ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00037191

Parties:

Complaint:

Date of Adjudication Hearing:  15/09/2022

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Procedure:

This complaint was referred to the Workplace Relations Commission (hereinafter ‘WRC’) pursuant to Section 41 of the Workplace Relations Act 2015 on 8th February 2022.  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 held a face-to-face hearing at Lansdowne House on 15th September 2022. The Complainant was in attendance and represented himself.  The Respondent had ceased trading and there was no attendance by or on behalf of the Respondent or any Receiver appointed on its behalf and no application had been made to the WRC for an adjournment.  I satisfied myself that a letter dated 15th July 2022 had issued to the Respondent at its last known address, confirming the venue, date and time of the hearing and was not returned undelivered.  I confirmed that the Respondent had not contacted the WRC to indicate any difficulty attending the hearing.  I allowed a period of 30 minutes to elapse to enable the Respondent to attend before commencing the hearing. 

The hearing was held in public pursuant to Section 41(13) of the Workplace Relations Act 2015 as amended by the Workplace Relations (Miscellaneous Provisions) Act 2021.  The Complainant’s evidence was taken under oath and he was made aware that the Parties’ names would be published within the decision.  All of the evidence and documentation submitted has been considered.

Background:

The Complainant was employed by the Respondent as a Claims Handler.  He earned €47,000 gross per annum, comprising of a basic salary of €35,000 plus a set annual bonus of €12,000.  He claims that from May 2020, the Respondent unilaterally imposed a 15% reduction in his annual salary and bonus, contrary to Section 5 of the Payment of Wages Act 1991.  This resulted in a total shortfall of €11,126.50.  The Complainant was assured that the monies would be repaid in the future.  The Respondent terminated his employment on 18th October 2021 and whilst he received statutory redundancy payment, this shortfall in his wages has not been discharged to date.  The Complainant seeks compensation from the Respondent and/or any Receiver and /or the Insolvency Payments Scheme operated by the Department of Social Protection in respect of same.  There was no engagement by or on behalf of the Respondent who has ceased trading and gone into receivership.

Summary of Complainant’s Case:

The Complainant gave evidence under oath outlining the factual background to his complaint with reference to correspondence and pay slips submitted to vouch his claim.  The Respondent provided insurance services and the Complainant was employed by the Respondent from 28th October 2014 until 18th October 2021 as a Claims Handler.  He earned €47,000 gross per annum, comprising of a basic salary of €35,000 plus a set annual bonus of €12,000.  In April 2020, the Respondent emailed its staff stating that a 15% reduction in salary (basic and bonus) was being introduced as a result of Covid-19, commencing from May 2020.  The Complainant was not consulted about this reduction, it was not provided for in his contract and he did not consent to same.  He was not offered any alternatives such as working less hours and maintains that the Respondent was in receipt of the Temporary Covid-19 Wage Subsidy Scheme (TWSS).  The Complainant emailed his line manager to confirm that he did not consent to this reduction.  He was reassured that this was a temporary measure and the shortfall would be repaid in the future.  The Respondent proceeded with the 15% reduction without his consent amounting to a monthly reduction of €587.50 in his wages.  

On 4th October 2021, the Respondent notified the Complainant that his role was at risk of redundancy.  During the two week consultation period, he raised queries regarding his selection for redundancy along with the issue of his outstanding wages on a number of occasions but did not receive any response.  He was made redundant on 18th October 2021 with immediate effect and without the Respondent answering his queries.  He received a statutory redundancy payment and one month’s pay in lieu of notice but was not paid his outstanding wages despite the assurances given.  An appeal against the decision to make him redundant and a further query regarding his outstanding wages also went unanswered.  The Complainant confirmed that the 15% reduction in wages was in place for nineteen months equating to a shortfall of €11,162.50 and has not been paid to date.  He learned that the Respondent has since ceased trading and has gone into receivership.  Accordingly, the Complainant submits that the 15% reduction in his wages constitutes an unlawful deduction from his wages and seeks compensation under the Payment of Wages Act 1991.

Summary of Respondent’s Case:

The Respondent or any Representative or Receiver on its behalf did not engage with the WRC or attend at the hearing, hence no evidence was adduced on its behalf in opposition of this complaint.  No submissions or documentation were submitted to the WRC on behalf of the Respondent. 

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 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.  Section 41(6) of the Workplace Relations Act 2015 requires referral of a complaint within six months of the date of contravention, extendable to twelve months if reasonable cause can be shown.

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.  In the instant case, it is uncontested that under his contract of employment, the Complainant was entitled to wages of €47,000 gross per annum, comprising of a basic salary of €35,000 plus a set annual bonus of €12,000.  Accordingly, I am satisfied that this comprises of ‘wages’ within the meaning of the Act which expressly includes bonuses and further that they were payable to the Complainant under his contract of employment. 

It is also uncontested that from May 2020, the Respondent had unilaterally imposed a 15% reduction in the Complainant’s annual salary and bonus.  Section 5(1) of the Payment of Wages Act 1991 expressly prohibits such a deduction without authorisation under statute, a term of the employee’s contract in force at the time or prior consent in writing.  In this respect, I found the Complainant’s evidence under oath and as vouched with correspondence and pay slips to be wholly credible.  There was no authorisation under statute, a term of his contract in force at the time or prior consent in writing allowing for this reduction.  Indeed, the Complainant had expressly objected to the reduction.  Accordingly, I am satisfied on the balance of probabilities that the unilateral 15% reduction constituted an unlawful deduction in his wages in contravention of Section 5 of the Act.

Regarding the requisite six month period for referral of a complaint to the WRC from the date of contravention under Section 41(6) of the Workplace Relations Act 2015, there had been an ongoing acknowledgment of debt by virtue of the Respondent’s assurance that the shortfall would be repaid.  However, the outstanding wages were not discharged to the Complainant upon the termination of his employment on 18th October 2021 or to date.  Accordingly, this complaint was within 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 if successful.  I find this complaint to be well-founded for the reasons as set out aforesaid. 

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.”  Although the Respondent may have been experiencing difficulties given the prevailing situation, there was a complete absence of any consultation with the Complainant before the 15% reduction in wages was implemented without exploring any alternatives.  The reduction represented a significant reduction in his monthly income.  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 Respondent pays the Complainant compensation in the sum of €12,000 (subject to any lawful deductions).

Dated:   15th March 2023

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Key Words:  Unilateral reduction in wages / bonus - Sections 5 & 6 of Payment of Wages Act 1991