the payment constituted expenses or wages, the Respondents’ Representative maintained this position.

The written submissions confirmed that the Complainant is an employee of the First Respondent since 1985 and currently holds the position of ‘Expert Network Operations - Airside Loadmaster’ pursuant to a contract signed in January 2018 and is subject to the “DHL Express Europe prevailing Policies and Procedures…” under this contract.  It was submitted that in early 2019, the Respondent introduced a new computer system for employees to input data related to meal allowance claims.  This change was communicated to all affected staff including the Complainant in February 2019.  In April 2019, the Complainant disputed his meal allowance payment for the end of March 2019.  He advised his Line Manager that he was entitled to a ‘Time Away From Base’ Allowance (TAFB) by email of 14th April 2019.  His Line Manager responded on the same date advising that this payment did not form part of his contractual entitlements and again asked him to use the new system to claim his expenses.  A meeting was arranged between the Complainant and the HR Team to try and resolve the issue.  It was contended that the Complainant had cancelled this meeting on the basis that he was seeking legal advice.  The Complainant’s Line Manager emailed him again on 29th April 2019 pointing out that he had not heard anything further from him and asking when he would like to meet with HR.  This meeting with the HR Team took place on 3rd May 2019.  At the outset of the meeting, the Complainant claimed that he did not have a statement of the terms and conditions of his employment and was provided with a copy of same.  Regarding the payment of TAFB, the Complainant claimed to be in possession of a contractual document guaranteeing TAFB Allowance as a contractual entitlement.  The Respondents were not aware of the existence of any such document.  The meeting concluded with the Complainant agreeing to provide this document in support of his position.  Nothing further was heard from the Complainant and no documentation was forthcoming. 

On 21st May 2019, the Complainant’s Line Manager emailed him asking if he could advise on how to proceed.  The Complainant responded by saying that the ball was in HR’s court and did not provide the document supporting his claim.  On 22nd May 2019, the Complainant emailed the HR Director stating that the matter was on the agenda of a meeting in 2013 and further information could be “found in the DHL Ops manual section 7.”  The Complainant did not provide the document in question notwithstanding further requests and instead referred this complaint to the WRC.  The document as outlined above was first provided within the Complainant’s submission to the WRC. 

It was submitted that the TAFB Allowance constitutes a payment in respect of expenses and is excluded from the definition of ‘wages’ contained under Section 1(i) of the Payment of Wages Act 1991 which provides: “the following payments shall not be regarded as wages for the purposes of this definition: (i) any payment in respect of expenses incurred by the employee in carrying out his employments,”  The change that took place in early 2019 was in terms of how those expenses were to be paid and the Complainant continues to receive payment of his wages.  Accordingly, this did not constitute a breach of the 1991 Act for the purposes of referring a complaint for the non-payment of wages to the WRC.  The Respondent also refutes the Complainant’s contention that he has a contractual entitlement to this Allowance.  Regarding the ‘Loadmasters Policies’ document relied upon by the Complainant to maintain his entitlement to the TAFB Allowance, it was submitted that this does not constitute a contract as it is marked ‘DRAFT’, the Parties are not named, it contains no date or signatures and it is a ‘UK document’ with no application within this jurisdiction. 

Further post-hearing submissions were made on behalf of the Respondents addressing the legal authorities on the matters in issue.  It was submitted that the Complainant had placed over-reliance on the UK caselaw and omitted to consider the question of whether he was contractually entitled to the payment in question.  This matter was addressed by the High Court in Marek Balans -v- Tesco Ireland Limited [2020] IEHC 55, wherein MacGrath J. considered Section 5 of the 1991 Act as follows:

“Section 5 of the Act of 1991 prohibits the making of deductions from wages save in certain circumstances.  Section 5(6) provides that where 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, then, except insofar as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment should be treated as a deduction made by the employer from the wages of the employee on the occasion.

Central to the court's analysis must be the concepts of wages properly payable and the circumstances in which, if there is a deficiency in respect of those such payments, it arose as a result of an error of computation.

The provisions of s.5(6) of the Act of 1991 were considered by Finnegan P. in Dunnes Stores (Cornels court) Limited v Lacey [20071 1 1.R. 478.  A Rights Commissioner had found in favour of the respondents holding that the cessation of service pay mounted to an unlawful deduction, which was upheld by the Employment Appeals Tribunal.  It was argued that the Employment Appeals Tribunal should address the question of remuneration properly payable to an employee before considering the question of a deduction or together a deduction was unlawful.  Finnegan P. concluded at p.482:

"I am satisfied upon careful perusal of the documents relied upon by the respondents that the some cannot represent the agreement or an acknowledgment of the agreement contended for but rather contain a clear denial of the existence of any such agreement.  No other evidence of an agreement was proffered.

In these circumstances I am satisfied that the Employment Appeals Tribunal erred in law in failing to address the question of the remuneration properly payable to the respondents, such a determination being essential to the making by it of a determination.

Insofar as implicit in the determination of the Employment Appeals Tribunal a finding is that the appellant agreed to pay to the respondents service pay and a long service increment then such finding was made without evidence and indeed in the face of the evidence: I am satisfied that there has been no deduction of pay from the respondents within the terms of the Act but rather their remuneration has been unilaterally increased by the appellant making a payment which recognises their long service in excess of that which was payable prior to the 18 September 2002.  In either case there has been an error of laze.  Accordingly I allow the appeal. “

This decision supports the proposition that the first matter which should be addressed by the Labour Court is to determine what wages are properly payable under the contract.”

It was submitted that this Judgment makes it clear that the Adjudication Officer, when considering a complaint under the Act, must firstly determine the wages which were properly payable to the employee on the occasion.  It is only when that is determined that the Adjudication Officer can proceed to examine whether that amount differs from that which was actually paid on the occasion and whether any difference amounted to a deduction within the meaning of the 1991 Act.  In the instant case, the Complainant has relied upon a document entitled 'Loadmasters Policies'.  This cannot constitute a contract as it does not contain even the most basic elements that constitute a contract  and is marked ‘DRAFT’, the Parties are not named, it contains no date or signatures and it is a ‘UK document’.  Thus the contention made on behalf of the Complainant that it does is untenable.

It was further submitted that the WRC has no jurisdiction to hear this complaint under the Payment of Wages Act 1991 on the basis that any deduction was in fact a reduction and reliance was placed on McKenzie & Anor -v- Minister for Finance & Others [2010] IEHC 461 as Edwards J. stated: “Finally, the Court agrees with the respondents' submission that the Payment of Wages Act, 1991 has no application in the circumstances of this case.  First, as has been pointed out, correctly in the Court's view, the reduction in the RDF allowance is not a "deduction " from wages payable, it is a reduction of the allowance payable.  The Act has no application to reductions as distinct from "deductions".”

In conclusion, it was submitted that the Complainant has failed to demonstrate any contractual entitlement to the TAFB Allowance and has failed to establish any deduction in wages as defined by the Payment of Wages Act 1991.  The Respondents have changed the way in which the Complainant receives his work-related expenses by moving from a flat rate to a vouched computerised system.  The Complainant has refused to engage with the new system and claim his expenses accordingly, resulting in the loss he is now claiming.  Accordingly, this complaint is not well-founded. 

Findings and Conclusions:

It is necessary to examine the facts giving rise to this complaint in light of the relevant legislative provisions for the material time of this complaint.  Section 1(i) of the Payment of Wages Act 1991 defines ‘wages’ in relation to an employee as “…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:  Provided however that the following payments shall not be regarded as wages for the purposes of this definition: (i)any payment in respect of expenses incurred by the employee in carrying out his employment, (ii)any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office, (iii)any payment referable to the employee's redundancy, (iv)any payment to the employee otherwise than in his capacity as an employee, (v)any payment in kind or benefit” 

Section 5(1) of the Payment of Wages Act 1991 provides: “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.”  The remainder of the Section 5 provides for other circumstances in which an employer can make a lawful deduction from an employee’s wages which are not applicable to the instant case.   Section 6 of the Act provides for the referral of complaints to the WRC and remedies.

As stipulated in Marek Balans -v- Tesco Ireland Limited [2020] IEHC 55 approving Dunnes Stores (Cornels court) Limited -v- Lacey [2007] 1 1.R. 478, a decision-maker must firstly determine what wages are properly payable under the employment contract before determining whether there has been a deduction under the Payment of Wages Act 1991.  Each case will turn on its own particular facts and in the instant case, it will be necessary to ascertain (1) whether the TAFB Allowance constituted a term of the Complainant’s contract and (2) whether the TAFB Allowance constitutes an expense or an emolument within the definition of ‘wages’ under Section 1(i) of the Payment of Wages Act 1991 before determining whether there has been a contravention of Section 5 of the Act.

Turning to the first issue, it is well established law that “Terms can be implied into a contract of employment in a variety of ways - such as by statute, by law, by custom and practice and by the conduct of the parties.  Once a term is implied into a contract, it will have the same effect as if it was written down and expressed between the parties.” (Regan & Murphy Employment Law, Bloomsbury, 2nd Edition [2017], Paragraph 3.48)  It was not disputed by the Respondents that monthly payments had been made to the Complainant from 2013 until April 2019 in a manner that was consistent with the terms set out in the document entitled ‘Loadmaster Policies’ and the email exchanges between the Parties.  The fact that the latter document was in draft form, did not name the Parties, was not signed and was in sterling format is inconsequential as this document simply speaks to what was agreed between the Parties.  Nor is it necessary that such agreement be in writing and signed by the Parties within the employment contract or by way of amendment.  No evidence was adduced on behalf of the Respondents putting the provenance of this document into question or displacing the Complainant’s evidence as to how the Allowance came about and what it was intended for which I found to be wholly credible.  Nor were any contract terms allowing for the Respondents to unilaterally vary the payment terms identified on behalf of the Respondents and/or any evidence adduced in respect of same.  I am therefore satisfied on the balance of probabilities that the Complainant had an established contractual entitlement to payment of the TAFB Allowance. 

Even in the absence of the ‘Loadmasters Policies’ document and emails, I would have reached the same conclusion based upon the fact that the payment had been made as a matter of custom and practice and absent any evidence of the Respondents’ entitlement to unilaterally withdraw same.

The next issue between the Parties to be determined is whether the TAFB Allowance is a payment “in respect of expenses incurred by the employee in carrying out his employment” or “…any other emolument, referable to his employment, whether payable under his contract of employment or otherwise” constituting ‘wages’ for the purposes of the Payment of Wages Act 1991.  If found to be ‘wages’, non-payment will constitute a contravention of Section 5 of the Payment of Wages Act 1991, if not authorised under statute, a term of the employment contract, the employee’s written consent or falling within the other exceptions provided.  In such instances, the WRC has jurisdiction to investigate a complaint pertaining to a breach of these provisions under Section 6 of the Act.  However, if the payment in question is found to be in respect of expenses incurred by the employee in carrying out his/her employment, then any dispute as to the entitlement to the payment of same falls outside of the WRC’s statutory remit and solely within the jurisdiction of the civil courts.

It is clear from the caselaw cited above, that the assessment of whether a payment is by way of expenses or wages is one of fact and degree and accordingly, each case will turn on its own particular facts.  At a minimum there has to be some evidence that the TAFB Allowance or an element thereof was intended to defray expenses incurred by the Complainant in the course of his employment.  It is not sufficient to simply state that a payment was for the purposes of expenses in an evidential vacuum.  As observed by McDermott, J. in Cleary & Others -v- B&Q Ireland Limited [2016] 1 I.R. 276, “There may be cases in which a payment designated by an employer as an expense may be properly regarded as part of the wage payable to an employee.”  Therefore, it is necessary for a decision-maker determining this issue to look behind the labels attributed to a particular payment and assess the surrounding factual matrix to determine its actuality.  The facts may be less than clear cut as apparent from the authorities cited, such as where a payment initially intended to cover expenses incurred by an employee in carrying out his/her employment ceases to be required for such expenses but continues to be made, or situations where a payment is intended to partially cover expenses, is paid at a flat rate, does not require vouching and/or is generous in nature. 

However, in the instant case, the position is straight-forward.  The facts proffered by the Complainant have not been put in issue, either by way of cross-examination or through adducing evidence and/or documentation displacing same.  In particular, it was not in issue that under the pre-existing payment regime, the Complainant had been paid TAFB Allowance, comprising of Duty Pay (calculated at an hourly rate for time away from Ireland) and Overnight Allowance (at a fixed rate per night spent away depending on the country), regardless of whether any expense was incurred by him or not.  Like his salary, he was free to do whatever he wished with these payments.  There was no requirement for any vouching to show that he had incurred any actual expense in order to receive payment.  Furthermore, normal items of expenditure which an employee might be expected to incur during such trips had already been covered by the Respondents.  There was no documentary or other evidence indicating that these payments were intended for the purposes of discharging expenses incurred in carrying out his employment.  Thus, the fact that the TAFB Allowance had been untaxed does not assist one way or the other and is a matter for Revenue. 

Based upon the evidence adduced as outlined above, I am satisfied that TAFB Allowance was intended to compensate Loadmasters for having to regularly work abroad away from home and the consequent anti-social hours and disruption to routine and family life.  Thus, it was an uplift in wages akin to any unsocial working hours payment.  Accordingly, I find that the TAFB Allowance was an emolument within the meaning of ‘wages’ under Section 1(i) of the Payment of Wages Act 1991. 

I am also cognisant of the clarification of the legal position that there is no distinction between a reduction and a deduction and consequently reject the Respondents’ submission in this respect.

Having satisfied myself that the TAFB Allowance was properly payable to the Complainant by way of wages, it is necessary to turn to the issue of whether there was a contravention of Section 5 of the Payment of Wages Act 1991.  It is not disputed that the Respondents had unilaterally removed the payment of TAFB Allowance from the Complainant from April 2019.  No statutory provision, term of the employment contract, written consent or any other exception under the Act was identified on behalf of the Respondents to lawfully permit same.  Conversely, there was clear written and oral evidence of the Complainant’s lack of agreement to this course.  Accordingly, I am satisfied on the balance of probabilities that the withdrawal of TAFB Allowance to the Complainant constituted a contravention of Section 5 of the Payment of Wages Act 1991 and unlawful deduction in his wages. In so finding, it is noted that the Complainant’s Solicitors updated this complaint and running loss in writing on a regular basis and at no stage have the Respondents raised any issue as to time. 

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to this complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.  I find this complaint to be well-founded for the reasons set out aforesaid.  For the record, I find that the Complainant is contractually entitled to the payment of TAFB Allowance and further that it constitutes an emolument as opposed to expenses for the purposes of Section 1(i) of the Payment of Wages Act 1991.  It follows that any continuance of the non-payment of TAFB Allowance to the Complainant constitutes a further contravention of Section 5 of the Payment of Wages Act 1991. 

Once a complaint has been declared well-founded, Section 6(1) of the Payment of Wages Act 1991 provides that an Adjudication Officer may direct an employer to pay an employee compensation of such amount (if any) as considered reasonable in the circumstances not exceeding: “(a) the net amount of the wages (after the making of any lawful deduction therefrom) that- (i) in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or (ii) in case the complaint related to a payment, where paid to the employee in respect of the week immediately preceding the date of payment, or (b) if the amount of the deduction or payment is greater than the amount referred to in paragraph (a), twice the former amount.”  As at the hearing date, the amount that the Complainant would have received as TAFB Allowance was €31,217 accruing on a monthly basis.  This constitutes a significant deficit in his wages.  Given the WRC’s jurisdiction to award up to twice the net amount of wages due where greater than a week’s net wages, I consider it reasonable in all of the circumstances to direct that the First Respondent pays the Complainant compensation in the sum of €52,000 as equating to the current estimated loss (subject to any lawful deductions).

Dated:   14th March 2023

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Key Words:  Sections 1, 5 & 6 of the Payment of Wages Act 1991 – Definition of Wages / Expenses for the purposes of Section 1(i) of the Act and jurisdiction of the Workplace Relations Commission