Petkus v Complete Highway Care Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice White |
| Judgment Date | 20 January 2017 |
| Neutral Citation | [2017] IEHC 12 |
| Docket Number | [2015 No. 76 MCA] |
| Court | High Court |
| Date | 20 January 2017 |
[2017] IEHC 12
THE HIGH COURT
White Michael J.
[2015 No. 76 MCA]
IN THE MATTER OF THE PAYMENT OF WAGES ACT 1991
AND
Employment – S. 5 of Payment of Wages Act 1991 – O. 84C of Rules of Superior Courts – Difference between Reduction and Deduction.
Facts: The appellants sought to set aside the determination of the Employment Appeals Tribunal (EAT) pursuant to the provisions of the Payment of Wages Act 1991 and O. 84C of the Rules of the Superior Courts. The appellants contended that the EAT fell into an error of law in its analysis and application of the evidence to the relevant law and in making unsustainable findings of fact and/or findings of fact. Among other contentions, the appellant contended that the EAT fell into an error of law in failing to consider the entirety of the circumstances of the matter and failed to properly consider or apply the correct interpretation and intention of legislation protecting the payment of wages of workers under the Act and the Constitution.
Mr. Justice White held that the appeal would be allowed. The Court declined to accept that the determination of reduction of wages, as distinct from a deduction, is a pure question of fact. The Court observed that the McKenzie & Anor v. Minister for Finance & Ors would not be a precedent to allow a reduction of wages which does not offend s. 5 of the Payment of Wages Act 1991. The Court agreed that the EAT fell into an error of law in failing to consider the entirety of the circumstances of the matter and failed to properly consider or apply the correct interpretation and intention of that legislation protecting the payment of wages of workers under the Act and the Constitution.
This is a statutory appeal pursuant to the provisions of the Payment of Wages Act 1991, and O. 84C of the Rules of the Superior Courts.
By order of this Court of 19th October, 2015, time was extended to allow the applicants to appeal by way of statutory appeal.
A motion was issued on 27th October, 2015, originally returnable for 23rd November, 2015. The motion was grounded on the affidavit of Kieran O'Brien, Solicitor, together with exhibits. A director of the respondent company, Barry Ennis, swore an affidavit on 12th January, 2016, together with exhibits and Mr. O'Brien swore a further affidavit on 5th July, 2016. The matter was heard before this Court on 6th July, 2016, in Kilkenny and judgment was reserved.
The applicants seek to set aside the determination of the Employment Appeals Tribunal of 13th January, 2015, on the following legal grounds:-
(a) the Employment Appeals Tribunal fell into an error of law in its analysis and application of the evidence to the relevant law;
(b) that the Employment Appeals Tribunal fell into an error of law in making unsustainable findings of fact and/or findings of fact for which there was no supporting evidence;
(c) that the Employment Appeals Tribunal fell into an error of law in failing to appropriate differentiate between a reduction and a deduction;
(d) that the Employment Appeals Tribunal fell into an error of law in finding that the respondent's 10% adjustment to the appellants' pay was a reduction;
(e) that the Employment Appeals Tribunal fell into an error of law in finding that the respondent's 10% adjustment to the appellants' pay was a reduction and that the Act does not apply to a reduction;
(f) that the Employment Appeals Tribunal fell into an error of law in failing to find that the respondent's 10% adjustment to the appellants' pay was not a deduction;
(g) that the Employment Appeals Tribunal fell into an error of law in failing to find that the respondent's 10% adjustment to the appellants' pay was not a deduction and consequently finding that the Act did not apply;
(h) that the Employment Appeals Tribunal fell into an error of law in failing to consider the entirety of the circumstances of the matter and failed to properly consider or apply the correct interpretation and intention of legislation protecting the payment of wages of workers under the Act and the Constitution; and
(i) that the Employment Appeals Tribunal fell into an error in law in setting aside that decisions of the Rights Commissioners and each of the appellants' cases.
The appellants were all employees of the respondent at the relevant time. The employees allege that the respondent unlawfully deducted 10% from their wages and withdrew a bonus. The employer claimed that due to very difficult economic trading conditions for the respondent that a reduction in wages took place. This commenced in 2009 and that the bonuses were dispensed with in 2010. The appellants made a claim to the Rights Commissioner Service of the Labour Relations Commission covering a period from March 2011 to September 2011.
The Rights Commissioner by decision of 30th April, 2013, decided that there was a breach of s. 5 of the Payment of Wages Act 1991, in that the 10% deduction in their pay was illegal.
The Rights Commissioner found that there was no illegal deduction with regard to the bonus and this portion of the claim failed.
The respondent appealed to the Employment Appeals Tribunal and the Tribunal in its decision of 13th January, 2005, stated:-
‘The Tribunal recognises the inherent difficulty in differentiating a reduction from a deduction. A deduction or reduction of 10%, as in this case, has different implication on the respondent's statutory liabilities. A deduction of 10% would not alter the respondent's statutory liabilities i.e. PRSI, USC, PAYE. However, a reduction does alter their statutory liabilities. It is clear from the payslips exhibited, the respondent's statutory liabilities were altered and, therefore, the Tribunal can only conclude that the 10% adjustment was a reduction. The Act does not apply to a reduction. On that basis, the Tribunal upsets the decisions of the Rights Commissioner under the Payment of Wages Act 1991, cancel the awards made to the respondents.’
The High Court judgment in McKenzie & Anor v. Minister for Finance & Ors (Edwards J., 30th November, 2010) [2010] IEHC 461, was relied on by the respondent at the Rights Commissioner hearing. The Rights Commissioner, in his decision, took the view that this case concerned expenses and, therefore, it did not refer to wages properly payable as defined in the Payment of Wages Act and thus, did not rely on that judgment.
In the relevant contract of employment governing the relationship between the appellants and the respondent, there is no specific reference to the right to deduct wages except at para. 20 where it states ‘changes to terms of employment, the company reserves the right to make reasonable changes to any of your terms and conditions of employment set out in this contract description and should this occur you will be notified in advance in writing of the nature and date of the change subject to consultation.’
Section 5 of the Payment of Wages Act 1991 , states:-
‘(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) I n 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,...
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