Earagail Eisc Teoranta v Ann Marie Doherty and Others
| Jurisdiction | Ireland |
| Judge | Kearns P. |
| Judgment Date | 05 June 2015 |
| Neutral Citation | [2015] IEHC 347 |
| Court | High Court |
| Date | 05 June 2015 |
[2015] IEHC 347
THE HIGH COURT
BETWEEN:
AND
Employment – Reduction of wages – Payment of Wages Act 1991
Facts: The appellant sought various orders against the decision of the Employment Appeals Tribunal on the ground that the Tribunal erred in law while coming to the determination of issues regarding the implementation of reduction of payroll costs by the appellant to the respondents. The appellant contended that existence of a written employment contract would amount to a contractual dispute not likely to be decided by the Tribunal. The appellant contended that the Tribunal wrongly interpreted s. 5 of the Payment of Wages Act 1991.
Mr. Justice Kearns P held that the Tribunal erred in law while interpreting the provisions of s. 5 of the Payment of Wages Act 1991 thereby remitting the case to fresh adjudication by the Tribunal. The Court observed that s. 5 (1) (a) (b) and (c) would have to be read and interpreted independently as expressed clearly by the insertion of the word ‘or’ and each subsection made out separate instances of exception of the rule that an employer shall not make deductions from the wages of the employees. The Court held that the Tribunal failed to provide reasoned decisions which it was required by law to do. The Court observed that the Tribunal possessed the expertise and fair and independent means to adjudicate upon industrial disputes and had jurisdiction to entertain disputes of such nature and the Courts in general would hesitate to interfere in its decisions unless there was an error apparent on the face of it.
JUDGMENT of Kearns P. delivered on 5th day of June, 2015
This is an appeal on a point of law pursuant to section 7(3)(b) of the Payment of Wages Act 1991 ('the 1991 Act'). By notice of motion the appellant seeks a number of orders pursuant to Order 84C of the Rules of the Superior Courts and pursuant to section 7(4)(b) of the 1991 Act directing that the Employment Appeals Tribunal erred in law in a number of respects in arriving at its determinations of the 4 th February, 2014, which issued on the 25 th February, 2014.
The appellant is a limited liability company established under the Companies Acts since 1962. Its primary business is the supply of premium seafood to a global market of retailers, wholesalers and food service businesses. The company's food processing plant at Min an Aoire in Donegal employs approximately two hundred people.
In 2006 the company was experiencing financial difficulties and in or around June 2006 a restructuring programme was introduced whereby the company introduced new procedures relating an 'Annualised Hours Framework' and 'Performance Related Pay'. Ultimately, the company was subject to a financial rescue in 2007. For many years up until 2011 the appellant company was funded by Anglo Irish Bank. However, on 10 th March, 2011 Anglo gave notice to the company that the bank would be withdrawing all loan facilities and invoice discounting services. All such facilities were withdrawn by the bank on the 31 st March, 2011. The company sought funding from a range of alternative sources and ultimately Bank of Ireland agreed to provide funding for the ongoing operations subject to various conditions and covenants.
Subsequently, as part of a process of cutting costs, the company decided to implement a 10% reduction in payroll costs. The reduction made to the level of wages distributed to staff came into effect on the 9 th May, 2011. While the nature of and reasons for the acceptance of this reduction by the majority of staff by the time this matter came before the Tribunal is disputed between the parties, the respondent's herein did not agree with the proposals and initiated complaints under the provisions of the 1991 Act seeking to argue that the appellant's actions were unlawful.
The matter came before the Rights Commissioner on various dates in 2011 and 2012. The parties produced written submissions and the employees were represented by Mr. Vernon Hegarty of SIPTU. The decisions of the Rights Commissioners in respect of the numerous complainants issued between December 2011 and February 2013. In each case, the Rights Commissioners upheld the complaints.
The appellant appealed the decisions of the Rights Commissioners and the matter came before the Employment Appeals Tribunal on the 15 th July, 2013 and the 27 th November, 2013. Both sides were represented before the Tribunal and detailed written submissions were produced. A number of witnesses were called to give evidence on the second hearing date before the Tribunal. The appellant submitted at the hearing that the Tribunal lacked the jurisdiction to hear the matter at all on the basis that the provisions of the 1991 Act were not designed to address the situation which arose in the present case.
The appellant further contended before the Tribunal that the reduction in pay implemented by the company in the instant case was not a 'deduction' within the meaning of s.5 of the Act. In this regard, the High Court (Edwards J.) decision in McKenzie & Anor. v. the Minister for Finance & Anor [2010] IEHC 461 was relied upon. Detailed submissions were also made by the appellant in relation to the correct construction of the relevant contractual terms and why, in the circumstances, even if the Tribunal acceded to the employees' claims, the Tribunal should exercise its discretion not to award compensation under section 6 of the 1991 Act.
The respondent also provided lengthy written submissions to the Tribunal which set out the chronology of events and described the pressure exerted on employees to accept the pay reduction or else risk losing their jobs. Submissions were also made in relation to the applicability and interpretation of the 1991 Act.
Section 5 of the 1991 Act relates to the regulation of deductions made by employers and states as follows:-
2 "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."
Section 5(6) goes on to state that:-
2 "(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."
Section 6 sets out the procedure for the making of complaints by employees in relation to contraventions of s.5 by their employer:-
2 "6.-(1) An employee may present a complaint to a rights commissioner that his employer has contravened section 5 in relation to him and, if he does so, the commissioner shall give the parties an opportunity to be heard by him and to present to him any evidence relevant to the complaint, shall give a decision in writing in relation to it and shall communicate the decision to the parties.
(2) Where a rights commissioner decides, as respects a complaint under this section in relation to a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is well-founded in regard to the whole or a part of the deduction or payment, the commissioner shall order the employer to pay to the employee compensation of such amount (if any) as he thinks reasonable in the circumstances not exceeding-
(a) the net amount of the wages (after the making of any lawful deduction therefrom) that-
(i) in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or
(ii) in case the complaint related to a payment, were paid to the employee in respect of the week immediately preceding the date of payment,
or
(b) if the amount of the deduction or payment is greater than the amount referred to in paragraph (a), twice the former amount."
The determination of the Tribunal states that the net issues in the appeal from the Rights Commissioners related to section 5 of the Payment of Wages Act 1991 and paragraph 8.2 of the contract of employment between the appellant and the respondents. It is appropriate to set out the material part of the...
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