Complainant

Respondent

Parties

Barry  McKelvey

Iarnroid Eireann Irish Rail

Representatives

Des Courtney SIPTU

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-00054120-001

13/12/2022

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

CA-00055250-001

23/02/2023

This matter was heard by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act, 2020 and S.I. No. 359/2020 which designates the WRC as a body empowered to hold remote hearings.

The complainant, his Union representative, and two representatives of the employer attended the hearing.  The evidence was not in contention and accordingly no evidence was given, and no oath nor affirmation were administered.  The parties relied on their written submissions outlined by their representatives at the hearing.,

The agreed facts in this case are that the complainant took a case against his employer to the High Court and the matter was appealed to the Supreme Court.  The complainant’s case was unsuccessful.  As part of that case, the complainant was ordered to pay the respondents legal costs but did not do so.  Ultimately the respondent began to deduct this amount from the complainants’ wages without written his prior written consent.

The complainant submitted that deductions from his wages by his employer are unlawful.  The complainant submitted two claims covering respectively the 26 weeks and the 15 weeks prior to the claims’ submission.  The total amount of the deductions is €8200.  The complainant is seeking to be paid compensation of that

The complainant submitted that he is in employment with the respondent since November 1999 as Inspector.  He was subject to disciplinary proceedings and sought to be represented by his solicitor in these proceedings, and the employer refused.  The matter of legal representation in his disciplinary process was then subject to High Court proceedings and was later heard by the Supreme Court.  The complainant’s case was ultimately not successful.  In 2022 the Supreme Court issued a Certificate of Determination concerning legal costs wherein it was determined that the complainant owed the respondent €83,714.62.

On 25th August 2022, the employer wrote to the complainant advising him that they would begin deducting €200 from his wages, beginning on the first week of September.   He responded in writing, advising that he did not give his consent to this deduction.

Discussions have taken place between the parties whereby the complainant sought an alternative arrangement for payment, such as a lower deduction over a longer period of time. The employer did not agree to this.

The complainant submitted that the employer has made unlawful deductions from his wages, as the Payment of Wages Act, 1997 does not authorise this deduction.

The complainant submitted that it is not disputed that the Supreme Court has determined that he owes the sum of €83,714.62 to his employer. However, this does not grant the employer the right to deduct the sum from his wages, as such a deduction is not provided for by the Act.  

The respondent submitted that the specific complaint is that the company are making a regular deduction from the complainant’s pay without his agreement.

The respondent submitted that in 2017 the company initiated disciplinary procedures against the complainant. A date was scheduled for the disciplinary hearing, but the complainant subsequently withdrew from participation in the disciplinary process and initiated High Court proceedings against the Company. The reason for these proceedings was that he was seeking to have legal representation at the disciplinary hearing. Those proceedings were finally disposed of in a judgment delivered by the Supreme Court on 11th November 2019.

The respondent submitted that following the conclusion of the legal proceedings the disciplinary process was reactivated by the company in December 2019. The process took place between February 2020 and September 2020 and a decision was issued in November 2020. Following an appeal of this decision to the Disciplinary Appeals Tribunal the complainant returned to work in February 2021.  

The respondent submitted that as part of disposal of the legal proceedings the complainant was ordered to pay the company’s legal costs. Following an adjudication of costs, the final amount due to the company was confirmed as being €83,174.62.   

The respondent submitted that this is an unusual and unique case, and that the complainant has not engaged meaningfully with the company regarding his debt and that the company made a reasonable decision to commence recouping the money through a payroll deduction.

The respondent submitted that this is an unusual and unique case. Both parties agree that the complainant owed his employer €83,174.62. The respondent made efforts over a number of years to get the complainant to start paying the money he owed it. They outlined a 10-year time frame within which he could pay the amount to them.

The complainant did not start making any payments whatsoever and when the respondent suggested a payment plan that would enable him to pay the amount of the costs within the 10-year time frame, the complainant countered by suggesting a time frame that was twice as long.

Finally the respondent informed the complainant that it was beginning to deduct set amount from his wages. A week later they began making deductions from his wages. They arrived at this point some two years after the complainant was ordered to pay their costs.

Section 5 of the Payment of Wages Act outlines the regulation of certain deductions made and payments received by employers and states 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 of an 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 (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.

Throughout Section 5 of the Act, the legislation permits an employer to deduct amounts from salary for various reasons. The legislation repeatedly provides for the written consent of the employee in advance of making the deduction.

This aspect of the Act, the prior consent in writing element, was not adhered to by the respondent in this case. There is no question but that the respondent was entitled to its costs pursuant to the case taken to the Supreme Court.

The only matter that this complaint turns on the lack of written consent to the deduction prior to the making of the deduction. I note that the respondent had tried to engage with the complainant for two years before taking this step of making deductions without the written consent of the employee.

However, the Act requires the written consent of the employee.  In that regard the complaint is well founded and that the Act was contravened. Accordingly, I consider that compensation of €500 is reasonable in all the circumstances of this unique case.

Having regard to all the written and oral submissions made in relation to this complaint, my decision is that the complaint is well founded, and I direct the respondent to pay the complaint €500 in compensation for the contravention.

Payment of Wages – prior consent to a deduction – award of compensation