ADJ-00035693

ADJUDICATION OFFICER DECISION

Adjudication References:  ADJ-00029289 & ADJ-00035693

Parties:

Complaints:

Date of Adjudication Hearing:  06/09/2022

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Procedure:

These complaints were referred to the Workplace Relations Commission (hereinafter ‘WRC’) under Section 41 of the Workplace Relations Act 2015, Section 39 of the Redundancy Payments Acts 1967-2014 and Section 8 of the Unfair Dismissals Acts 1977-2015.  The complaints subject to ADJ-00029289 related to non-payment of the Complainant’s wages and were referred to the WRC on 19th August 2020.  The complaints subject to ADJ-00035693 arose from the Complainant’s subsequent dismissal on 7th May 2021 and were referred to the WRC on 25th October 2021.  The Complainant was represented by Eamonn Gibney of the HR Dept and the Respondent was self-represented.  Following delegation to me by the Director, I inquired into these complaints and gave the Parties an opportunity to be heard and to present any relevant evidence. 

All of these complaints were heard together at Lansdowne House on 6th September 2022 and thereafter, the Parties were afforded a period of time to resolve matters.  The Complainant was in attendance with his Representative, Mr Eamonn Gibney.  Two Directors (Mr A and Mr B) attended on behalf of the Respondent.  Written submissions and supporting documentation were received on behalf of both Parties.  At the outset, the changes to procedure under the Workplace Relations (Miscellaneous Provisions) Act 2021 were outlined.  As the Respondent was self-represented, the statutory requirements and burden of proof for each complaint were outlined.  The hearing was held in public and evidence was taken on oath.  The Parties were also made aware that their names would be published within this decision.  Mr Gibney confirmed that complaint ref: CA-00039239-002 could be withdrawn as it duplicated ref: CA-00039239-001.  Ref: CA-00046826-003, being a complaint under Section 39 of the Redundancy Payments Act 1967 was also withdrawn in favour of a complaint of unfair dismissal under Section 8 of the Unfair Dismissals Act 1977.

Background:

The Complainant had been employed by the Respondent and held the role of Quality Manager earning €42,000 gross per annum at the material time giving rise to these complaints.  He claimed that his wages had been unlawfully reduced for full-time hours during the Covid-19 Pandemic.  He also claimed that his subsequent dismissal on 7th May 2021 constituted an unfair dismissal.  Furthermore, he had not been paid in lieu of a waived notice period or for the bank holiday falling on Monday 7th June 2021.  He sought compensation in respect of all complaints.  The Respondent maintained that the Complainant had acquiesced with the reduction in his wages and had been properly dismissed by reason of redundancy receiving his statutory redundancy payment of €10,704.  Having agreed to a final day of work on 20th May 2021, he was not entitled to payment in lieu of the remainder of his notice period or the June bank holiday. 

CA-000039239-01 - Complaint under Section 6 of the Payment of Wages Act 1991 – Reduction in wages for full-time hours work

Summary of Complainant’s Case:

The Complainant supplemented his written submissions with oral evidence.  He outlined his employment history with the Respondent, a small communications technology company.  He commenced employment on 7th January 2013 as a Senior Hardware & Manufacturing Technician and at the time of these complaints, held the role of Quality Manager earning €42,000 gross per annum or €3,500 gross per month for a 40-hour week.  A copy of his contract and Company Handbook was furnished.  It was common-case that the Respondent had one main product and customer and approximately 12 full and part-time employees. 

There had been no issues with the Complainant’s employment until the Covid-19 Pandemic in March 2020.  At the time, he was responsible for the manufacturing and delivery of products and working on a project to develop a satellite version of the Respondent’s main product.  On 3rd April 2020, 17th July 2020 and 10th September 2020, management held online presentations to update its staff on its proposals for survival during the Covid-19 Pandemic.  In the first presentation, the staff had been informed that sales had stalled resulting in no revenue in and limited cash available to pay ongoing costs.  The strategy was to “Have NO redundancies.  Pay as much as we possibly can while keeping the company alive through this crisis.  Use Covid-19 Wage Subsidy Scheme where we can and make as fair as possible for all employees.  Sample pay slips provided to all employees outlining April pay details.  As revenue improves, we progressively increase salaries to their pre-Covid-19 level.”  This entailed cutting costs including overheads, outgoings and salaries and included an undertaking that any end of year profits would be used to compensate employees for salary reductions.  Following the first presentation, the Complainant received a letter dated 6th April 2020 from his Supervisor (Director & CTO), Mr A stating: “Please find attached your proposed/sample April payslip, with the government COVID 19 wage scheme added.  Your gross salary is Basic Pay + GovC19 WageSub.  Please also find attached your March payslip, for comparison purposes of your gross and net pay.  As discussed last Friday, there is a reduction in your April gross pay, owing to the Sales downturn, caused by the COVID 19 crisis.  As sales improve, we shall increase salaries progressively until they are fully restored.  If you have any questions regarding this, please do not hesitate in contacting me.” 

The Complainant had not been consulted about this change in his contractual terms or requested to provide his consent to same.  It was simply imposed upon him, requiring him to work his full 40-hour week for 50% of his regular salary, increasing to 70% from September 2020 until the termination of his employment on 7th May 2021.  The total shortfall was €11,898.56 and an undisputed monthly breakdown calculating same was furnished.  His pay for this period primarily derived from the Covid-19 Government Wage Subsidy Schemes (EWSS & TWSS) with a small top-up from the Respondent.  The Complainant maintained that he had never agreed to this reduction in wages either impliedly, orally or in writing and had remained working his full hours for reduced wages under protest.  It is common-case that because the Complainant had remained working full-time, he had been central to completing a project to deliver the satellite product critical for the Respondent’s survival.  Whilst he had no difficulty taking a pay cut for reduced hours or short-time given the circumstances, he took issue with having to work full-time for reduced wages.  He refutes the Respondent’s contention that because he had remained working full-time on reduced wages, he had acquiesced with the reduction.  In this respect, he relies upon an uncontested exchange of emails with Mr B (Director & CEO), the relevant portions of which are set out hereunder.

In the absence of any HR guidance, the Complainant had taken some time to research his employment rights with the WRC and Citizens Advice Bureau, and on 30th June 2020, he emailed Mr B as follows: “On the wage subsidy, I am currently down 50% of my salary and I understand that the company is not in a position to pay the full wage, fair enough.  I don’t believe that I am obliged to be working full hours for 50% of my wages, therefore I am proposing to work reduced hours per week to reflect this.  I believe that I am due time in lieu for loss of earnings since April also.”  On the same date, Mr B responded requesting that the Complainant forward the advice he had received to him.  On 7th July 2020, the Complainant forwarded Mr B the information provided by the WRC (also available online) confirming that unless there is prior written consent from an employee to a deduction from wages pursuant to Section 5(1)(c) of the Payment of Wages Act 1991, it is unlawful.  He placed particular reliance upon the following abstract in question-and-answer format: “What if I do not receive my wages?  In accordance with the Payment of Wages Act 1991 non-payment of wages or any deficiency in the amount of wages properly payable by an employer to an employee on any occasion shall be regarded as an unlawful deduction from wages unless the deficiency or non-payment is attributable to an error in computation.” and “Can an employer reduce an employee’s pay?  This would be a change to the employee’s Terms of Employment and therefore, it will be necessary for the parties to negotiate and agree changes to the original contract of employment before such changes can take effect and be legally binding on the parties.  Should the pay be reduced without agreement and wages accordingly reduced then this would be considered to be an unlawful deduction from wages.” 

On 8th July 2020, Mr B replied: “The relevant point here is as you point out that “it will be necessary for the parties to negotiate and agree changes to the original contract of employment before such changes can take effect and be legally binding on the parties.”  Fijowave made a company presentation on Friday 3rd April outlining the Covid-19 impact on the Company and Fijowave was proposing to put all employees on the Covid-19 Wage Subsidy Scheme where possible.  As revenue improves, we progressively increase salaries to their pre-Covid-19 level.  By implementing this plan the intent was that we would not have to make any immediate redundancies.  At this meeting we committed to following up with a sample pay slip of the exact impact for all employees which we did on Monday the 6th.  At this point no one informed the company that they had rejected the plan.  To close out your issue I now need you to formally inform Fijowave that you either accept or reject the company proposal on salary reduction until sales revenue improve, at which point it will allow Fijowave to increase salaries back to their pre-Covid 19 level.”  On the same date, the Complainant replied: “(Mr B) any changes to the original contract of employment have to be agreed in writing.  Have you requested all members of staff to agree in writing to this or just me, and also can you advise what your proposal is in light of the salary reduction plan being rejected by anyone.  I’m just looking for fairness here (Mr B), there is nothing fair about asking anyone to work full hours for 50% of their salary.” 

On 15th July 2020, Mr B replied to the Complainant reiterating the Respondent’s position and with reference to the letter that had issued with the sample payslip on 6th April 2020, stating: “We asked all employees to contact us if there were any issues.  No employee contacted us and we took this as acceptance of the proposal and implemented the change.  It is now three months on from implementation and from your emails… it is not clear to me if you are now saying you are accepting or rejecting the plan.  To be clear, the plan did not include reduced working time.  Our business continuance plan will not sustain reduced working hours.  For clarity, I am now asking you confirm you are accepting or rejecting the plan at this point in time.”  On 16th July 2020, the Complainant responded: “Regarding the letter sent on 6th April, there is no mention of “the amendment to the employment contract” as you have stated.  There is no indication that this is a change to the terms and conditions of my contract and there is no request for me to formally agree to the change.  My gross monthly salary has been reduced from €3500 to a Fijowave payment of €234.  This is a 93% reduction in my gross salary.  The government covid 19 wage subsidy of €1516.67 brings my salary up to 50%.  Fijowave are requesting me to work a full 40 hour week whilst being in receipt of only 20 hours wages per week.”  He further confirmed that on foot of the information he had received from the WRC, “… I am disputing that Fijowave are requesting me to work a full 40 hour week whilst being in receipt of only 20 hours wages per week.”  On the same date, Mr B replied: “For clarity Fijowave is asking you to work a full week for 50% of the previous take-home pay.  Whilst we all, as employees with bills to pay find this hard to swallow, we have collectively for the past three months adhered to this scheme recognising that the survival of company and all our jobs is predicated on working through the COVID business slow-down till sales return.  As CEO I have considered whether we could operate on reduced hours and furthermore I have discussed it with the Board and all are clear, to get through this, we need to take this tack.  I cannot offer individual employees special terms which would be discriminatory towards all others so I would ask for the collective good of the company that you also accept the arrangement.  To reiterate, our intention is to make good the return to full salaries just as quickly as sales allow.”  In a final email to Mr B on 20th July 2020, the Complainant stated: “I do not agree that I am looking for special terms.  Following the company update on Friday last, there is no indication that this situation will change in the short, medium or long term.  I have made a reasonable request that my hours be reduced to reflect the payment of 50% of my salary.  This has been rejected by you and the board of management.  I will proceed with a submission to the Workplace Relations Commission in regards to this matter.”  Accordingly, he referred the first set of these complaints to the WRC on 19th August 2020.  He referred the second set of complaints on 25th October 2021 following the termination of his employment.  He confirmed that he had remained working full-time on reduced wages, relying upon savings and contributions from other family members to maintain his family home.

Under cross-examination, Mr B put the Respondent’s position to the Complainant.  Specifically, the Respondent had required all of its staff to buy into the survival plan requiring them to work full hours on reduced pay and the Complainant had never confirmed whether he was accepting that plan or not.  In response, the Complainant referred to their exchange of correspondence cited above as clearly indicating his rejection of the proposal to work his full 40-hour week on reduced pay.  He further contended that he was the only employee being required to confirm his acceptance or rejection of the plan in writing.

Submissions

It was submitted that it was clear from its presentations to staff that the Respondent had implemented the pay-cut for full-time work without any discussion or giving them any clear say on the matter.  The language of “having to take a pay cut” was dictatorial and non-negotiable.  Delivering the proposal in a public forum without individual consultation and requiring employees to put their heads above the parapet if they had any objection was not an acceptable form of consultation.  The Respondent had the options of lay-off and short-time available to it as provided for in the Complainant’s contract.  However, it had taken the draconian measure of cutting its employees’ pay by up to 50% which was pushed through as if it was its right.  It was submitted that pay is a contractual right, fundamental to the contract of employment and one which cannot be arbitrarily diminished without consultation or agreement in writing as is customary and expressly required by Section 5(1)(c) of the Payment of Wages Act 1991.  None of the other provisions allowing for a deduction from wages by an employer provided under Section 5 applied in the instant case. 

It is further noted that the Complainant updated the WRC in writing with figures for the ongoing deductions from his wages as they arose and hence no issue arises in relation to the time-limits for referral of same.

Summary of Respondent’s Case:

Mr B gave evidence on behalf of the Respondent supplementing written submissions.  He said that business had been going “okay” until the Covid-19 Pandemic hit.  The Respondent had lost most of its revenue from its main product because it could not be installed owing to the lockdowns.  The Respondent had been developing other products and was trying to extend its customer-base at the time.  It had continued software work providing security updates and enhancing its products during the Pandemic.  It had also been developing a satellite version of its main product, the delivery of which was essential for its survival.  The Complainant’s input had been central to its delivery requiring him to continue working fulltime.  Albeit late owing to Covid, this product had been delivered.  Mr B went through the three online presentations delivered to its staff outlining the Respondent’s survival plan during the Pandemic as referenced above.  He confirmed that the strategy had been to cut costs, pay as much as possible to keep the company alive utilising the Covid-19 Government Support Schemes to pay wages and as revenue increased to restore salaries and not make any redundancies.  This entailed employees accepting reduced pay (50% increasing to 70%) for full working hours as being essential for the Respondent’s survival.  A sample pay slip had been issued to all employees with the letter of 6th April 2020 as set out above asking them to revert if they had any issues.  Express written consent had not been sought.  None of the employees other than the Complainant had raised any issues with the plan.  Mr B had taken the fact that he had not raised any issue until three months after the plan was in place as acquiescence.  The Complainant had never explicitly confirmed his position notwithstanding their exchange of correspondence.  As confirmed in a report from its Accountant submitted, the Respondent had suffered a loss for 2020 and had to defer payments to its creditors.  As at the date of the hearing, Mr B stated that whilst still in business, the Respondent’s future remained uncertain, and it had not yet returned to profit such that it could make good the Complainant’s reduction in wages.  He accepted the Complainant’s calculation of the €11,898.56 shortfall in his wages as being correct.  As at the date of this decision, it is noted that the Respondent is listed as trading normally. 

Under cross-examination, it was put to Mr B that it was unlawful to require employees to work their full working hours on reduced pay without their prior written consent and he was asked what had justified such a requirement of the Complainant.  Mr B replied that management had considered whether it was possible to reduce hours, but this was not feasible as ongoing work including delivery of the satellite product was essential for the Respondent’s survival.  He expressed his gratitude to the Complainant for remaining working on the satellite product to ensure its delivery.  He maintained that the Complainant had never made his position clear.  It was put to Mr B that his emails of 16th and 20th July 2020 confirming that he disputed the situation and was referring the matter to the WRC could not have been clearer.  Mr B further confirmed that management had not sought HR advice at any stage owing to financial constraints. 

Submissions

In written submissions on behalf of the Respondent, it was submitted that following a total collapse of sales via a process of continual employee engagement, salaries across the entire workforce were reduced to a level that was believed would sustain full employment until the year-end when it was hoped that sales would recover.  The Board had contemplated whether the Respondent could offer its employees pro-rata hours to net pay received.  It was concluded that this was not feasible as the Respondent could not serve its customers and would also miss its targets including the satellite project.  At no stage, was it represented to employees that short-time working hours were available.  The Respondent did not seek to couch the situation as anything other than a reduction in pay driven directly by a sales collapse.  The actions taken by the Respondent were in line with the following clause in the Company Handbook: “1  Security of Employment – A prosperous and expanding Company is the surest guarantee of secure employment.  By the nature of the business in which the company operates, there is a continuing and essential need for adaptation and change if the company is to survive, remain competitive and provide security of employment.  Employees should understand that ongoing cooperation in implementing necessary changes is a condition of employment.”  It was management’s view that it had acted in the best interests of both the Respondent and its employees in the plan it had implemented to try to protect jobs whilst keeping it afloat.  It had engaged with employees from the start and believed that it had received their agreement to the reduction in pay for full working hours.  The alternative would have entailed significant job losses and the risk that the Respondent would not be able to recover when business conditions changed.  The Respondent had also fully complied with all Government Covid-19 workplace guidelines and recommendations. 

Other submissions were made by the Parties in relation to the Respondent’s use of the Government Wage Subsidy Schemes (EWSS & TWSS) to substantially replace its employees’ wages rather than topping them up to existing levels, an assessment of which is not required for the determination of these complaints.

Findings and Conclusions:

It is necessary to examine the facts giving rise to this complaint in light of the relevant statutory provisions.  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:”  There is no issue in the instant case that the sum sought constitutes ‘wages’ under the Act.

In relation to deductions from wages, 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.”  It is well-settled law that a reduction in wages constitutes a deduction from wages under Section 5 of the Act.  The remainder of Section 5 provides for other circumstances in which an employer can make a lawful deduction from an employee’s wages not applicable to the instant case.  Section 6 of the Act provides for the referral of complaints to the WRC and the available redress.

As stipulated in Marek Balans -v- Tesco Ireland Limited [2020] IEHC 55 approving Dunnes Stores (Cornels court) Limited -v- Lacey [2007] 1 1R 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 Section 5 of the Payment of Wages Act 1991.  In the instant case, there is no dispute that contractually, the Complainant was entitled to an annual salary of €42,000 or €3,500 monthly for a 40-hour working week.

The next question to be considered is whether the Respondent was lawfully entitled to reduce the Complainant’s wages under Section 5 of the Payment of Wages Act 1991.  In this respect, the Respondent relies firstly upon the Complainant’s acquiescence to its decision to cut its employees’ wages whilst requiring them to work their full hours in a bid to survive the Covid-19 Pandemic and secondly, on a term in the Company Handbook as cited above and in particular the line providing: “Employees should understand that ongoing cooperation in implementing necessary changes is a condition of employment.”  In relation to an employee’s consent to a deduction from wages, the legislation is unequivocal and Section 5(1)(c) of the Payment of Wages Act 1991 expressly requires the employee’s prior written consent.  Although emergency legislation was introduced including the curtailment of an employee’s entitlement to seek redundancy under Section 12A of the Redundancy Payments Act 1964, there was no provision allowing employers to unilaterally reduce wages.  Wage Subsidy Schemes were provided to assist employers who were unable to pay normal wages owing to the effects of the Covid-19 Pandemic.  However, the Respondent did not consult with or seek prior written consent from its employees to the pay-cut which was presented as a fait accompli.  Not that it was necessary, I am further satisfied that the Complainant unequivocally made clear his objection to this arrangement in his email exchange with Mr B and in particular his email of 16th July 2020 stating: “… I am disputing that Fijowave are requesting me to work a full 40 hour week whilst being in receipt of only 20 hours wages per week.”  I now turn to the Respondent’s reliance on the clause in its Company Handbook.  Whilst accepting that a term from a company handbook could conceivably constitute a contractual term if properly notified to the employee at the time of signing the contract, at any stretch the wording: “Employees should understand that ongoing cooperation in implementing necessary changes is a condition of employment.” could not be construed as a term authorising a unilateral reduction in wages under Section 5(1)(b) of the Payment of Wages Act 1991.  I am therefore satisfied on the balance of probabilities that the reduction in wages imposed was in breach of the Payment of Wages Act 1991. 

In so finding, it is acknowledged that the prevailing circumstances during the Covid-19 Pandemic were unprecedented and like many businesses, the Respondent was severely financially impacted.  It found itself in a predicament- fulltime labour from its employees was required to stay afloat but it was not in a position to pay normal wages even with the assistance of the Government Covid-19 Subsidy Schemes.  If it placed its staff on short-time or lay-off, the business could not be sustained and job losses would be an inevitability.  Hence, management had opted to impose a pay cut of 50% reducing to 30% on all its employees whilst requiring them to work full hours.  In implementing its survival plan, it is regrettable that HR advice was not sought as to how best to manage the situation and engage with its employees including the Complainant in line with their statutory entitlements.  Given that it is a small company, prior individual consultation would have been possible even remotely.  Lack of finance is cited as the reason for the decision not to seek HR advice.  However, it is noted that free sources of advice including the WRC and Citizen’s Advice Bureau as well as other online resources were readily available and indeed the Complainant had availed of same. 

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.  I find this complaint to be well-founded for the reasons 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.”  I am cognisant that whilst finding an employer to be in breach of the Payment of Wages Act 1991 for Covid-19 related reasons, in some instances the WRC and Labour Court have not made any award of compensation.  However, the facts in those cases generally related to reduced pay for reduced hours and are thus distinguishable.  Each case will turn on its own particular facts and any redress will have to be assessed accordingly.  The instant case constitutes a significant deficit in the Complainant’s wages in respect of time actually worked and labour provided to the Respondent.  Notwithstanding his objection, he had remained working his full hours on reduced wages which was key to delivering the satellite product fundamental to the Respondent’s survival, and without which the Respondent may not still be in business.  He could have been using that time to take on a second-part time job to meet the costs of running his home or otherwise putting his time to good use.  Instead, the Complainant had to rely upon savings and other family income and incurred the expense of engaging representation to pursue this complaint to a hearing before the WRC.  Despite remaining in business and being afforded every opportunity to do so, to date, the Respondent has not made any efforts towards meeting this shortfall.  Given that up to twice the net amount of wages due where the amount is greater than a week’s net wages may be awarded, I consider it reasonable in all of the circumstances to direct that the Respondent pays the Complainant compensation in the sum of €13,000 (comprising of €11,899 subject to any lawful deductions and €1,101 in compensation).  In so awarding, I have factored in the Respondent’s financial difficulties and uncertain future and in the absence of these difficulties would have deemed a higher award to be reasonable.

CA-00046826-001 - Complaint under Section 8 of the Unfair Dismissals Act 1977 – Unfair Dismissal:

Summary of Respondent’s Case:

Mr A and Mr B gave evidence on behalf of the Respondent in support of its position that the Complainant was properly made redundant and was paid his statutory redundancy of €10,704.  They contended that management had tried everything to avoid redundancies but by May 2021, the Respondent was still in a dire financial position owing to the impact of the Covid-19 Pandemic on sales and income.  The Board had held two meetings and it was decided to cut costs immediately.  They had no other option but to make approximately half of their workforce redundant including its Sales Director who had attended those meetings.  The only staff retained were those specialised in software required to maintain its existing product. The Complainant had been selected for redundancy because he worked on the hardware side.  Following a Board meeting on 7th May 2021, the affected employees were informed of their redundancies in individual online meetings.  Whilst he was not given written notice, the Complainant had been informed that it was an important meeting and given the option of meeting in person.  Mr A had met with him online and explained the reason for making his position redundant, being that it was due to Covid-19 and the lack of sales.  He had been further informed that roughly half the staff were being made redundant comprising of those working on the hardware side whilst those with a software skillset were being retained. 

Mr A had followed up with a letter dated 13th May 2021 to the Complainant confirming his redundancy: “As discussed with you on Friday 7th May 2021, I am very sorry to confirm that your position has been made redundant.  Unfortunately, we have not been able to identify any suitable alternative work for you.”  It also confirmed that he was entitled to a one month notice period and “We will require you to work your notice, or unless otherwise agreed with your Manager…  Your last day of employment will be 6th June 2021.”  It further confirmed payment of €10,704 in statutory redundancy.  The Complainant was also furnished with a form to sign stating: “I, John Hanlon, accept the above payment as the full and final payment due to me as a result of redundancy.  I confirm that this payment is full and final, and no further claim will be made against the company in respect of this redundancy or the payment now received.”  In a further email exchange, the Complainant had confirmed: “I am satisfied with the statutory redundancy amount.  Regarding not signing the letter, I am not obliged to sign anything in order that my redundancy be paid, therefore I will not be signing.”  A redundancy clause in the Company Handbook provided as follows: “It is recognised that business or economic circumstances may arise which will leave us with no alternative but to declare a redundancy.  Where employees are made redundant the prime consideration will be to protect the employment of as many people as possible consistent with maintaining the full efficient operation of the business.  Selection will therefore take place on the basis of retaining the necessary skills and expertise required for the survival of an efficient operation.”  Mr A and Mr B maintained that a genuine redundancy situation had arisen as evidenced by the fact that the Complainant’s role had not been replaced and no further hardware work had been undertaken by the Respondent.  In the meantime, one staff member who was key to maintaining software had been re-employed.  In terms of the Complainant’s efforts to mitigate his losses, it was contended that there would have been more jobs on a lower salary available to him.

Under cross-examination, Mr A accepted that the Respondent had not written to the affected employees notifying them that their positions were at risk of redundancy, inviting them to avail of representation or canvasing alternatives to redundancy.  Mr A confirmed that the Complainant’s input had not been sought but maintained that there were no alternatives as he was a hardware specialist and the only remaining work available was on the software side.  It was also accepted that he had not been offered any appeal.

Summary of Complainant’s Case:

Whilst it was not disputed that the Respondent had been in financial difficulty when management had made the redundancies, it was the Complainant’s position that his dismissal was unfair in circumstances where he was not afforded any fair procedures.  He gave evidence confirming that he was called to an online meeting on 7th May 2021 without any notice that his position was at risk of redundancy and was informed that he was being made redundant.  He had asked whether anyone else was being made redundant and was informed that half the workforce were being made redundant.  He was dismissed by letter dated 13th May 2021 and being uncomfortable with remaining working, had agreed a final working day of 20th May 2021 with Mr A.  The Complainant had not been consulted in relation to alternatives and accordingly had no opportunity to influence the decision.  He was not afforded representation.  Neither was he afforded the right to appeal his dismissal.  A submission that his dismissal was in reaction to his raising an issue with the reduction in his pay and referral to the WRC was not pursued at the hearing.

The Complainant confirmed that he was seeking compensation for the period of eleven months when he had been unemployed until he secured an alternative role from 25th April 2022 with a salary of €52,000 per annum.  In terms of mitigation, he had been in receipt of PUP (Pandemic Unemployment Payment) initially and when that ended, on Jobseekers Allowance.  During that period, he signed up for recruitment websites and applied for five positions which he deemed suitable.  He provided a list of job applications made on 3rd August 2021, 26th January 2022, 3rd February 2022, 3rd March 2022 and 11th March 2022.  He had also been accepted on a Springboard course in March 2022.  He confirmed that his speciality was in hardware as opposed to software.  There had been very few suitable roles available within his geographical area. 

Whilst it was accepted that the Respondent was in financial difficulty such that a genuine redundancy situation had arisen, it was submitted that this did not obviate the requirement to act reasonably and afford fair procedures to the Complainant.  In this respect, reliance was placed upon the decision of the WRC in Caroline McNeill -v- Galway Civic Trust - ADJ-00027918, upholding a complaint of unfair dismissal arising from a genuine redundancy situation.  In reaching that conclusion, reliance was placed upon the EAT decision in Gerry Fennell -v- Resources Facilities Support (2011) 22 E.L.R. 26 where it was held: “The Tribunal considered all of the evidence adduced; it is for the respondent to establish (a) that a redundancy situation arose and (b) that they acted reasonably and fairly towards the claimant in addressing that situation.  It is found that a redundancy situation arose and the respondent did not behave reasonably and fairly with the claimant.”  It was further submitted that in addition to the unlawful unilateral reduction in the Complainant’s wages, the redundancy process was also flawed depriving him of the due process associated with a reasonable employer.  In this respect, the Complainant had not been afforded any fair procedures including notice that his position was at risk, consultation in relation to alternatives to redundancy, the opportunity to avail of representation or an appeal against the decision to make him redundant.

Findings and Conclusions:

The Complainant contends that he was unfairly dismissed in circumstances where he was not afforded any fair procedures in a redundancy process.  The Respondent maintains that the Complainant was properly made redundant along with half of the workforce specialised on the hardware side.  I am therefore required to determine whether or not the Complainant has been fairly dismissed by reason of redundancy. 

It is firstly necessary to set out the requisite statutory provisions pertaining to this complaint.  The applicable portions of Section 6 of the Unfair Dismissals Act 1977 (as amended) provide as follows:

“6(1) Subject to the provisions of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, to be an unfair dismissal unless, having regard to all the circumstances, there were substantial grounds justifying the dismissal…

(4) Without prejudice to the generality of subsection (1) of this section, the dismissal of an employee shall be deemed, for the purposes of this Act, not to be an unfair dismissal, if it results wholly or mainly from one or more of the following:..  (c) the redundancy of the employee, and…

(7) Without prejudice to the generality of subsection (1) of this section, in determining if a dismissal is an unfair dismissal, regard may be had, if the adjudication officer or the Labour Court, as the case may be, considers it appropriate to do so- (a) to the reasonableness or otherwise of the conduct (whether by act or omission) of the employer in relation to the dismissal, and…”

It is further noted that Section 6(3) provides for specific circumstances where a redundancy is deemed to be automatically unfair subject to the generality of Section 6(1), none of which apply in the instant case.

Redundancy is defined by Section 7(2) of the Redundancy Payments Act 1967 (as amended) as follows:

“(2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concernedthe dismissal is attributable wholly or mainly to-

(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or

(c) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or

(d) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or

(e) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained,…”

Subject to the generality of Section 6(1), Section 6(4)(c) of the Unfair Dismissals Act 1977 provides that the dismissal of an employee is deemed not to be unfair if it results wholly or mainly from redundancy.  As observed by Charlton J. in the leading case of JVC Europe Ltd -v- Ponisi (2012) E.L.R. 70: “In an unfair dismissal claim, where the answer is asserted to be redundancy, the employer bears the burden of establishing redundancy and of showing which kind of redundancy is apposite.  Without that requirement, vagueness would replace the precision necessary to ensure the upholding of employee rights.”  The legislation as interpreted by caselaw requires the employer to (1) establish that a genuine redundancy situation existed and if so, that the dismissal resulted wholly or mainly from that redundancy and (2) conduct itself reasonably throughout including adherence to fair procedures.  This includes a fair selection process and the taking of reasonable steps to identify alternative employment.  Invariably, these two requirements will be inextricably linked.  Where an employer has no agreed redundancy selection policy as in the instant case, it is well-established by caselaw that the employer must act fairly and reasonably. 

Firstly, it is important to acknowledge that the Covid-19 Pandemic was an extremely challenging time for employers and employees alike with uncertainty as to how best to manage the challenges posed by the restrictions and consequent economic pressures whilst conducting processes fairly.  It is not in issue that the Respondent found itself in a very difficult situation financially such that management had to make some very tough decisions with a view to ensuring its future survival.  As already indicated, it is unfortunate that the Respondent did not avail of HR advice to manage the redundancy process to ensure that fair procedures were afforded to its employees.  Applying the applicable law to the factual matrix herein which is not materially in dispute, I am satisfied on the balance of probabilities that the Respondent has not established that the Complainant was fairly dismissed by reason of redundancy for the following reasons:

(1)  In the interests of transparency and fairness, it is good practice to provide employees at risk of redundancy with objective selection criteria beforehand.  Whilst a notice period and consultation process for a company with less than 20 employees (so not falling within the Protection of Employment Act 1977) is not a statutory requisite, it is also considered good practice to ensure that all alternatives have been exhausted.  Employers who ignore these steps do so at their peril as evidenced by the caselaw.  Regardless of an employer’s financial position, without taking the steps of consulting with the affected employees or exploring alternatives, it is near impossible to demonstrate that a genuine redundancy situation arose.  In the instant case, the Complainant was a valued employee working as a Quality Manager on the hardware side of operations and key to delivering a product which was fundamental to the Respondent’s survival.  He had extensive experience and knowledge of the area.  However, management opted not to seek his input for suggestions as to how the hardware side might remain viable or whether he could be retained in another capacity before reaching the decision to make his role redundant.  Instead, the decision was made unilaterally at a Board meeting on 7th May 2021 and without notice, the Complainant was verbally informed afterwards that he was being made redundant and of the basis for his selection for the very first time.

(2)  Given the timing of the redundances in question in May 2021 during the Covid-19 Pandemic, I am further of the view that a reasonable employer would have considered the alternatives of lay-off and short-time at least until the end of the emergency period on 30th September 2021 to afford an opportunity for conditions to improve.  Notwithstanding a provision in his contract allowing for same, this had not been discussed or considered and instead, management had opted for the permanency of redundancy at a time of considerable uncertainty.  It is simply not sufficient to say in hindsight that the decision was correct because the positions in question were permanently made redundant and/or have not been filled to date. 

(3)  It is well established in caselaw that where there is no agreed procedure in relation to selection for redundancy, as in the instant case, then the employer must act fairly and reasonably.  Section 6(7) of the Unfair Dismissals Act 1977 also provides that an Adjudication Officer may have regard to the reasonableness or otherwise of the conduct of the employer (whether by act or omission) in relation to a dismissal.  There was a complete absence of due process and fair procedures from the redundancy process adopted and in particular, the Complainant was not given any notice that his role was at risk of redundancy; was not provided with any selection criteria; was not consulted in relation to alternatives; and was not advised to avail of representation or afforded an appeal.  It is particularly concerning that the Respondent deemed it appropriate to seek to have its employees complete a form waiving their statutory rights in relation to the termination of their employment in lieu of what was their statutory entitlement.

Decision:

Section 8 of the Unfair Dismissals Acts 1977-2015 requires that I make a decision in relation to a complaint of unfair dismissal in accordance with the relevant redress provisions.  For the aforesaid reasons, I find that the Complainant was unfairly dismissed by the Respondent through no fault of his own.  Once a complaint has been declared well-founded, Section 7(1) sets out the various forms of available redress including reinstatement, re-engagement and financial compensation as the Adjudication Officer “as the case may be, considers appropriate having regard to all the circumstances.”  Section 7(1)(c) provides for compensation of up to 104 weeks remuneration in respect of the employment from which an employee was dismissed for financial loss attributable to the dismissal and up to 4 weeks if no financial loss was incurred.  Section 7(2) sets out the various factors to be considered in determining the amount of compensation payable under Section 7(1) including applicable to this case: “(a) the extent (if any) to which the financial loss referred to in that subsection was attributable to an act, omission or conduct by or on behalf of the employer, (c) the measures (if any) adopted by the employee or, as the case may be, his failure to adopt measures, to mitigate the loss aforesaid,….  Section 7(3) further provides that: ““financial loss”, in relation to the dismissal of an employee, includes any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Acts, 1967 to 1973, or in relation to superannuation;”

In terms of mitigation, it is noted that there were very few suitable positions available to the Complainant during the Covid-19 Pandemic as evidenced by the fact that he could only make five job applications.  Arguably, he could have made more efforts to have taken less well-paid positions during this period.  He did however seek to undergo training and to his credit, found suitable employment eleven months later on a higher salary.  Had he remained employed by the Respondent, it is quite probable that he would have been placed on lay-off or short-time given its dire financial circumstances and would have been at a loss of earnings in any event.  Thus, it is improbable that he would have been in receipt of his full pay for the eleven-month period.  Factoring in the fact that the Complainant has had the benefit of the €10,704 statutory redundancy payment, I award €17,000 (less any lawful deductions) in compensation as being appropriate having regard to all the circumstances and direct that this sum is paid by the Respondent to the Complainant.  This represents just over 70% of maximum potential financial loss for the period in question.  For the avoidance of doubt, this award is additional to the statutory redundancy paid to the Complainant.

CA-00046826-002 - Complaint under Section 6 of the Non-payment of Wages Act 1991 - Non-payment of wages in lieu of notice period

Summary of Complainant’s Case:

The Complainant contended that he had not been paid in lieu of his contractual/statutory notice-period.  Under his contract, the Complainant was entitled to one month’s notice with the proviso: “However, both parties are free to waive their right to notice and/or accept pay in lieu of notice, if agreed between them.”  With more than 5 years’ and less than 10 years’ service, the Complainant was statutorily entitled to 4 weeks’ notice under Section 4(1)(c) of the Minimum Notice and Terms of Employment Act 1973.  He was notified of his redundancy on 7th May 2021 as confirmed by letter dated 13th May 2021, providing one month’s notice and asking him to work for the duration of his notice with a termination date of 6th June 2021.  He wanted to leave straight away as it would not have been a comfortable atmosphere to remain.  Whilst the Parties had agreed that his last day of work was 20th May 2021, he had not waived pay in lieu of the remaining notice.  However, he was not paid in lieu of the remaining two weeks comprising of €1,750, constituting an unlawful deduction from his wages contrary to Section 5 of the Payment of Wages Act 1991. 

Summary of Respondent’s Case:

On behalf of the Respondent, Mr A contended that the Complainant had been afforded his contractual entitlement to one month’s notice.  The letter of 13th May 2021 had stated: “We will require you to work your notice, unless otherwise agreed with your Manager.”  However, the Complainant had indicated that he wished to leave immediately and it was agreed that his last day of work would be 20th May 2021.  Accordingly, he was paid up to that date and was not entitled to pay in lieu of notice.  Additionally, as 6th June 2021 was taken as the end date for the calculation of redundancy payment, he had been overpaid.

Findings and Conclusions:

Relevant to the instant case whereby the Complainant had over eight years’ service, Section 4 of the Minimum Notice and Terms of Employment Act 1973 provides the following in relation to minimum notice:

“4(1) An employer shall, in order to terminate the contract of employment of an employee who has been in his continuous service for a period of thirteen weeks or more, give to that employee a minimum period of notice calculated in accordance with the provisions of subsection (2) of this section.

(2) The minimum notice to be given by an employer to terminate the contract of employment of his employee shall be-…

(c)if the employee has been in the continuous service of his employer for five years or more, but less than ten years, four weeks,…

(5) Any provision in a contract of employment, whether made before or after the commencement of this Act, which provides for a period of notice which is less than the period of notice specified in subsection (2) of this section, shall have effect as if that contract provided for a period of notice in accordance with this section.”

Section 7 of the Minimum Notice and Terms of Employment Act 1973 provides the following in relation to the right by either an employer or employee to waive the right to notice or payment in lieu of same.

“7(1) Nothing in this Act shall operate to prevent an employee or an employer from waiving his right to notice on any occasion or from accepting payment in lieu of notice.

(2) In any case where an employee accepts payment in lieu of notice, the date of termination of that person’s employment shall, for the purposes of the Act of 1967, be deemed to be the date on which notice, if given, would have expired.”

Applying the facts herein to the aforesaid statutory provisions, with over eight years’ service, the Complainant was entitled to four weeks’ statutory notice or one month’s notice under his contract of employment.  Section 4(5) of the Act provides that where longer, statutory notice takes precedence.  It is common-case that the Respondent gave the Complainant one month’s notice requiring him to work for the duration of that period.  Understandably, he sought to leave as soon as possible and an end date falling some two weeks short of his statutory and contractual notice was agreed.  Taken together, Sections 4 and 7 of the Act provide for an employee’s entitlement to the requisite statutory notice period based upon length of service and the right by either party to waive that notice period or to accept pay in lieu.  These provisions do not confer an entitlement to an employee who has waived notice to payment in lieu of same.  Based upon the evidence adduced in the instant case, I am satisfied that whilst there was agreement to waiving the remaining two weeks of the notice period, there was no express or implied agreement to pay in lieu of same.  Thus, no contractual entitlement to same arises under Section 5 of the Payment of Wages Act 1991.  For the record, the redundancy payment made has been factored into the award for unfair dismissal above.

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to this complaint.  Based upon the aforesaid reasoning, I find this complaint to be unfounded. 

CA-00046826-004 & CA-00046826-005 – Complaints under Section 27 of the Organisation of Working Time Act 1997 - Non-payment in lieu of annual leave and June Bank Holiday

Summary of Complainant’s Case:

The Complainant sought a further sum of €161.50, being his daily rate of pay in lieu of the June bank holiday – ref: CA-00046826-005, referred under Section 27 of the Organisation of Working Time Act 1997.  This complaint was brought on the basis that his employment had ended within the week ending on the day before a public holiday, being Monday 7th June 2021.  The Complainant had also referred a complaint under Section 27 of the Organisation of Working Time Act 1998 – ref: CA-00046826-004 for non-payment of pay in lieu of annual leave accrued during his notice period which was not pursued at the hearing.

Summary of Respondent’s Case:

The Respondent relied upon the fact that the Complainant had agreed a departure date of 20th May 2021 to refute both complaints on the basis that any statutory entitlements on cessation ended on that date.

Findings and Conclusions:

In relation to compensation in lieu of statutory entitlements upon the cessor of employment, Section 23(2) of the Organisation of Working Time Act 1997 provides: “Where- (a) an employee ceases to be employed during the week ending on the day before a public holiday, and (b) the employee has worked for his or her employer during the 4 weeks preceding that week, the employee shall, as compensation for the loss of his or her entitlements under section 21 in respect of the said public holiday, be paid by his or her employer an amount equal to an additional day’s pay calculated at the appropriate daily rate.”  I find that as the Complainant’s employment ended on 20th May 2021, he was not in employment during the week ending the day before Monday 7th June 2021 and thus did not qualify for compensation in lieu of that bank holiday.

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to these complaints.  Based upon the aforesaid reasoning, I find both of these complaints to be unfounded.

Overall Award:

For the avoidance of doubt, the overall award to the Complainant in respect of all complaints is €30,000.

Dated:   29-02-2024

Workplace Relations Commission Adjudication Officer:  Aideen Collard

Key Words:  Section 5 of Payment of Wages Act 1991 - non-payment of wages for full-time hours during Covid-19 Pandemic and non-payment of wages in lieu of notice period not worked - Sections 6(1) & 6(4)(c) of the Unfair Dismissals Act 1977 - dismissal by reason of redundancy constituted unfair dismissal