PWD2511

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00044978 (CA-00055810-001)

BACKGROUND:

This is an appeal of an Adjudication Officer’s Decision made pursuant to Section 7(1) of 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 Kieran McNulty against a Decision of an Adjudication Officer dated 25 November 2024 made under the Payment of Wages Act 1991 (“the Act”).  The Adjudication Officer found that the complaint made by Mr McNulty that his employer, Theo Benning Ireland Gmbh, made an unlawful deduction from his wages was not well founded.

In this Determination the parties are referred to as they were at first instance. Hence, Kieran McNulty is referred to as “the Complainant” and Theo Benning Ireland Gmbh as the “the Respondent”.

A hearing was held on 5 March 2025. The Court did not hear sworn testimony from the parties, as both sides accepted that the factual matrix was not in dispute. Both sides confirmed to the Court that they had been given a full opportunity to present all relevant information to the Court.

Background

The Complainant is employed as a General Operative and has worked with the Respondent since May 2000. He contends that he was subject to an unlawful deduction from his wages in November 2022 when the Respondent unilaterally reduced his working hours. The Respondent rejects that assertion and contends that there is an established custom and practice in the employment, whereby employees are required to work reduced hours, and their wages are reduced on a pro-rata basis.

Summary Position of the Complainant

The Complainant suffered an unlawful deduction from his wages without consent or agreement in 2022. His contract for employment does not provide for nonpayment of wages where the Respondent reduces his hours of work.

While all new employees since 2010 have a clause included in their contract of employment providing for layoff and short time working, the Complainant who is employed since 2000 has no such term in his contract of employment.

The Respondent reduced the Complainant's hours on a voluntary basis from time to time in the past with his consent. Employees can voluntarily accept reduced hours if it is suitable to them. This practice has continued for many years and satisfies Section 5 one of the Act where an employee that volunteers to work reduced hours gives their consent to a deduction in their wages.

In October 2022, the Complainant’s hours of work were reduced on a compulsory basis, when he was informed that his hours were to be reduced to a three-day week. There was no request to volunteer, and the Complainant’s hours were reduced without his consent. The Complainant was paid less than his contractual entitlement and suffered a deduction in his wages. The Complainant was required to work a shorter working week for two pay periods (weeks 45 and 46) - when his hours of work were reduced by 13 and 16 hours respectively - leading to a shortfall in his wages of €214.80.

The Complainant did not consent to the deduction.

There is no provision in the Complainant’s contract of employment to allow for such an introduction. There is no established or accepted custom and practise that the Respondent can rely on to support the proposition that short time working was an implied term of the Complainants contract of employment. Therefore, the imposition of reduced hours cannot be regarded as custom and practise or an implied term of his contract of employment.

Summary Position of the Respondent

The Complainant seeks payment for unpaid hours following a reduction in working hours for staff due to a downturn in business in October 2022. The Complainants’ working hours were reduced as follows:

• Week 45 - w/c 07 November Reduction of 13 hours (Thursday and Friday)
• Week 46 - w/c 14 November Reduction of 16 hours (Thursday and Friday)

Due to the way orders are placed with the Company, a pattern exists whereby a reduction in the working hours of staff is required, on average, every one to two years. The Company has attempted to manage the impact on staff in as fair a manner as possible. In the first instance, volunteers are sought. When the number of volunteers do not provide the required reduction of capacity, the Company is left with no alternative but to introduce a reduced working week for remaining staff.

The reduction in working hours is a regular and known event by all staff and their union, SIPTU, as there has been a reduction in the working hours for some, if not all staff, voluntary or enforced, every one to two years going back to 1998.

In the period from 2008 to 2022, the Complainant was placed on reduced working hours in the years 2008, 2009, 2011, 2012, 2014, 2016, 2019, 2020 and 2022. He did so on a voluntary basis in 2012. On all other occasions, he was placed on short time working on an involuntary basis. As a result, working reduced hours is an implied term of the Complainant’s contract of employment through custom and practice.

In the matter of O’Reilly v Irish Press, (1937) 71 I.L.T.R. 194, the High Court found: -

“… it is necessary in order to establish a custom of the kind claimed that it be shown that it was so generally known that anyone concerned should have known of it, or could easily have become aware of it.”

In Stefan Chmiel and others v Concast Precast Limited (PW725/2012), the Court determined: -

“….it is well established at common law that lay-off without pay may be operable where an employer can demonstrate it has been the custom and practice of the trade and/or workplace and that the custom must be reasonable, certain and notorious.”

The practice of reducing working hours is well known to staff and to their union in the employment. A 1998 agreement with the union relating to technical grades, and 2006 correspondence from the union, clearly demonstrates that SIPTU was aware of the occurrences of layoffs within the Company and that it was a feature of employment.

The 1998 agreement with SIPTU in relation to technical grades of staff which, addressing the layoff of staff, states: -

“With the development of more technical products in our manufacturing process the demand for technically qualified personnel and the retention of this category the event of layoffs is essential in order to maintain the employment of other employees.”

“During a period of company wide layoff, this grade of technical operator would be retained as a separate group and will for the duration of the layoff carry out work associated with the technical grade only.”

“In the event of layoff within the technical grade, this will be carried out based on length of service.”

In January 2006, SIPTU wrote to the Respondent relating to a downturn in orders, stating:

“In the event of such lay-off arising, we would ask Management to consider the option of “3 day working”. Recently some Employees have indicated an interest in working a three day week and if practical could reduce the need for lay-offs. Any arrangement involving three day working would be on a voluntary basis and the details would obviously need to be agreed in advance.”

These documents demonstrate that not only were layoffs and changes to working hours taking place, but these were also well known by the union.  Employee terms and conditions of employment can be set through implied terms and collective agreement.

In this case, the Complainant worked reduced working hours on nine occasions in the period 2008 to 2022. Nine instances of reduced working hours in the period 2008 to 2022 renders this practice as reasonable, certain and notorious. Due to the frequency of the reduction in working hours, the correspondence and communications with SIPTU, the custom is reasonable, certain and notorious and therefore is an implied term of his contract of employment.

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

The Court’s jurisdiction in the within appeal is confined to assessing alleged contraventions under the Payment of Wages Act.  It has no jurisdiction under that Act to consider matters raised by the parties during the hearing relating to production scheduling or workforce planning during times of downturn in the business.

The complaint was submitted to the Workplace Relations Commission on 29 March 2023. Accordingly, the Court’s jurisdiction is confined to assessing contraventions that may have occurred in the six-month period prior to that date. 

In this case, the Complainant alleges a shortfall in wages during two pay periods that fell in October 2022. During the first pay period, which commenced on 7 November 2022 (Week 45), the Complainants’ hours of work were reduced by 13 hours.  During the second pay period, which commenced on 14 November 2022 (Week 46), the Complainants’ hours of work were reduced by 16 hours. As a result, the Complainant contends that he suffered a total shortfall in wages of €214.80 net.

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 for the Labour Court to determine in assessing if a contravention of the Act occurred is to establish what wages are properly payable under the contract.  Accordingly, the starting point for assessing what is properly payable is the Complainant’s contract of employment.

It is accepted that the Complainant’s hourly rate of pay at the relevant time was €13.15.

The relevant clause in the Complainant’s contract of employment relating to hours of work states as follows:

“Normal Working Time

Normal Working Hours are 40 hours per week commencing at 8am to 5pm. Monday to Thursday and 8am to 2pm on Friday.

A paid break of 10 minutes is available with a ½ hour unpaid lunch break Monday – Thursday.  The times for these breaks are as directed with notification from the company”.

It accepted that there is no express provision in the contract of employment that allows the Respondent to place the Complainant on lay-off or short-time working.

Accordingly, the Court finds that the amount properly payable to the Complainant in the relevant period was his contractual rate of pay, i.e. €13.15 x 40 hours.

Was there a shortfall in the amount payable?

It is accepted that there was a shortfall in the Complainant’s normal weekly wages in the relevant period amounting to €214.80 net.

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.

The Respondent submits that the deductions made to the Complainant’s wages were authorised by virtue of a term of his contract of employment, as provided for under section 5(1)(b) of the Act.

In that regard, it contends the practice of reducing hours of work was an established custom and practice that was implied into the Complainant’s contract of employment.

The Respondent accepts that the Complainant is not a member of a technical grade. It clarified to the Court that its reference to the 1998 collective agreement relating to technical grades was solely to demonstrate that lay-off was an established and recognised feature of the employment.

Was the contract of employment amended by an implied term by way of custom and practice?

The Court heard that the company seeks volunteers, in the first instance, when implementing short time working. Where there are insufficient volunteers, the Company places staff on reduced working hours on a compulsory basis.

The Respondent submits that in the period from 2008 to 2022, the Complainant worked reduced working hours in 2008, 2009, 2011, 2012, 2014, 2016, 2019, 2020 and 2022, which it contends amounts to an established custom and practice.

The matter for the Court to consider is whether the practice of reducing hours of work was a regular occurrence such that it 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.”

SIPTU, on behalf of the Complainant, accepts that the practice of short time working is “notorious” and “well known” within the Respondent workplace. However, it submits that it does not constitute an established practice as it was not a reasonable or certain event that happened every year.

It is accepted that the Complainant was placed on reduced working hours in nine of the fourteen years between 2008 and 2022. The Court is of the view that being placed on short time working in nine of fourteen years amounted to a regular and recognised practice.

It is accepted that the Complainant was placed on short time working on a compulsory basis on each occasion that he worked reduced working hours, apart from 2012 when he volunteered for short time working. The Court heard that when the Complainant engaged in short time working on a compulsory basis, he did not agree to do so “under protest” nor did he raise a formal grievance about the fact.

In October 2022, the Complainant raised a formal grievance when his hours were reduced, on the basis that his working hours were reduced without his consent.

Having regard to the above facts, the Court finds that the Complainant acquiesced to being placed on short time working on a compulsory basis in the years 2008, 2009, 2011, 2014, 2016, 2019 and 2020 and that, in the absence of agreement in writing between the parties, that established practice became an implied term of the contract between the parties.

As a result, the Court finds the Complainants 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.

Based on the oral and written submissions made, the Court finds that the deductions made to the Complainant’s wages in October 2022 were authorised by virtue of an implied term of his contract of employment that allowed the Respondent to place the Complainant on reduced working hours. Accordingly, the Court finds that no unlawful deduction of wages occurred when the Complainant was not paid for unworked hours.

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 deductions made to the Complainants wages in October 2022 were authorised by virtue of an implied term of the Complainant's contract of employment. As no unlawful deduction in the Complainants wages occurred, the within complaint is not well founded

Decision

The Court finds that the complaint is not well founded.

The decision of the Adjudication Officer is upheld. 

The Court so Determines.

	Signed on behalf of the Labour Court
	Katie Connolly
ÁM	______________________
31 March 2025	Deputy Chairman

NOTE

Enquiries concerning this Decision should be addressed to Áine Maunsell, Court Secretary.