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WRC Finds Unlawful Deduction of Pay by DAA but Refuses to Compensate the Employee

In the case of Alan Deighan v. Dublin Airport Authority (DAA) plc ADJ-00032849 the WRC Adjudicator, Ms Catherine Byrne, concluded that the Respondent made an unlawful deduction of pay when it reduced the Complainant’s hours of work and pay to 60% as the contract of employment did not permit the Respondent to do so. However, as the Respondent was facing financial challenges, safeguarding as many jobs as possible and engaging with the trade unions, the Adjudicator stated that it would be “unreasonable” to award compensation. She also took into account that the Complainant was paid for the hours that he worked, was not prevented from working elsewhere to make up the loss of income and could have avoided the reduction in hours and pay.

Facts: The Complainant is a member of the Connect Union, and his complaint is one of 69 complaints submitted by members of the Connect and Unite unions concerning a reduction in hours and wages implemented by the Respondent between October 2020 and August 2021. This case is one of the agreed sample cases, the outcome of which is to be applied to a certain cohort of the remaining complainants.

The Complainant is an airfield electrician who was employed by the Respondent since January 1998.  In October 2020, arising from the failure of the Connect union to accept proposals on new ways of working, the Respondent reduced his working week to three days a week and his pay to 60% of the normal rate.  The union argued that the reduction in wages is a breach of section 12 of the Airport Act 2014, a breach of the Complainant’s contract of employment and a breach of section 5(1) of the Payment of Wages Act 1991.  The Respondent’s position was that the reduction in working hours was a proportionate and reasonable response to the impact of Covid-19 on the company’s revenue and that the Complainant was paid the wages which were properly payable at the time.

Due to the impact of Covid-19 and the travel restrictions, on 26th April 2020, all employees, apart from airfield electricians, airport police and airport duty managers were moved to a four-day week and pay was reduced to 80%.  As an airfield electrician, the complainant remained on 100% of his hours and pay. 

In June 2020, proposals on New Ways of Working, “NWOW” were finalised between the DAA group of companies and the unions representing employees across the group.  At the beginning of the pandemic, it was agreed that there would be no compulsory redundancies or permanent changes to core terms and conditions.  NWOW provided options such as career breaks, reduced hours and a voluntary severance scheme.  New ways of working were proposed for employees who decided to remain with the company.  The changes were summarised under five headings: follow the work, roster changes, teamworking, sanitization and the embracing of technology and associated processes.

On 11th September, at a “town hall” meeting hosted by the then chief executive officer, Mr Dalton Phillips, employees were informed that, if the NWOW proposals were rejected, hours and pay would be reduced.  On 16th September, airfield electricians were sent a proposed 60% roster, which, the airfield manager stated was intended “…to meet the needs of the business and our staff during this challenging time for all.”

Balloting on the NWOW proposals started on Tuesday, 6th October 2020 and the outcome was due to be confirmed on Friday, 9th October.  On 6th October, Mr Devine wrote to the Complainant and his colleagues, telling them that, if the NWOW proposals were rejected, the first step to manage the financial challenges facing the company would be that, with effect from Sunday, 11th October, hours and pay would be reduced to 60%.  Of around 2,000 employees who participated in the ballot, 93% voted to accept the NWOW proposals.  The ballot of Asset Management Delivery Trade teams in Dublin, which includes the Complainant, was not in favour of the proposals.  On 9th October, the Complainant was informed that, commencing on 11th October, his hours would be reduced to 60%. On 10th October, the Complainant sent an email to Mr O’Hanlon of the Respondent making it clear that he did not agree to the reduction in his hours.

For the remainder of 2020 and into 2021, the majority of employees remained subject to 80% working hours and pay. The unions referred the 60% reduction to the WRC conciliation process and it went to the Labour Court which recommended that the employees accept the NWWP and that once accepted that the employees’ pay is restored immediately to 100%. The Labour Court made no recommendation in respect of backpay to the employees. The outcome of the ballot on the recommendation was split and inconclusive. An agreement was eventually reached between the Respondent and the unions in August 2021 and the hours and pay of the members, including the Complainant, was restored to 100% at that time.

Decision: The Adjudicator confirmed that the reduction in hours did not amount to short time under the Redundancy Payments Acts and acknowledged that the Complainant was not prevented from working elsewhere during the hours he was not working for the Respondent. The Adjudicator referred to the EAT decision in Sullivan v. Department of Education [1998] 9 ELR 217, the Labour Court decision in Kostal Ireland GMBH and Mr Gabriel Delee PWD 2212, the High Court decision of Industrial Yarns v Leo Greene [1984] IRLM 15. She stated that there was no provision in the Complainant’s contract of employment that permitted the Respondent to reduce the Complainant’s hours of work or lay him off. Having considered all of the evidence and the decisions, the Adjudicator found that there was no statutory or contractual provision to reduce the Complainant’s hours of work and therefore when the hours were reduced to 60%, 100% of the Complainant’s wages were properly payable.

Having decided that there was an unlawful deduction of wages in breach of section 5 of the Payment of Wages Act, the Adjudicator held that the Complainant was not entitled to any compensation or repayment of the unlawfully deducted wages. In reaching this conclusion, the Adjudicator referred to the financial challenges of the Respondent, its efforts to maintain as many jobs as possible and its engagement with the unions. She also referred to the fact that the Complainant was paid for the hours that he worked and was not prevented from working elsewhere. Strangely, the Adjudicator also referred to the fact that the Labour Court did not recommend payment of loss of pay in the Industrial Relations recommendation.  

Takeaway for the Employers: This is a strange decision and if compensation was awarded, I would have expected that it would have been appealed by the Respondent. It will be interesting to see if the Unions appeal the decision. The Adjudicator did take into account that the Complainant was paid for the hours that he worked. Nevertheless, the decision is a reminder to all employers to ensure that their contracts of employment includes a provision in relation to lay-off and reduction in working hours when required by the business and that employees will only be paid for the hours worked.

Link  – https://www.workplacerelations.ie/en/cases/2023/january/adj-00032849.html

Authors – Anne O’Connell

31st January 2023

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2


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