Complainant

Respondent

Parties

Colette  Morgan

Helga's Preschool

Representatives

  David Goodman

Dominic Wilkinson B.L. instructed by ARAG Legal Protection

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00057376-001

27/06/2023

On April 17th, 2023, the complainant was told by the respondent that she was being made redundant on June 20th, 2023, after twenty years of service.

A dispute arose about how the complainant’s redundancy payment should be calculated.

The complainant received her original redundancy package (details submitted). The redundancy payment was arrived at using the calculator on mywelfare.ie with a figure of €8,310.01 being offered.

On further checking she was informed that periods of layoff had not been included in this calculation. They relayed this information to the respondent and asked for the calculation given to be reviewed.

They did soandrecalculatedtheredundancypackageincluding layoffs coming up with a figure of €8076.67.This being a reduction on her previous package offered. These layoffs were based on the respondent’s preschool calendar over the previous three years.

Within this calculation, she noticed that her gross weekly wage was incorrect, with the gross weekly wage used for this calculation being €204.68 (pg.10).

This figure is incorrect as her gross weekly wage according to her contract of employment is €280. This figure is arrived at, as her hourly wage according to her contract is €14 for twenty hours per week, giving a total of €280. The complainant queried this figure with the respondent and explained that her gross weekly wage was incorrect and questioned how this figure was arrived at.

She was told she would have to prove that the redundancy payment was incorrect.

She believes this figure of €204.68 was arrived at by taking her weekly wage of €280, multiplying it by the number of weeks she work per year being 38 weeks and then dividing this figure by the number of weeks per year being 52 weeks, thus getting a figure of €204.68. she did not believe that this was the correct way to calculate her redundancy payment.

The complainant found out that her normal weekly remuneration should apply to how her lump sum was being calculated.

 “For the purposes of this Schedule, in the case of an employee who is paid wholly by an hourly time rate or by a fixed wage or salary, and in the case of any other employee whose remuneration does not vary in relation to the amount of work done by him, his normal weekly remuneration shall be taken to be his earnings (including any regular bonus or allowance which does not vary in relation to the amount of work done) for his normal weekly working hours as at the date on which he was declared redundant, together with, in the case of an employee who is expected to work overtime regularly, his average weekly overtime earnings as determined in accordance with paragraph 14”.

(Redundancy Payments Act 1967, Schedule 3, Paragraph 13).

She submitted this Information to the respondent  at a meeting on June 16th, 2023, and, explained how the weekly wage used was incorrect. The correct figure was €280. This would have led to the redundancy lump sum being calculated by the following means according to the Redundancy Payments Act, the CIS, and the redundancy calculator from mywelfare.ie:

Weekly Wage: €280 Years worked 19.23. Bonus Weeks: 1 Total Weeks 39.46

Statutory Entitlement: 39.46 x €280 = €11,048.80.

This was not accepted by the respondent who demanded that the complainant disprove its figures and information was supplied from its auditors verifying its figures.

As this meeting took place only a few days before being the redundancy, the complainant had to sign the redundancy payment in order to be paid €8076.67 on the June 20th, 2023. With her month’s salary and outstanding holiday pay the total payment was €9015.73.

She was still querying the lump sum figure and wanted to get It rechecked, so they included the letter when signing the redundancy packages on 20/06/2023.  The complainant’s normal weekly renumeration is the method which applies for the lump sum calculation.

The respondent has stated the way that her lump sum had been calculated was by using her reckonable service in order to obtain the figure of €8076.67.

When using this method, it took into consideration that her contract was for thirty-eight weeks per year and this would have been over the previous twenty years. This can be seen on the only two contracts she have received over the last 20 years, her first contract of employment for the respondent being issued in 2019 and a second in 2022.

No contracts of employment were given for the previous years she had worked for Helga’s preschool. Her Reference confirms that she has worked for twenty years for the respondent. Within this calculation of reckonable service, she believes that double counting of lay off’s has occurred, as when the gross weekly wage of €204.68 was applied, this in turn is taking into consideration that she had only worked 38 weeks per year. If you then go to take lay off periods off, this will further reduce the lump sum, and would have included time off that had already been accounted for.

According to the Citizens Information Service (CIS “The following periods are included as reckonable service, (called reckonable absences): The period you were actually in work, Any absence from work due to holidays”

She was informed by the respondent that holidays did not count as reckonable service, contravening the above. As a result of this her reckonable service per year would have included her 8% of hours worked as her holiday pay. This would have led her reckonable service to be forty-one weeks per year and not the thirty-one weeks as stated, thus altering the figure within her lump sum.

Within this method of using reckonable service to calculate her redundancy lump sum, she noted that the CIS stated how her terms of service would have been calculated.

“Reckonable service is the length of time you have been employed in your job that is taken into account when calculating a redundancy payment. Some absences from work over the last 3 years are deducted from your reckonable service. Absences outside of this 3-year period are not deducted. The 3-year period ends on the date your employment ends.”(CIS).

As a result of the above, she says her lay off periods over the last three years and not deemed as reckonable service would be deducted from her reckonable service. Any absences outside of this three-year period would not be deducted according to CIS. This would be the three-year period from the date her employment ends, thus the previous 17 years being included as her reckonable service.

In the Complaint Form lodged on June 27th, 2023 the complainant says that she did not receive the correct redundancy payment. 

The first issue is the complainant‘s Continuous Service and Reckonable Service Calculations. The respondent operated a childcare/ preschool business, and the complainant was employed by the September 2003 to June 20th, 2023. This means that the Complainant has a total of 19.79 years of service. During her employment there were periods of lay off and in the last three years of employment there were periods of lay off to be taken into account when calculating her reckonable service.

The complainant was declared redundant on April 17th, 2023 and the last day in employment was June 20th,  2023. The reason for the redundancy was the cessation of the business. On or about June 20th,  2023 the respondent provided the complainant with a copy of a letter outlining the payments due to her upon her employment terminating by reason of redundancy.

The Complainant is claiming that she had 19.155 years of service in her submission, which includes a component for annual leave, and using that information the calculation is as fin the left-hand column.  When completing the on-line Redundancy Calculator, the respondent included information such as start and finish dates and periods of lay off and using that information the calculation was as in the right-hand column.

The difference between the two calculations is 0.15 i.e., 39.31 -vs- 39.46 in terms of total number of weeks for the purposes of calculating the statutory redundancy payment.

The second issue concerns the use of the Redundancy Calculator. The respondent input a gross weekly wage of €204.68 into the mywelfare.ie RedundancyCalculator.

The complainant was employed under a contract of employment which provided for employment when employed of 4 hours per day, 5 days a week over 38 weeks. The rate of pay provided for in the contract of employment was €14 per hour.

The respondent sought advice on the matter and was advised that the calculation of the gross weekly wage was to be 38 weeks’ pay divided by 52 weeks for the purposes of calculating the gross weekly wage. It is respectfully submitted that €14 x 4 hours x 5 days x 38 weeks

/ 52 = €204.62 per week.

Thirdly, The respondent input a number of variables into the Redundancy Calculator provided on my.welfare.ie site and the following is a summary of the calculation.

Our calculations estimate your statutory redundancy entitlement would be: €8,076.67

Calculation of statutory redundancy

Employment start date 8/9/2003, Employment end date 20/6/2023, Years 19.23, Days 276

Number of years’ service 19.79

Bonus week 1, Total weeks 39.46, Statutory entitlement 39.46 X €204.68 = €8,076.67.

The complainant was employed in a pre-school and falls within that category of worker referred to as ‘seasonal.’ This includes many workers within the education system who do not have the benefit of fifty-two week contracts but who nonetheless enjoy continuity of employment. Other obvious examples are seasonal workers in agriculture, horticulture, etc.

This is a fairly technical matter that comes down to a difference as to how the complainant’s wage should be calculated.

In a nutshell, that difference turns on whether the complainant’s period of annual leave should be considered to be part of the period of employment or the period of lay off. Whichever of these is chosen has a bearing on the calculation of the complainant’s aggregate wage.

A lay-off is generally taken to refer to a period when an employer has no work for a temporary period and the employee will not be paid. Generally, this is when an enterprise is experiencing short-term trading difficulties or economic problems. In this case, as set out in the submissions, it is in the nature of the respondent’s business that it will not be active for certain periods of the year.

What then, is the status of the complainant’s annual leave?

The respondent sees it as part of the lay-off period while the complainant takes a contrary view and sees it as part of the complainant’s working time.

I find for the complainant on this central point.

Annual leave is a benefit and entitlement that derives from being in employment, and ought to be considered to be part of the employee’s working time (in the general sense, as they are not actually working; that being the point of it).

A full-time employee, for example, on a permanent contract cannot be considered to be on some sort of absence from the contract of employment when they are on annual leave or benefitting from public holiday entitlement.

The idea of excluding a statutory benefit from the calculation of any part of a worker’s other statutory benefits would be entirely inequitable and contrary to public policy and a denial of the purpose of annual leave as a health and safety benefit to the employee in question. It is an intrinsic part of the employee’s working time.

Accordingly, I find that the respondent erred in excluding the annual and any public holiday entitlement in calculating the complainant’s weekly salary and that she is entitled to a redundancy payment based on those periods forming part of her working time. I find that it is not a part of the lay-off period.

The weekly wage for the purpose of reckoning the redundancy payment should therefore be re-calculated on the basis of including all leave entitlements as part of her working time and not as part of the layoff period and in compliance with the general provisions of the Redundancy Payments Act.

Complaint CA-00046376-001 is well founded.

The weekly wage for the purpose of reckoning the redundancy payment should be re-calculated on the basis of including all leave entitlements as part of her working time and not as part of the layoff period and in compliance with the general provisions of the Redundancy Payments Act.

Redundancy