PWD2444

FULL DECISION

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00033099 (CA-00043814-001)

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 in accordance with Section 44 of the Workplace Relations Act, 2015. 

The following is the Court's Decision.

DECISION:

This is an appeal by Christian Porter (‘the Complainant’) of a decision of an Adjudication Officer (ADJ-00033099 – CA-00043814-001 dated 30 September 2022) under the Payment of Wages Act 1991 (‘the Act’).

Christian Porter did not attend the hearing at first instance and the Adjudication Officer held that, in the absence of any evidence to the contrary, the complaint by him against his former employer Excel Roofing Systems Limited (“the Respondent”)was not well-founded.

The appeal was lodged to the Labour Court on 14 March 2022. A case management meeting was held on 23 May 2023. This case is linked to DWT2421, UDD2428 and TED2411. The Court heard the four appeals across two days on 1 February 2024 and 16 May 2024.

Position of the Complainant

The Complainant was laid off from his employment from 2 January 2021 until he resigned his employment on 25 March 2021.

The Complainant was not issued with a contract of employment, and hence there was no contractual provision allowing the Complainant to place the Complainant on lay-off without pay.

The Respondent placed the Complainant on layoff citing a downturn in business. The lay-off was implemented in advance of a mandatory government shutdown that was announced a few days later. An employee cannot be on two types of layoffs at the same time. The layoff was an ordinary layoff linked to a downturn in business and not related to a COVID-19 government mandated national shut down. If the layoff was due to COVID-19, this would follow that no payment would arise.

In the case of John Lawe v Irish Country Meats (Pig Meat) Limited 1988 ELR 266 White J. considered the issue of payment during a period of layoff. In that case the Court referred to the legal position that is summarised in Forde Employment Law, page 81, where it is stated:

“Absent a term in the contract to the contrary, the employer’s fundamental obligation is to pay the agreed remuneration for the time of work during which the employee is prepared to work (Hanley v – Pearse and Partners). Ordinarily, an employer is free to lay off workers for any reason, provided he continues to pay them. A layoff without paying the normal agreed remuneration can be treated by the employee as a dismissal.”

The Complainant was paid a daily rate of €227.27 gross (€161.35 net).  He was not paid for a period of 58 days in the period from 2 January 2021 to 25 March 2021, in breach of the Payment of Wages Act.

Position of the Respondent

The Respondent rejects the claim. It submits that a genuine layoff situation arose and that in such circumstances the Complainant was not entitled to any payment. The legal parameters governing layoff are that (i) an employer cannot provide work for an employee, (ii) believes situation to be temporary, and (iii) gives an employee notification of the layoff as soon as possible.

The main contractor on the site where the Complainant worked notified the Respondent via e-mail on 2 January 2021 that the site would not re-open as scheduled on 4 January 2024. The Complainant was copied on that email. The Respondent notified the Complainant by phone that evening that a complete cessation of work in the construction industry was about to be announced due to the huge spike in COVID-19 numbers in Ireland at that time.

The Respondent confirmed the lay-off situation to the Complainant by e-mail on the 4 January 2021. The Complainant was advised that the lay-off would be subject to ongoing review. The government-imposed shutdown remained in place, and the earliest point that the Complainant could have returned to work was in and around the 11 April 2021. The Complainant resigned his employment on 25 March 2021.

The Complainant glosses over the fact that the entire workforce was laid off on a temporary basis the previous year due to the COVID-19 pandemic. There was a precedent of lay-off set across the entire construction sector from March 2020. The Complainant was laid off for three months in 2020 and, therefore, accepted that layoff was a term of his contract of employment. He acquiesced to lay-off as a term in his contract. He did not seek redress at that time. He availed of the pandemic related social welfare payments available to him.

The Complainant was paid in full for the period between the Monday 4 to Wednesday 6 January 2021. No wages were properly payable to him in the period thereafter when he was on lay-off and no unlawful deduction was made.

The Applicable Law

Section 5 of the Payment of Wages Act 1991 provides in part as follows:

(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.

(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.

Deliberations and Findings

The complaint was submitted to the Workplace Relations Commission on 29 April 2021. Therefore, the six-month cognisable period for consideration by the Court is the period from 30 October 2024 to 29 April 2021.

 The Complainant seeks payment of his normal weekly wages of €244.55 for the period 2 January 2021 to 25 March 2021.

 To ground a claim under the Payment of Wages Act 1991 the Court needs in the first instance to ascertain what wages are properly payable. Having established that the Court then needs to ascertain whether there was a shortfall in the proper payment and, if that was the case, whether the shortfall arose for one of the reasons set out in section 5(1) above.

What Amount is Properly Payable?

 In Balans v Tesco Ireland Limited [2020] 31 E.L.R. 125 MacGrath J. held that the first matter to be determined in assessing if a contravention of the Act occurred is to establish what wages are properly payable under the Complainant’s contract of employment.

There was no written contract of employment governing the Complainant’s terms and conditions of employment, however, the parties were in agreement that the Complainant was entitled to a daily rate of pay of €227.27 Gross (€161.35 net) had he physically worked during the relevant time and a layoff situation not arisen.

Notwithstanding the Respondent’s initial submission that no wages were properly payable to the Complainant during a lay-off, Counsel for the Respondent acknowledged that the amount properly payable to the Complainant during the relevant period, having regard to his terms and conditions employment, was a daily rate of pay of €227.27 Gross (€161.35 net).

Accordingly, the Court finds that the amount properly payable to him during the relevant period was his normal wages. The Court finds that the wages properly payable to the Complainant during the relevant period having regard to his terms of employment was a daily rate of pay of €227.27 Gross (€161.35 nett).

Was there a shortfall in the amount payable?

 The Complainant seeks payment of his normal weekly wages of from the period commencing 2 January 2022 until 25 March 2021, when he resigned his employment.

 In response to questions from the Court, the Complainant accepted that he received a retrospective payment for the initial days that he was laid off. 

Accordingly, the Court consider the relevant period for consideration regarding the alleged breach of the Act to be the period from 8 January 2021, when all employees on site were laid off, to the termination of his employment on 25 March 2021.

Were the deductions required or authorised within the meaning of section 5(1) of the Payment of Wages Act 1991?

 The Act at Section 5(1) prohibits an employer from making a deduction from wages that are properly payable to 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.

 In this case, the Respondent submits that any deduction to the Complainant’s was required or authorised to be made by virtue of a term of the employee's contract of employment in force at the time, as provided for under section 5(1)(b) of the Act.

While the Respondent accepts that there was no written contract of employment in place between the parties at the relevant time, it submits that the Complainant acquiesced to lay-off as a term in his contract when he accepted a three month lay-off from his employment in 2020 and did not seek redress at that time. He availed of the pandemic related social welfare payments available to him.

The Complainant accepts that he did not object to his layoff without pay during the first lockdown. He contends that his second layoff situation in January 2021 was not linked to the Covid 19 pandemic. He referred to the fact that he was the only employee laid off on 2 January 2021 and that he was notified that his layoff was due to a downturn in business. The Complainant queried the rationale for his layoff, when work remained on site, and why he was selected for layoff, when two named managers with less service remained working on other contract sites.

 In UDD2428 the Court found that the Complainant was laid off due to the impact ofthe COVID-19 pandemic on the construction sector, and that the Complainant was contacted about the evolving layoff situation before other employees because of his senior position, with responsibility for delivery on site. By 8 January 2021 the entire workforce was laid off.

 The matter for the Court to consider is whether the Complainant’s acquiescence during the first period of lockdown in 2020 amounts to an established practice sufficient to imply a variation into the Complainant’s contract of employment.

 In O'Reilly v Irish Press [1937] 71 I.L.T.R 194 Maguire P considered how a term can be implied into a contract of employment by custom and practice. In that case, the plaintiff argued that he had an entitlement to a 6-month notice period by virtue of custom and practice in the industry. In assessing if such an entitlement was implied into the plaintiff’s contract of employment through custom and practice, Maguire P said for this to happen it must be proved:-

 “by persons whose position in the world of journalism entitles them to speak with certainty and knowledge of its existence. I have to be satisfied that it is so notorious, well known and acquiesced in that in the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties.”

 It is clear to the Court that was a challenging time for all. However, taking account of the exceptional circumstances that prevailed during national lockdowns, and the specific circumstances outlined in this case, the Court does not accept that a practice had developed that was so notorious and well known that an employee was certain of its existence, such that, in the absence of agreement in writing, it could be taken as one of the terms of the contract between the parties.

 Based on the evidence submitted, the Respondent has not established to the satisfaction of the Court that the Complainant’s contract of employment was varied by custom and practice, such as to allow the Respondent to rely on Section 5(1)(b) of the Act.

 Notwithstanding the restrictive measures implemented across society to minimise the spread of the Covid-19 virus, the fact remains that the employment relationship between the Respondent and Complainant remained in place during that time. The Court, therefore, concludes that the contract of employment in place during the period encompassed by the complaint establishes the wages that were properly payable to the Complainant at that time.

 Based on the evidence submitted, the Respondent has not established to the satisfaction of the Court that the Complainant’s contract of employment was varied such as to allow the Respondent to rely on Section 5(1)(b) of the Act, as submitted by the Respondent.

Finding

The Act at Section 5 prohibits an employer from making a deduction from the wages that are properly payable to 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 her prior consent in writing to it.

 The Court is satisfied that the arguments relied upon by the Respondent in this case do not require or provide authorisation for the deductions made. 

 Emergency measures introduced to limit the application of employment rights legislation during the pandemic did not amend or change obligations or protections provided under the Payment of Wages Act.

 The deductions made were not required or authorised to be made by virtue of any statute. The deductions were not required or authorised to be made by virtue of a term of the Complainant's contract of employment. Finally, the Complainant did not provide his written consent to authorise a deduction in wages as permitted by section 5(1)(c) of the Act.

 In the circumstances outlined to the Court the Respondent cannot rely on Section 5(1) of the Act to say that the deductions made from the Complainant’s salary were lawful.  Accordingly, the Court finds that an unlawful deduction from the Complainant’s wages occurred during this period and so determines that the complaint is well founded.

Redress

 The Act at Section 6 provides as follows:

(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.

 Having decided that a complaint is well founded, the Court must consider what award, if any, is reasonable in the specific circumstances of each case.

In the Court’s view, it is appropriate when assessing redress to consider the wider circumstances in which the deductions occurred in this case. 

The deductions made occurred during the height of the global Covid-19 pandemic. The pandemic had an unprecedented impact on the normal social and economic life of the country, with Government enforced lockdowns impacting all employment sectors. Few employers were in a position to continue to pay employees in those circumstances. 

The challenges facing both the Respondent and its workers were exceptional and significant in scale.  The Complainant set out a clear and cogent case as to why a contravention of his employment rights occurred. However, having regard to the facts of this case and the unprecedented circumstances that prevailed at the time, the Court considers, in line with earlier decisions of this Court in Caitriona Jones v Aer Lingus PWD224; Elizabeth Barry v Aer Lingus PWD2318; Romana Vancekova v Primark Ltd t/a Pennys PWD2250, that an award of no compensation is reasonable the circumstances.

Decision

 The Court finds that the complaint is well founded.

The Court determines that the Complainant suffered a deduction from his wages during the cognisable period for the within complaint and that this deduction was unlawful.

For the reasons set out above, the Court decides that an award of no compensation is reasonable having regard to all of the circumstances giving rise to this complaint.

The decision of the Adjudication Officer is overturned. 

The Court so Decides.

	Signed on behalf of the Labour Court
	Katie Connolly
AR	______________________
15 July 2024	Deputy Chairman

NOTE

Enquiries concerning this Decision should be addressed to Aidan Ralph, Court Secretary.