Respondent

Parties

Dara  Purcell

Health Service Executive

Representatives

Self-Represented

Ms C Bruton BL instructed by Ms Ca Ruane of Byrne Wallace LLP

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00054600-001

20/01/2023

The issue in contention concerns an alleged Illegal deduction from an Employee’s Salary - this being a failure to pay or consider a Performance Related Payment as allegedly outlined in the Employee’s Contact of Employment.

The Employment began on the 18th December 2006 and continued at the date of the Hearing.

The rate of pay was stated by the Complainant to be €132,000 per annum for a 35-hour week.

The Employment was that of a Senior Executive in the Health Service Executive – (abbreviated as HSE in the Adjudication decision.)

The Complainant was self-represented but was fully Legally qualified. A very comprehensive Written Submission was supplied (with numerous Legal precedents quoted) and an extensive Oral testimony was given. He was subjected to a full cross examination from the Respondent Counsel, Ms Bruton.

In brief summary the Complainant’s case was that he had a proper legal contact of employment with the HSE dated the 27th of November 2006.  In his written submission he states

The Complaint made to the WRC relates to the non-performance of a provision in my contract of employment since July 2022     Para 35.2

There could be no doubt but that the HSE was his employer and not the Department of Health or any other Central Government Agency commonly referred to as the “Civil Service”.

Clause 6 of his contract stated that

A maximum of 20% PRA is also available subject to satisfactory performance of duties against specified performance targets as set out and agreed with the Chief Executive Officer on an annual basis.

The Complainant advanced the case that this was in effect a legally binding contract with the HSE to a basic salary and a possible 20% PRA. (For convenience PRA is used as an abbreviate for Performance Related Pay Allowance). This was a clear contractual agreement and was not and could not legally be overtaken or subsumed by various Central Government decisions in relation to Public Finances – the FEMPI Legislation in 2009 in particular.

It was accepted that PRA payment had been removed for directly employed Civil Servants by the Minister for Finance and the Minister for Public Expenditure and Reform in 2009. A banded Salary reduction programme was put in place. The Board of the HSE had been “requested” to follow suit by the Department of Health and had complied.

However, and most importantly a Salary Uplift of some 10% had been granted to a small number of staff across some very Senior Public Service Grades and Categories in 2009. The categories were those staff who had a PRA entitlement. This was done to prevent unnecessary anomalies and unfair situations arising from the blunt application of the Salary reduction programme to basic pay alone.

The Complainant had been the beneficiary of the 10% Salary Uplift – the Salary reduction was applied to Basic plus Uplift rather than the straight basic salary. The Complainant accepted the Uplift and regarded it as, in essence, a substitute payment in lieu of the now no longer available PRA Payment. He regarded this as a legally acceptable method of the Employer discharging the PRA element of Section 6 of the employment contract.

The situation changed in 2017/2018 as the Public Finance improved and the FEMPI reductions were restored to Public Servants. The 10% Uplift was removed but crucially the PRA entitlements were not restored. The 10% Uplift was not, the Complainant argued, time bound or conditional on a PRA restoration. At the time he stated it was his belief that it was envisaged that it would continue indefinitely.

Extensive e mail and ordinary correspondence between the HSE, the parent Department of Health and the Depts of Finance and Expenditure and Reform were considered and cross examined in the Hearing. The FEMPI No 2 Act and Circular 28/2009 were extensively explored.

The Complainant argued that to alter his Contract of Employment with the HSE, the Minister for Health would need to have issued a Section 10 (5) order under the Health Act of 2004 directing the Board to alter a Contract of Employment. No such Order was ever, to his knowledge, received. He contended that the HSE, quoting Board Minutes, had “Suspended the PRAs” not abolished them.

The Employer even if acting under the advice of the Dept of Health or Depts of PE & R or Finance could not legally retrospectively alter a contract entered in to in 2006 unless the Parties so agreed.

No discussions regarding on an altered contract had ever taken place with the Complainant. The FEMPII No 2 Act of 2009 and Circular 28/2009 were not a substitute and did not qualify as Health Act, 2004, Section 10 , legal directions to the HSE.

Considerable references were made to Holland v Athlone institute of Technology [2012] 23 ELR and a Hogan and McDermott EAT decision in support of the Complainant’s view regarding the proper provenance of Government Circulars or lack of same where major alterations to the Contracts of Employment of a Public Servant were at issue.

The 10% Uplift had ceased in July 2002. This and it’s non replacement by a restored PRA was in fundamental breach of his Contract of Employment and was effectively an illegal deduction under Section 5 of the PoW Act 1991.

Accordingly, his complaint should succeed.

The Respondent submitted a detailed Written Submission supported by Oral testimony from a number of Managers. The Chief Spokesperson was Ms C Bruton BL.

Ms Bruton BL pointed out that the complaint was made under the Payment of Wages Act,1991 although extensive references were by the Complainant to the Terms of Employment (Information) Act, 1994 and any contravention of this Act was vigorously denied.

The Respondent advanced numerous arguments in relation to the background of the case but in principle the case was that the Employer was a Public Body established under statute by the Heath Act,2004.

The terms and Conditions of Employment of its employees are, in effect governed by the Health Act, 2004, Section 22 and in particular Section 22(4).

“The Executive shall with the approval of the Minister given with the consent of the Minister for Finance, determine –

(a)    The terms and conditions of employment (including terms and conditions relating to renumeration and allowances) of employees appointed under this section, and

(b)    The grades of the employees of the Executive and the number of employees in each grade.”

Following on from this Section 5(1) of the Payment of Wages act,1991 has to apply.

 Section 5 (1) of the Payment of Wages Act,1991

Regulation of certain deductions made, and payments received by employers.

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,

The Minister for Finance did away with PRAs in 2008 and Circular 28/2009 in accordance with the Financial Emergency Measures in the Public Interests (No 2) Act of 2009. The HSE, the employer in this case, had no option but to follow the direction of the Minister.

Likewise, the measures towards pay restoration in the Public Service Pay and Pensions Act 2017 (sections 19(4) & Order SI No 308/2021 and Circular 11/2021 were followed by the HSE as a Public Body. Section 5(1) of the Payment of Wages Act,1991 has to apply.

Accordingly, the complaint has no merit. In the extensive submissions and oral testimony, the question of what wages/Salary were “properly payable” was discussed, as was the key issue of the date and methodology of the discontinuance of the PRA payments. It was the clear position of the Respondent representatives that the Minister, (in keeping with Acts of the Oireachtas and supporting Statutory Instruments & Circulars), had given clear instructions and their hands were then effectively tied.

The arguments of the Contractual Relationship of the Complainant and the HSE as Employer was considered. The Respondent view was that the applications of Circulars in 2009 and latterly in 2017 had in effect constituted a legal change in the Employment contacts of all Respondent employees including those at the most senior level such as the Complainant. Accordingly, any references to the Terms of Employment (Information Act,1994) were not relevant, irrespective of the fact that they were not before the Adjudication.

3:1         Opening Adjudication comments.

The complaint before the Adjudication, CA-00054600, is under the Payment of Wages Act,1991. Effectively a Breach of Section 5 of the Act is alleged.

This in not to say that the Complainant has not raised a very serious Contract Law issue vis a via his Employment Contract of the 27th of November 2006 and the HSE - his direct employer. However, it has to be made clear that this issue of contract interpretation is a matter for a Higher Court not a First Instance Adjudication Officer Hearing.

Accordingly, the Adjudication of the 8th December 2023 must focus, primarily, on Section 5 of the Payment of Wages Act,1991.

3:2        Section 5 of the Payment Wages Act,1991 “Regulation of certain deductions made, and payments received by employers”.

Proceeding under the 1991 Act prompts the first fundamental question as to what was the Wage/Remuneration “Properly payable” to the Complainant.

This has to prompt the second fundamental question – was a “Deduction” made as alleged by the Complainant on the 1st July 2022.

In considering these questions and in particular the Wages Properly payable issue the overall context has to be taken into account.

The key background issue here was that the Employer -the Health Service Executive, was and is without doubt the largest employer in the State. It is estimated that some 67,000 staff are direct HSE employees within excess of a further 30,000 in related Agencies under their auspices.

The freefall in Public finances in the 2007 to 2009 period was unprecedented. The size of the Public Pay bill required urgent, and some would say seismic actions. The Performance Related Pay system at Senior Management levels was an obvious target for radical retrenchment.

There was no doubt in any of the evidence presented in this Adjudication that Performance Related Pay at Senior Level was abolished in the directly employed Civil Service. The numerous State Agencies, the HSE, the Gardai, the Defence Forces etc under the Control of the Civil Service Departments/Ministers had no choice but to follow suit. It was estimated that some 700 Senior Posts were impacted upon. Levels of Salary were also reduced in conjunction.

The methodology of the achievement of these major retracement goals was via the normal public administrative mechanisms of Central Government – primary legislation in the Houses of the Oireachtas and the follow-on Circulars and Statutory Instruments. In this case the Financial Emergency Measures in the Public Interest Acts of 2009 ( 1 & 2)  and 2010 and numerous supporting Circulars especially, in this case, Circular 28/2009.

Not wishing to labour the point but the Wage/Salary levels in the HSE, including the highest levels of management are under the direct control of the Minister for Health and via that Office, the Minister for Finance /Minister for Public Expenditure and Reform. 

The Complainant argument here was that the Operation of Circular letters from the Departments of Finance and the Dept. of PE & R did not specifically alter the Terms and Conditions of the Complainant and any changes should have been the subject of separate instructions under the Health Act,2004. Reliance was placed on Hogan and McDermott EAT Case [2012] 23 ELR by both sides with differing interpretations as to the provenance of Circulars and alterations of Contacts of Employment of Public Servants. Consideration has also to be given when considering this point to Holland v Athlone Institute of Technology [2012] 23 ELR and although not quoted directly in the case McKenzie v Minister for Finance [2010] IEHC 461.

In the final analysis it has to be recognised that the Complainant in this case occupies a very senior position in the HSE. However, this seniority, does not obviate the Holder or any other of the reported 700 senior staff from normal Public Administrative measures nor in practical reality afford the Holder a right to a personal re negotiation of his Terms. To allow otherwise, even if the Payment of Wages Act,1991 was to be overlooked, would be to create an unmanageable bureaucratic burden for the Administration of the State, particularly, in a situation of crisis in Public Finances. Legal recognition of the very critical position of the Public Purse in the 2008/2009 period is now well recognised.

In McKenzie v Minister for Finance [2010] IEHC 461 (referred to in a learned Article on the payment of Wages Act, 1991 by Ms MP Guinness, BL at King’s Inns November 2023) Edwards J is quoted as stating

It is part of the constitutional mandate of the Government that it should be able to act swiftly, and if necessary, unilaterally, in the urgent protection of the national interest”.

It is hardly surprising therefore that the references to “Statute” in the 1991 PoW Act are so clearly referred to.

The Wages & Renumeration of Public Servants and Agency Staff, such as the HSE, are governed by Statute as decided primarily in the Houses of the Oireachtas

Accordingly, Section 5(1) (a) of the Payment of Wages Act,1991 has to apply.

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.

(Underlining by Adjudication Officer)

The adjustments in the basic Salary and the PRA of the Complainant can be clearly traced back to relevant Circulars and Acts of the Oireachtas. The evidence presented makes this abundantly clear.

The Complaint has to deemed, on this basis, Not Properly Founded, under Section 5(1)(a) of the Payment of Wages Act,1991.

On this basis the Complaint has to be dismissed.

3:3        Supplementary Arguments

There was considerable discussion among the Parties a relation to the issue as to whether or not the Complaint was “In time” (in addition to the Workplace Relations Act,2015 Section 41 question discussed above) and as to whether or not the PRA Payments were “Discretionary” to the Employer. These have not been gone into at length in this Adjudication as the fundamental issue was Section 5 of the Payment of Wages Act,1991 which, once decided, governs the entire case.

Payment of Wages Act,1991, Performance Related Pay.