Complainant

Respondent

Parties

Emmett  Doyle

Theo Benning Ireland Gmbh

Complainant

Respondent

Anonymised Parties

Representatives

Ms.Rachel Hartery, SIPTU

Mr. Robin McKenna, IBEC

Act

Complaint Reference No.

Date of Receipt

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

CA-00055786-001

29/03/2023

The Complainant is a long-standing, permanent employee of the Respondent. On the date of hearing, the Complainant remained in employment with the Respondent.

On 29th March 2023, the Complainant referred the present complaint to the Commission. Herein, he alleged that the Respondent had made an illegal deduction from his wages. In particular, the Complainant submitted that he suffered a deduction in wages whilst being placed on reduced working hours. In denying this allegation, the Respondent submitted that a custom and practice had arisen whereby wages would be reduced on a pro-rata basis whilst employees are on said reduced hours.

A hearing in relation to this matter was convened for, and finalised on, 11th October 2024. Both parties issued extensive submissions in advance of the hearing. These submissions were expanded upon and contested by the opposing side in the course of the hearing. As no material dispute existed as to the relevant factual matrix, no sworn evidence was called by either side to the dispute. This hearing was heard in parallel to three other complaints involving the same parties. As the substantive matter is identical across these complaints, one Complainant read their submission into the record on the basis of all four Complainants. Likewise, the Respondent read one common submission in defense. It is further understood that numerous other complaints have been filed, with the present matter acting as a test case in relation to the same.

No preliminary objections as to my jurisdiction to hear the complaint were raised at any stage of the proceedings.

By submission, the Complainant stated that two distinct contracts of employment exist within the Respondent workforce. In this regard, he stated that pre-2010, all employees were issued with contracts that provided for 40 hours per week. After 2010, it is apparent that all new employees were issued contracts that provide for 25.5 to 40 hours per week. The Complainant and the other Complainants listed in parallel all are engaged under the former 40 hours per week contract.

In this regard, it was submitted that neither contract expressly provides for lay-off, short time or reduced working hours that are unpaid. However, it was accepted that the newer, post 2010, contracts expressly allowed for a reduction of hours by operation of the contractual clause in respect of the weekly working hours.

Throughout the Complainant’s employment, he routinely had his hours reduced depending on the operational needs of the business. In this regard, it is common case that the Respondent would endure certain quieter periods of reduced output. During these periods, the Complainant, and his colleagues engaged on the pre-2010, forty hours per week, contracts, would have their hours reduced. By submission the Complainant stated that at no stage did he or his colleagues agree or consent to this reduction. In circumstances whereby the relevant contractual term within the Complainant’s contract expressly provided for 40 hours per week, with no provision for reduction, he submitted that there was no lawful basis for the reduction in his hours, and the subsequent pro-rata reduction of his wages.  Whilst this matter has been ongoing for some period of time, the Complainant clarified that the present complaint related to the alleged breach that occurred within the cognisable period only.

Regarding the Respondent’s position in respect of the terms alleged implied through custom and practice, the Complainant’s representative submitted that the contract is clear in the express entitlement regarding working hours. In this regard, she submitted that this express terms will always be the operative terms in these regards, and cannot be amended by virtue of an alleged implied term.

By response, the Respondent agreed with much of the factual matrix outlined by the Complainant. In this regard, they accepted that the organisation would experience quieter periods of reduced output. During these periods, the Respondent would be obliged to reduce their staffing numbers. In this regard, the Respondent would firstly enquire as to whether any employee wished to seek annual leave for these periods. Following the same, the Respondent would reduce the hours of the post 2010 cohort of employees in line with their contractual terms. Once both of these options had been exhausted, the Respondent would seek to reduce the hours of the pre-2010 cohort of employees, by consent if possible, but without if necessary.

In August 1998, the Respondent entered into a collective agreement with technical grade of staff regarding the operation of lay-off in the event of a downturn in work. While it was accepted that the present Complainant did not fall under the remit of this agreement, the same was opened to demonstrate the long-standing and notorious nature of such reductions in working time. Having regard to the foregoing, the Respondent submitted that the agreed factual matrix clearly demonstrates a custom and practice of reduced hours and a pro-rata reduction in pay for the present Complainant, and all other matters heard in parallel. In this respect, it was submitted that the reduction if clearly “reasonable, certain and notorious” and as such should be implied into the Complainant’s contract of employment.

In the present case, the Complaint has submitted that he suffered an illegal deduction from his wages in contravention of the impleaded Act. In this respect, he submitted that his wages were reduced on foot of a pro-rata reduction in his hours. In circumstances whereby his contract of employment expressly provided for a forty-hour working week, and no provision was made for lay-off, short time or a reduction in hours generally, he submitted that the Respondent had no contractual or legal basis of such a deduction, and that the same should be deemed illegal for the purposes of the impleaded Act. In the alternative, while the Respondent accepted that the Complainant had an express contractual entitlement to a forty-hour working week, they submitted that an established custom and practice served to imply a term permitting a reduction in hours in certain circumstances, with an attendant reduction in wages.

In the matter of Marek Balans v Tesco Ireland Ltd [2019 No. 83 MCA], McGrath J stated that when considering complaints under the present Act,

“Central to the Court’s analysis must be the concepts of wages properly payable and the circumstances in which there is a deficiency in respect of those such payments”.

Section 1 of the Payment of Wages Act 1991, defines “wages” as “any sums payable to the employee by the employer in connection with his employment, including…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”.

In this regard, it is common case that the Complainant’s contract of employment, under the heading “normal working time” states as follows,

“Normal working hours are 40 hours per week commencing at 8am to 5pm”

The contract goes on to provide for an hourly rate of pay, resulting in a standard weekly contractual wage. The parties further agreed that the contract does not expressly provide for any variation of the Complainant’s hours or rate of pay.

The clear import of the foregoing is that the Complainant enjoys a contractual entitlement to a forty-hour work week, with a weekly salary calculated in accordance with his agreed hourly rate. In this regard, it is apparent that by reducing the working week the Respondent has reduced the weekly wage from below that which is “properly payable” by virtue of the contract.

In the matter of UCC v Finbarr Waldron PWD 212, the Labour Court held that,

“The Act does not make provision for the determination of what wages are properly payable on an occasion on the basis of what the Court might think reasonable. Rather, the Act requires the Court, having investigated the matter, to make a determination as regards what wages were properly payable on a given date by reference to objective criteria.”

While the Respondent has set out the operational requirements of the business were such that they were obliged to reduce the Complainant’s working week, the fact remains that the Respondent paid the Complainant less than his contractual entitlement and consequently, the Complainant suffered a deduction in his wages as defined by Section 1 of the Act.

Thereafter, Section 5(1) of the Act provides that,

“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.”

Regarding the present factual matrix, it is clear that the deduction did not arise by operation of statute, and it is further accepted that the Complainant did not give prior consent in writing to the same. In this regard, it is apparent that the Respondent is seeking to rely on part (b) cited above. In particular, they have submitted that the deduction in question arose as a consequence of a contractual term implied by custom and practice.

In In Stefan Chmiel and others v Concast Precast Limited [PW 725 / 2012] the Labour Court held that,

“…at common law there is no general right to lay-off / short time without pay and while there are limited circumstances wherein there will be such a right, the employer must demonstrate that it has been custom and practice of the workplace and that the custom must be reasonable, certain and notorious”.

While the instant case does not involve a deduction in pay arise from lay-off or short-time as contemplated by the Redundancy Payments Acts, the Respondent has submitted that the reduction in hours in question is “reasonable, certain and notorious” and consequently constitutes an implied term of the Complainant’s contract of employment.

In this regard, it is apparent that the nature of the Respondent’s business is that they endure certain period of reduced orders and a consequent reduction in output. On foot of the same, and in line with operation requirements, the Respondent seeks to reduce the hours of their workforce. From the agreed position of the parties, it is apparent that this is undertaken in a tiered fashion, calculated to avoid lay-offs or redundancies within the organisation. From the position adopted by the Respondent, they would firstly seek agreement on absence on a general voluntary basis. In circumstances whereby this does not meet the anticipated reduction, the Respondent will then seek to reduce the hours of the post-2010 cohort of employees in line with their contractual terms. Finally, the Respondent will then seek to reduce the hours of the pre-2010 cohort of employees, notwithstanding their contractual entitlement to forty hours per week. In this regard, they further submitted that this has been a long-standing arrangement within the organisation. Having reviewed the relevant documentation, it is apparent that this occurrence is long-standing and recurrent issue within the Respondent. In this regard various collective agreements regarding this issue, many of which were decades old, involving other cohorts of employees were opened by the parties in the course of the hearing. Finally, it is noted that the imposition of reduced working hours is a persistent issue, arising almost every year for the Complainant and his colleagues.

Having regard the accumulation of the foregoing points, it is apparent that the routine reduction of staff hours is “reasonable, certain and notorious” and meets the criteria for an implied term of the Complainant’s contract. In disputing the position adopted by the Respondent, the Complainant’s representative submitted that any implied term cannot take precedence over an express term. While this may be the case, it is noted that the relevant express term of the contract states that the Complainants “normal” working hours are forty per week. The obvious implication of the word “normal” in the contractual term (and the heading to the same) is the existence of abnormal or exceptional working arrangements that might serve to amend the working arrangements. In this regard, the term implied into the contract relates to these abnormal working hours. Having regard to the foregoing,  it is apparent that the finding in respect of the implied term does not contradict, or in any way interfere with, the express term of the contract of employment.

In the matter of Kostal Ireland -v- Sinead Connon PD 2452, the Labour Court examined a strikingly similar set of facts to that advanced by the present parties. In that instance, while the Court similarly found that a deduction occurred in respect of the employee’s wages, and that a custom a practice existed in relation to the same, they found that the while one of the days resulting in the deduction of wages occurred as a consequence of the implied term, the other three days did not.  In such circumstances, the Court found that the deduction of wages on the first day was not an illegal deduction, while the following three, which did not result as a consequence of the implied term, were illegal deductions. Regarding the instant case, it is apparent that the deduction in question arose solely as a consequence of the reduced hours imposed on foot of the implied term only. As such the present matter may be distinguished from that of Kostal, cited above.

Having regard to the accumulation of foregoing points, it is apparent that while the Complainant did suffer a deduction from his wages, such deduction is not illegal for the purposes of the impleaded Act by virtue of an implied term of his contract. As a consequence of the same, I find that his complaint is not well-founded.

I find that the complaint is not well-founded.

Wages, Deduction, Custom and Practice, Kostal