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Contract Did Not Permit Deduction Of Salary Where Employee Refused To Return To Work At A New Location

The Labour Court overturned the Adjudication Officer’s Decision and awarded the Appellant €12,943 for unlawful deduction from her wages.

Facts: This was an appeal of the Adjudication Officer’s decision made under the Payment of Wages Act, 1991 (“Act”).

The Appellant is a Personnel Manager at one of the Respondent’s stores. During a restructuring in the Respondent’s organisation, it was identified that there was a need for less Personnel Managers and the Appellant was offered various options, including the option of voluntary severance. The Appellant was not interested in opting for voluntary severance. A dispute arose when the Appellant was asked to cover 2 stores and the Appellant initiated a grievance procedure, which did not progress as the Appellant went on sick leave. When the Appellant was certified fit to return to work after 8th August 2016, the Respondent refused to permit her to return to work because of her non-cooperation to work at two of its stores and she was on unpaid leave. The Appellant lodged a claim with Workplace Relations Commission on 17th November 2016 that the Respondent had deducted sums unlawfully from her salary. The Adjudication Officer at the hearing found that the claim was not well-founded. The Appellant thereafter appealed to the Labour Court (“Court”).

Issue: The issue in this case was to determine if the Respondent was entitled to the made a deduction from the Appellant’s wages in the given circumstances, as both parties claimed that the other party had failed to abide by the Appellant’s Contract of Employment (“Contract”). The Appellant at the hearing argued that on various occasions, when she advised the Respondent that she was fit and available to work, the Respondent failed to provide her with any work in breach of the implied contractual term and failed to pay her for those periods. The Respondent argued that the Appellant was not entitled to any pay as she had already exhausted all her contractual entitlements to paid leave prior by 8th August and had not performed any contractual duties.

The Court noted that in Financial Services Union v. Gerry Hanna PWD202, it was held that where an employer makes a deduction in an employee’s salary, the employer must clearly identify the statutory or contractual provision under which such deduction is authorised.The Court also noted the observations of White J. in John Lawe v. Irish Country (Pig Meats) Ltd (1998) 9 ELR 266, that it is the “employer’s fundamental obligation to pay the agreed remuneration for the times of work during which the employee is prepared to work”.

Upon examining the Appellant’s Contract, the Court noted that the Respondent could not move the Appellant under the change of location clause in the absence of the Appellant’s agreement and opined that the Respondent could not rely on the mobility clause for non-payment of the agreed remuneration, where the employee is prepared to work. The Court held that in the absence of her agreement, they were obliged to honour that contract for as long as it existed. The Court commented that although the Respondent argued that the Appellant’s full time role no longer existed in the original store, the Respondent had not attempted to terminate the existing contract.

Decision: The Court concluded that the Appellant’s wages were properly payable for the period in which she was certified fit to return to work to the date on which the claim was lodged. The Decision of the Adjudication Officer was overturned and the Court awarded the Appellant a total of €12,943 gross.

Takeaway for the Employers: This decision emphasises that the employers should be wary of deducting any amounts from their employee’s salaries, especially where there is a dispute in relation to returning to work. An employer should first ensure that it can rely on a contractual or statutory entitlement to make such a deduction and that it is not acting unreasonably in the situation, before proceeding with the deduction.

Link https://www.workplacerelations.ie/en/cases/2020/september/pwd2024.html

Authors – Anne O’Connell & Chaitra Girish Mallya

30th  September 2020

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2

www.aocsolicitors.ie

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