PWD2452

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00034988 (CA-00045957-001)

BACKGROUND:

This is an appeal of an Adjudication Officer’s Decision made pursuant to the Payment of Wages Act, 1991. The appeal was heard by the Labour Court on 8th April 2024 in accordance with Section 44 of the Workplace Relations Act, 2015. 

 The following is the Court's Decision:

DECISION:

This matter comes before the Court by way of an appeal by Kostal Ireland GMBH (the Appellant) against the decision of an Adjudication Officer in a complaint made under the Payment of Wages Act, 1991 (the Act) by Sinead Cannon (the Complainant).

The Adjudication Officer decided that the complaint was well founded.

Background

Arising from the negative effects of the global pandemic upon the industry in which the Respondent is engaged, various measures were implemented in the employment. These measures included a shut-down from 25th March 2020 until 27th April 2020 during which employees were not paid. On that occasion employees were advised that they would be entitled to support payments made available by the State in response to the global pandemic

As the year progressed the Respondent maintained very regular communications with its employees arising from the difficulties being experienced in the industry including plant closures being carried out by customers.

In 2021 the pandemic situation continued, and employees were regularly updated as regards difficulties with supply chains and an inability to secure adequate allocations of components.

The Complainant submits that she was placed on short-time working and not paid by the Respondent on 17th May 2021, 18th June 2021, 2nd July 2021 and 5th July 2021. The Respondent accepts that the Complainant was not paid on these dates but submits that on 17th May 2021 the plant was shut down. Shut-downs are accepted by both partes as being a common feature of the plant especially at Christmas. On those occasions workers are invited to avail of annual leave or other options, including availing of unpaid leave.

The contract of employment of the Complainant, who commenced employment in 1995, carried the following provision:

2.1 The Union agree and recognises that the Company has the sole right and exclusive right to manage the business. The Company’s right to manage the business shall include, but not be limited to the following:

2.8 To hire, discharge, classify, transfer, layoff, suspend or discipline employees.

The contract of employment of employees who commenced employment since 2008 contains the following clause:

The company reserves the right to lay you off from work or reduce your working hours where through circumstances beyond its control it is unable to maintain you in employment or maintain you in full employment. You will receive as much notice as possible prior to such lay-off or short time. You will not be paid during the lay-off period. You will be paid only in respect of hours actually worked during periods of short time.

The Complainant contends that deductions in the amount of €748.26 were made from her wages on the occasions. The Appellant contends that the amount of deductions is overstated by €29.83.

The Law

The Act at Section 5(1) provides as follows:

5.(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) of the Act provides:

(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 in relevant part provides as follows:

6. (1) A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 5 as respects a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is, in whole or in part, well founded as respects the deduction or payment shall include a direction to the employer to pay to the employee compensation of such amount (if any) as he considers 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, were 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.

Wages are defined in s. 1 of the Act of 1991 in relevant part 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…”

The Redundancy Payments Act, 1967 defines the terms ‘lay-off’ and ‘short time’ at section 1 as follows:

Lay-off and short-time.

11.— (1) Where an employee’s employment ceases by reason of his employer’s being unable to provide the work for which the employee was employed to do, and—

(a) it is reasonable in the circumstances for that employer to believe that the cessation of employment will not be permanent, and

(b) the employer gives notice to that effect to the employee prior to the cessation,

that cessation of employment shall be regarded for the purposes of this Act as lay-off.

(2) Where —

(a) for any week an employee’s remuneration is less than one-half of his normal weekly remuneration or his hours of work are reduced to less than one-half of his normal weekly hours,

(b) the reduction in remuneration or hours of work is caused by a diminution either in the work provided for the employee by his employer or in other work of a kind which under his contract the employee is employed to do.

(c) it is reasonable in the circumstances for the employer to believe that the diminution in work will not be permanent and he gives notice to that effect to the employee prior to the reduction in remuneration or hours of work,

the employee shall, for the purposes of this Part, be taken to be kept on short-time for that week.

Summary position of Complainant

The Complainant submits that in May 2021 she was informed by the Appellant that she was being put on short time, meaning that she would be required to work a shorter working week than the contracted 39 hours per week. In addition, her weekly pay was to be adjusted and she would not be paid the contracted 39 hours pay per week.

She submitted that deductions were made from her wages on 17th May 2021, 18th June 2021, 2nd July 2021 and 5th July 2021.

She submitted that an amount of €193.10 was deducted from her wages on 17th May 2021, €193.10 on 18th June 2021, €168.96 on 2nd July 2021 and €193.10 on 5th July 2021.

The Complainant submitted that no provision of her contract of employment permitted a reduction in weekly working hours or her wages on these occasions. She submitted that, having regard to the Act at Section 5(1), the deduction from her wages was not required by virtue of statute or any contractual term in the contract of employment or relevant collective agreement. The Complainant submitted that she had not given her consent, written or otherwise, for the deduction to be made from her wages and there is no established or accepted custom and practice in the workplace allowing a deduction from wages of this nature.

In or around 2008 the Appellant sought agreement from the workforce to implement short-time in an attempt to avoid redundancies. The workforce did not agree at the time to short-time working. However, when the roster was forced upon employess, the Complainant participated in that roster under protest. The dispute which occurred at the time resulted in all new employees recruited since that date having a clause included in their contract of employment providing for lay-off and short-time working.

The collective agreement in place in the employment does not contain any clause providing for short-time working without pay.

The High Court, in Balans v Tesco Ireland Ltd [2020] ELR12 and Dunnes Stores (Cornelscourt) Ltd v Lacey [2007] IIR 478 set out that any consideration of a complaint under the Act must first consider the wages which were properly payable on the occasion.

In UCC v Finbarr Waldron PWD 212, this Court confirmed that

“The Act does not make provision for the determination of what wages are properly payable on an occasion on the basis of what the Court might think reasonable. Rather, the Act requires the Court, having investigated the matter, to make a determination as regards what wages were properly payable on a given date by reference to objective criteria.”

The Complainant’s contract of employment clearly provides for wages properly payable in the amount of €1,252.00 per week.

Her contract does not contain any clause which allows the Appellant to reduce her wages in any circumstances but particularly in circumstances where she is available and prepared to work.

As a result of the lack of an express term in the Complainant’s contract, the Appellant may seek to rely on the existence of a ‘custom and practice’ of this type of deduction from wages in the workplace stemming back to 2008 / 2009. No such custom and practice exists. Deductions were made from wages at that time, but the Complainant continuously refused to accept that deduction and any participation by her in the reduced roster at that time was done under protest.

In Stefan Chmiel and others v Concast Precast Limited [PW 725 / 2012] this Court held that

“at common law there is no general right to lay-off / short time without pay and while there are limited circumstances wherein there will be such a right, the employer must demonstrate that it has been custom and practice of the workplace and that the custom must be reasonable, certain and notorious”.

The events giving rise to the within complaint were not required by statute or authorised to be made by virtue of statute or any instrument under any statute, and neither did the reduced working period conform with the definition of short-time working contained in the Redundancy Payments Act, 1967 or the definition of lay-off as defined in that Act.

The precedent case which should be applied to the Complainant’s situation is Industrial Yarns v Greene [1984] ILRM 15. In that case the employee was seeking wages that his employer had deducted from him while he was supposedly on lay-off. In that case the Court held

“If there is no contractual power (expressed or implied) in the contract of employment to suspend the operation of the contract for a limited period, than by ceasing to employ an employee and refusing to pay him wages the employer is guilty of a serious breach amounting to repudiation of it”

Summary position of Appellant

The Appellant submitted that the central issue for consideration by the Court is whether deductions which were made from the wages of the Complainant that were “properly payable” to the Complainant and, if any such deductions were made, whether those deductions were made contrary to Section 5(6) of the Act.

The Appellant notified workers of two days of shut-down to occur on 16th March 2021 and 17th May 2021. On both of those days, employees were given the option of taking a day’s annual leave or taking unpaid leave. The shutdown of the plant is a common feature in the operation, especially at Christmas, and occurs regularly and is a well-established custom and practice. In this case, the Complainant opted to take a day’s annual leave on 16th March 2021 and opted not to do so on the 17th May 2021.

The complaint before the Court relates to the shut-down on 17th May 2021 which the Complainant contends was a period of short time working, and three other dates which were, in fact, periods of short-time working.

The Appellant submitted that the practice of shut down where an employee has the option of taking annual leave or unpaid leave is established in the employment and occurs regularly at Christmas but on other occasions also.

The Appellant submitted that while the Complainant’s contract is silent in relation to reduced pay for periods of short time working, there is a collective agreement in place between SIPTU and the Appellant which clearly confirms the Appellant’s right to place employees on ‘layoff’. That agreement in relevant part asserts

“The Company Role

2.1 The Union agree and recognizes that the Company has the sole and exclusive right to manage the business. The Company’s right to manage the business shall include, but not be limited to ….

2.6 To establish or change work shifts and work standards

2.7 To schedule hours of work, including overtime

2.8 To hire, discharge, classify, transfer, layoff, suspend or discipline employees”

To place employees on lay-off would have a significant financial impact on them and therefore short-time working, whilst still impactful, would have less of an effect. The Appellant considered strongly that the only alternative to short-time working on the occasion would have been to place new entrants on lay-off or let them go permanently. The EAT in Anthony Byrne v Johnson Brothers PW 473/2011 held that ‘the difficulties experienced by the Respondent were genuine and significant, thus the decision to impose the deductions in salary was reasonable and proportionate”.

The Appellant also relied upon the decisions of this Court in Elizabeth Barry v Aer Lingus [PWD 2318] and Caitriona Jones v Aer Lingus [2248] where the Court considered, having regard to the circumstances faced by the employer, considered that, notwithstanding the complaint of the worker was well founded, the amount of compensation which was reasonable in all of the circumstances was nil.

The Appellant submitted that, without prejudice to the submission made in opposition to the complaint, the Court should, in the event of an award being considered, have due regard to the difficulties faced by the Appellant at the material time and also to the fact that the Complainant had made claims against the State in respect of her entitlements during the period when she was not at work.

Discussion and conclusions

The High Court in Marek Balans v Tesco Ireland Limited [2020] IEHC 55, made clear that this Court, when considering a complaint under the Act, must first establish the wages which were properly payable to the employee on the occasion before considering whether a deduction had been made. If it is established that a deduction within the meaning of the Act had been made from the wages properly payable on the occasion, the Court would then consider whether that deduction was lawful.

It is common case that the contract of employment of the Complainant comprises a written contract and a collective agreement concluded between the Complainant’s Trade Union and the Appellant. The written contract of employment specifies that the Complainant will work 39 hours per week and the rate of pay to be paid to the Complainant is the subject of collective agreement between the parties.

The Court therefore concludes that the contract of employment in place and relevant collective agreements establish the rate of pay which properly payable to the Complainant in any week during the material time for the complaint which gives rise to the within appeal.

As a result of her contract of employment and the collective agreement which forms part of that contract, the gross weekly rate of pay of the Complainant at the material time was €1,252 according to the Complainant, and that assertion has not been contested by the Appellant. The Court concludes that the wages which were properly payable to the Complainant at the material time were €1,252 per week.

It is common case that the wages paid to the Complainant during the period forming the basis for the complaint before the Court were less than the total amount of wages that were properly payable to the Complainant on the occasion. The quantum of difference between what was properly payable and what was actually paid was either €718.43 (according to the Appellant) or €748.26 (according to the Complainant).

The Act, at 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 to the employee on that occasion, 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.

There is no submission before the Court contending that the difference between wages actually paid to the Complainant and the wages which were properly payable to her on the occasion was attributable to an error of computation. The Court therefore concludes that the difference was a deduction within the meaning of the Act.

The Act at Section 5 prohibits an employer from making a deduction from the wages of an employee unless the deduction (a) is required or authorised to be made by virtue of any statute, (b) is required or authorised to be made by virtue of a term of the employee's contract of employment or (c) the employee has given his prior consent in writing to it. There is no contention before the Court that the deduction made from the wages of the Complainant on the occasion was required or authorised by statute or that the Complainant had given her prior consent in writing to the deduction.

The collective agreement in place between the Complainant’s Trade Union and the Appellant provides as follows:

“the union agree and recognises that the Company has the sole and exclusive right to manage the business. The Company’s right to manage the business shall include but not be limited to the following:

To hire, discharge, classify, transfer, layoff, suspend or discipline employees”

The  Appellant asserted to the Court that the collective agreement, in specifying that the Appellant has the sole right to ‘layoff’, should be interpreted as meaning that the Appellant has the right to alter the working hours of the workers covered by the agreement and that whenever the Appellant alters such hours to a level below contracted working hours in a week, a worker will not be paid the wages specified in the contract of employment / collective agreement.

The Appellant submitted that, for reasons set out in its submission related to trading and other circumstances, it reduced the working hours of the Complainant in the weeks concerned and consequently reduced the wages of the Complainant and that the deduction was authorised by the collective agreement in place in the employment and consequently lawful.

The Trade Union submitted that the complainant was not laid off within the meaning of the Redundancy Payments Act, 1967 or the collective agreement and that, as a result, the Appellant cannot be considered to have exercised the clause in the collective agreement entitling it to lay off the Complainant. The Trade Union submitted that no other agreement or statute is in being which entitled the Appellant to reduce the wages of the Complainant on the occasion below the wages that were properly payable on the occasion.

The Act makes clear that a deduction from the wages properly payable to an employee on an occasion will be lawful only in the circumstances set out at Section 5(1). There is no contention that the deduction at issue was authorised by statute or that the worker had given his prior consent to that deduction in writing. This case therefore turns on whether the deduction is required or authorised to be made by virtue of a term of the Complainant’s contract of employment included in the contract before, and in force at the time of, the deduction or payment.

In Stefan Chmiel and others v Concast Precast Limited [PW 725 / 2012] this Court held that

“at common law there is no general right to lay-off / short time without pay and while there are limited circumstances wherein there will be such a right, the employer must demonstrate that it has been custom and practice of the workplace and that the custom must be reasonable, certain and notorious”.

The Appellant has contended that the practice of shut down where employees can choose to take annual leave or unpaid leave is an established custom and practice in the employment. That assertion did not appear to the Court to be disputed by the Complainant. The Court therefore accepts that this arrangement or practice in effect formed an uncontested and long-standing part of the contract of employment. The Court further accepts that the events leading to a deduction in the wages of the Complainant on 17th May 2021 were a shut down as contended for by the Appellant during which the Complainant did not opt to avail of annual leave.

The Court further concludes that the events leading to a deduction from the wages properly payable to the Complainant on 18th June 2021, 2nd July 2021 and 5th July 2021 did not amount to a shut-down. It appears to be common case that on these occasions the Appellant implemented a short-time arrangement which resulted in deductions from the wages of the Complainant.

The Court concludes that the practice of shut-down was a regular and accepted event in the employment and, as a result, constituted an implied element of the contract of employment. A deduction from the wages of the Complainant on the basis that she did not opt to avail of annual leave on the occasion of a shut-down on 17th May 2021 does not amount to an unlawful deduction as a result.

The short-time arrangement implemented by the Appellant on three other dates is not a lay-off within the meaning of the contract of employment and any resulting deduction from the wages properly payable to the Complainant cannot constitute a deduction mandated by the contract of employment. Neither is it the case that any such deduction was agreed to by the Complainant. In those circumstances the Court concludes that the deductions from the wages of the Complainant on 18th June 2021, 2nd July 2021 and 5th July 2021, which amounted to a cumulative total of €555.16, were unlawful within the meaning of the Act.

 Award

The Act at Section 6 in relevant part provides as follows:

6. (1) A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 5 as respects a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is, in whole or in part, well founded as respects the deduction or payment shall include a direction to the employer to pay to the employee compensation of such amount (if any) as he considers 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

(b) if the amount of the deduction or payment is greater than the amount referred to in paragraph

(a), twice the former amount.

In assessing the appropriate award of redress the Court has had regard to the totality of the circumstances at the material time and, in particular, the challenges endured by the business of the Appellant at the time; the fact that the alternatives to short-time available to the Appellant were limited in nature and likely to have a severe effect on employees in the business; the fact that the State intervened to provide a payment to the Complainant in recognition of the fact that she was without work and payment on certain of the dates at issue; and the gross amount of the deduction made from the wages of the Complainant.

The Court directs the Appellant to pay to the Complainant compensation in the amount of €277.50, being the amount the Court considers reasonable in the circumstances.

 Decision

The Court decides that the within complaint is well founded, and directs the Appellant to pay to the Complainant compensation in the amount of €277.50.

The decision of the Adjudication Officer is varied.

The Court so decides.

	Signed on behalf of the Labour Court
	Kevin Foley
CC	______________________
7 August 2024	Chairman

NOTE

Enquiries concerning this Decision should be addressed to Ceola Cronin, Court Secretary.