PWD2437

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00047991 (CA-00059097-001)

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 Mr Patrick Geraghty (‘the Complainant’) from a decision of an Adjudication Officer (ADJ-00047991, dated 31 January 2024) under the Payment of Wages Act 1991 (‘the Act’). Notice of Appeal was received in the Court on 12 March 2024. The Court heard the appeal in Dublin on 18 June 2024. As there was no dispute on the facts between the Complainant and his employer, Iarnrổd Eireann (‘the Respondent’), no sworn evidence was taken. Each party made comprehensive written and oral submissions to the Court.

The Factual Matrix

In LCR21213, dated 22 April 2016, this Court recommended that the Respondent put in place a contributory income continuance scheme for its safety-critical staff. (Such a scheme had already been put in place for drivers employed by the Respondent.) The Court further recommended that the Respondent would contribute 30% of the cost of the scheme and the members 70%. By agreement between the Trades Unions and Respondent, the scheme ultimately put in place in 2020 was extended to all staff (other than drivers) to obtain the most favourable premium available. The Trades Unions were the policy holder and the Respondent company facilitated the deduction of members’ contributions from their wages. For the initial three-year period, an employee’s full weekly contribution was €13.00 gross, less tax at 20% or 40% as applicable.

The insurance company underwriting the scheme proposed a significant increase in the overall premium in 2023. Following negotiations, the revised employee contribution was settled at €16.00 per week gross. A number of SIPTU members, including the Complainant, indicated that they were not in a position to pay the increased weekly premium. The Complainant referred the within claim under the Act to the Workplace Relations Commission on 29 September 2023.

The Complainant’s Submission

The Worker firstly submits that his weekly contribution to the income protection scheme is a deduction from his wages, within the meaning of the Act, to which he has not consented (as required by section 5(1)(c)). He further submits that the scheme should be considered to be a good or service supplied to or provided to him by his employer, the supply or provision of which is necessary to his employment and, therefore, regulated by section 5(2)(b) of the Act which required that any deduction thereunder “is of an amount that is fair and reasonable having regard to all the circumstances”. It is the Complainant’s submission that section 5(2)(b)(ii), therefore, obliges the Respondent to take into account “all the circumstances” that apply to him as an individual, including all his financial outgoings and obligations, including his mortgage and child-minding costs. This has not happened, he says, because the same premium is payable by him and deduced by the Respondent from his wages as is payable by his co-workers, regardless of their individual circumstances. He asks the Court to find that the deduction is, accordingly, an unlawful deduction within the meaning of the Act.

The Respondent’s Submission

The Respondent submits that the income continuance scheme is the subject of a collective agreement between it and the Trades Unions that represent employees who are members of the scheme. It further submits that it is a term of each individual employee’s contract of employment that the terms of collective agreements entered into with any recognised Trade Union are incorporated into their contract of employment.

On the basis of the foregoing, the Respondent submits that the Complainant is bound by the collective agreement in relation to the income protection scheme and that the deduction of scheme contributions from his wages is authorised by virtue of his contract of employment in accordance with section 5(1)(b) of the Act.

The Law

Section 5 of the Act 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.

(2) An employer shall not make a deduction from the wages of an employee in respect of—

(a) any act or omission of the employee, or

(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,

unless—

(i) the deduction is required or authorised to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the contract of employment made between the employer and the employee, and

(ii) the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of the wages of the employee), and

(iii) before the time of the act or omission or the provision of the goods or services, the employee has been furnished with—

(I) in case the term referred to in subparagraph (i) is in writing, a copy thereof,

(II) in any other case, notice in writing of the existence and effect of the term,

and

(iv) in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and

(v) in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and

(vi) in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is ofan amount not exceeding the cost to the employer of the goods or services, and

(vii) the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than 6 months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.

(3) 

(a) An employer shall not receive a payment from an employee in respect of a matter referred to in subsection (2) unless, if the payment were a deduction, it would comply with that subsection.

(b) Where an employer receives a payment in accordance with paragraph (a) he shall forthwith give a receipt for the payment to the employee.

(4) A term of a contract of employment or other agreement whereby goods or services are supplied to or provided for an employee by an employer in consideration of the making of a deduction by the employer from the wages of the employee or the making of a payment to the employer by the employee shall not be enforceable by the employer unless the supply or provision and the deduction or payment complies with subsection (2).

(5) Nothing in this section applies to—

(a) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, where—

(i) the purpose of the deduction or payment is the reimbursement of the employer in respect of—

(I) any overpayment of wages, or

(II) any overpayment in respect of expenses incurred by the employee in carrying out his employment,

made (for any reason) by the employer to the employee, and

(ii) the amount of the deduction or payment does not exceed the amount of the overpayment,

or

(b) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, in consequence of any disciplinary proceedings if those proceedings were held by virtue of a statutory provision, or

(c) a deduction made by an employer from the wages of an employee in pursuance of a requirement imposed on the employer by virtue of any statutory provision to deduct and pay to a public authority, being a Minister of the Government, the Revenue Commissioners or a local authority for the purposes of the Local Government Act 2001 (as amended by the Local Government Reform Act 2014), amounts determined by that authority as being due to it from the employee, if the deduction is made in accordance with the relevant determination of that authority, or

(d) a deduction made by an employer from the wages of an employee in pursuance of any arrangements—

(i) which are in accordance with a term of a contract made between the employer and the employee to whose inclusion in the contract the employee has given his prior consent in writing, or

(ii) to which the employee has otherwise given his prior consent in writing,

and under which the employer deducts and pays to a third person amounts, being amounts in relation to which he has received a notice in writing from that person stating that they are amounts due to him from the employee, if the deduction is made in accordance with the notice and the amount thereof is paid to the third person not later than the date on which it is required by the notice to be so paid, or

(e) a deduction made by an employer from the wages of an employee, or any payment received from an employee by his employer, where the employee has taken part in a strike or other industrial action and the deduction is made or the payment has been required by the employer on account of the employee’s having taken part in that strike or other industrial action, or

(f) a deduction made by an employer from the wages of an employee with his prior consent in writing, or any payment received from an employee by an employer, where the purpose of the deduction or payment is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employee to the employer, or

(g) a deduction made by an employer from the wages of an employee where the purpose of the deduction is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employer to the court or tribunal or a third party out of the wages of the employee.

(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.

Discussion and Decision

Having carefully considered the Parties’ submissions, the Court finds that the Complainant has made a mere assertation that the income continuance scheme is a good or service supplied to or provided for him by the Respondent, within the meaning of section 5(2)(b). The Complainant has not given any reasons as to why he believes this to be the case. In fact, in the Court’s view, any service that may be regarded as being provided to the Complainant by virtue of the scheme is self-evidently provided by the insurance company that underwrites the scheme in return for a premium, the cost of which is borne by the Complainant and the Respondent jointly, albeit with the Complainant contributing the greater share of the premium payable.

The Court finds, on the contrary, that the Respondent’s submission to the effect that the Complainant is contractually obliged to be in membership of the income protection scheme, and make weekly contributory payments thereto at the prevailing agreed rate, by virtue of a term of the underlying collective agreement in that regard that is incorporated into his contract of employment, is well-founded.

It follows, therefore, that the deductions made by the Respondent from the Complainant’s wages in respect of the income continuance scheme, during the period comprehended by the within claim under the Act, are deductions made lawfully in accordance with section 5(1)(b) of the Act. They are, furthermore, deductions to which the Complainant is deemed to have consented when he signed his contract of employment with the Respondent.

The Court so decides.

	Signed on behalf of the Labour Court
	Mr Haugh
AR	______________________
20th June 2024	Deputy Chairman

NOTE

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