Do You Make These Mistakes With Your Employment Disciplinary Procedures?

disciplinary-procedure

Unfair dismissal claims made up 31% of all claims to the Employment Appeals Tribunal in 2012.

And of the cases which were won by employees against employers, roughly 80% were lost on the grounds of unfair procedures.

Many employers fail to understand that regardless of how bad the performance of the employee, regardless of the alleged misconduct or whatever other reason for the dismissal, if the employer fails to give the employee fair play and natural justice then the employee will win his case.

What is natural justice and fair procedures in this context?

In short, basic fair play.

This would include the right to respond to any allegations or complaints, the right to have a colleague or union representative accompany the employee to any disciplinary hearing, the right to appeal any sanction imposed, the right to have the sanction removed from the record after a reasonable period of time (generally 6 months).

Here is a step by step disciplinary procedure. This should help ensure that fair procedures and natural justice is afforded to the employee.

The average payout for a successful unfair dismissal in 2012 was over 18,000 euros. If the employer also considers the legal costs of defending employment related claims, ensuring fair procedures in disciplinary proceedings is essential.

Statutory instrument 146/2000 deals with grievance and disciplinary procedures, is short, and is well worth a read. And this post will also give you the basics of what you need to know about disciplinary procedures in the workplace.

However the key mistake you need to avoid is thinking that you can take shortcuts with the procedures to be adopted. Or thinking that “misconduct” or “gross misconduct” allows you to dismiss instantly.

Because there are difficulties in defining “gross misconduct” as shown by many of the decisions handed down by the Employment Appeals Tribunal or Rights Commissioner service.

For example the Dunnes Stores department manager who was dismissed for misconduct-she had set up a side business selling goods to colleagues-or the public transport employee who spat at a passenger in a dispute-both of these employees were held to have been unfairly dismissed.

A decent solicitor or barrister acting for the employee  will always suggest that the sanction of dismissal was “disproportionate” to the misconduct complained of and will point to the otherwise good record of the employee.

And these arguments are regularly accepted by the Employment Appeals Tribunal leaving the employer with an expensive claim to pay out on, even where the employer is absolutely convinced that he was justified in terminating the employment.

The key takeaway for employers is this: you must afford fair procedures and natural justice in dealing with your employees and using your workplace disciplinary procedure.

If you don’t, you are likely to lose an unfair dismissals claim, no matter how justified you feel the dismissal was. And even if the employee quits because of the absence of fair procedures, (s)he may win a claim for constructive dismissal.

Constructive Dismissal-The Burden of Proof on the Employee is a Heavy One

Constructive-Dismissal-Solicitors

Can we be honest?

Constructive dismissal cases are difficult to win because the burden of proof is on the employee to prove that she had no other option but to resign due to the unreasonableness of the employer.

The January, 2013 decision of the Employment Appeals Tribunal in the case of Daniel O’Gorman v Glen Tyre Company Limited illustrates this.

In this case Mr. O’Gorman was a mechanic who had gone on sick leave in May, 2010 and did not return to work. He resigned from his position in September, 2010.

Mr. O’Gorman brought a case for constructive dismissal.

Decision of EAT

The Employment Appeals Tribunal in its decision referred to the burden of proof on the employee as being a ‘very high one’. It held that the employee must prove that his resignation was not voluntary.

The EAT must look at the contract and decide whether there has been a significant breach of the employment contract going to the root of the contract.

If there has not been a breach by the employer the EAT will then look at the conduct of the employer and employee and decide on the ‘reasonableness’ of the decision of the employee to resign.

The claim by the claimant for constructive dismissal fell under three headings:

  1. The excessive workload placed on him
  2. Exclusion in the workplace, for example at lunch breaks
  3. Being bullied and harassed in the workplace.

Mr. O’Gorman suffered from Asperger Syndrome.

Mr. O’Gorman left work in May, 2010 and did not return due to stress, according to his parents and GP who stated it was work related. However, the employer stated that he did not know this until he received the 2nd medical certificate.

The EAT held that it is crucial in a constructive dismissal case that the employee fully informs the employer of the complaints being made against him and gives the employer the opportunity to resolve the problems.

Interestingly, the EAT in this held that the parents of the claimant had a duty to let the employer know of the issues.

The EAT found no significant breach of contract going to the root of the contract which would have prevented the employee from carrying out his duties as per the contract.

The EAT then examined the conduct of both parties and found that the decision of the employee to resign was not a reasonable one.

The claimant’s claim failed.

Read the full decision here.

You may also want to read about the 2 tests used in constructive dismissal cases and  about unfair dismissal and constructive dismissal in Ireland.

How to Draft an Employment Contract-Express Terms That Should Be Included in a Contract of Employment

employment-contract-ireland

The employment contract in Irish law is made up of implied terms and express terms. There is nothing you can do about the implied terms.

That’s why great care should be taken about the express terms in the contract, and why corners should not be cut when you as an employer are putting contracts in place.

You don’t want to be staring at the small print later on when facing a claim for breach of contract or unfair dismissal and saying “did I really say that?”.

Implied terms fall into 4 categories:

1. Those implied by statute

2. Terms implied by custom and practice

3. Terms implied by law

4. Terms implied by collective agreements in unionized employment.

There is nothing the employer can do about these implied terms. However, the express terms-agreed between employer and employee-are a matter for negotiation and agreement between the parties.

What express terms should be included in a contract of employment?

1. The Parties

Who the employer is is a vital term and it may not be entirely clear unless set out in the contract.

1.1 Date of Commencement

The date of commencement will be very important to establish various statutory entitlements of the employee eg the protection of unfair dismissals legislation, redundancy entitlements etc.

2. Job Function/Description

The temptation for the employer here is to have as widely drafted a job description as possible.

However, this can cause problems if the need for redundancy arises as the employee may claim that their job description requires them to carry out duties different from those which the employer wishes to make redundant.

3. Hours of Work

The hours of work term of the contract should deal with

• Overtime (paid or not) (There is no statutory obligation on employers to pay  overtime. However, most employers pay higher rates of pay for work done outside normal working hours, for example at a rate of time and a half. This should be stated in your contract of employment).

• Shifts

• Breaks.

The most important piece of legislation in this area is the Organisation of Working Time Act, 1997.

It is advisable for the employer to also provide for the right to lay off or place employees on short time (there is no general right in law to do this).

The Protection of Young Persons (Employment) Act, 1977, the Conditions of Employment Acts 1936-44, and the Shops (Hours of Trading) Act, 1938 should also be considered.

4. Place of Work

It is advisable for employers to have a geographical mobility clause in the contract as an express term. Here is an example:

The company reserves the right when determined by requirements of operational efficiency to transfer employees to alternative work and it is a condition of employment that they are willing to do so when required.

However, the employer must act reasonably and responsibly in this regard.

Interestingly, a reduction in pay as a result of a contractually allowed transfer is not a breach of an implied term that there would be no unilateral reduction in pay.

5. Exclusive Service

Decisions in Irish employment law have held that employees have the right to work for another employer in their spare time. However, this work could not conflict with their duties of confidentiality and loyalty to their employer.

6. Probation

Any probationary clause should not exceed 12 months. It should also provide for an extension of the initial period (say 6 months) and should have a notice period less than outside the probation period.

Reference should also be made to the disciplinary procedures of the company not applying during the probation period. However, if this is the case, then a probationary policy should be drafted by the company setting out what procedure will apply during the probationary period.

Even though an employee is on probation, s/he is still entitled to fair procedures and natural justice when it comes to termination.

The wording of the probationary period is also important. The District Court in Ireland has held that the following clause gave rise to an entitlement to the employee to be paid for the remaining 5 months of a probationary period when he was dismissed after one month:

The first six months of this contract shall be a probationary period.

This one clause is a good example of why you should have a legal professional draft any contract of employment you require.

At common law, it appears that the employer has an implied right to terminate during the probationary period on the giving of specified or reasonable notice. This is why provision should be made in the contract for a shorter notice period during the probationary period.

7. Term or Duration of Contract

The term or duration of the contract is only applicable for a fixed term or specified purpose contract.

8. Salary/Pay

This, clearly, is a very important clause in any contract of employment. Setting out basic salary is straightforward; bonuses and commissions can cause problems if not set out clearly.

The employer will seek to have the payment of a bonus at his/her discretion; employees will be keen to see how they can become entitled to a bonus.

Termination during a bonus period should also be clarified and agreed. (Read the law surrounding the payment of wages also)

9. Holidays/Annual Leave

Minimum holiday entitlements are provided for in the Organisation of Working Time Act, 1997. This act vests in the employer the right to determine when holidays are taken.

However, this clause should also make provision for when holidays can be taken as well as recognising that any extra holidays would be over and above the statutory entitlement to holidays and public holidays.

10. Company Car

The entitlement to a company car should be set out in this clause with clarity as to the make, model, value, etc. allowable.

11. Sick Pay

The sick pay clause will set out whether the employer operates a sick pay scheme or not. There is no general entitlement to sick pay in Ireland.

However, this entitlement may be implied from custom and practice in the workplace.

The employers may operate a sick pay scheme or an income continuance plan or health care insurance entitlements.

This needs to be clear from the outset in the employment contract as sick pay is an area which causes great difficulty for both employer and employee in the absence of clarity.

12. Pension

If a pension is part of the remuneration package, reference should be made to it in the contract and if there is a company pension scheme it is important that an employee is not excluded in such a way as to leave the employer open to a successful claim for direct/indirect discrimination.

13. Retirement Age

There is no statutory retirement age in Ireland (save for in the public service and a small number of industries). For this reason, a retirement age should be spelled out in the contract, if one is desired.

It is worth noting that just because there is a retirement age specified in the pension scheme does not mean that there is an implied retirement age in the contract of employment.

An interesting case dealing with age, retirement age, and fitness to work is the Donegal County Council v Porter [1993], Irish High Court.

14. Grievance Procedure

The method of processing grievances in the employment should be referenced here.

Employees should be bound to exhaust the internal grievance procedure first before resorting to outside bodies.

The statutory code of practice, Industrial Relations Act, 1990 (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order, 2000 (Statutory Instrument 146/2000) contains the principles to be applied by the employer in any grievance and disciplinary procedure.

15. Disciplinary Procedure

Employers should have a disciplinary procedure to ensure fair procedures and natural justice where necessary.

SI 146/2000 sets out the basic principles which any disciplinary procedure should follow. These include:

• What will happen to deal with a complaint/allegation

• How many stages will be followed in each event

• The employer’s right to choose which stage to commence the procedure and the penalty to be imposed

• The right of representation of the employee

• Whether there is a right of appeal to any decision taken to impose a penalty.

16. Restrictive Covenant

This clause deals with the right of employees to compete with their former employer once they have left employment with that employer. There are 2 aspects to any ‘non compete’ clause:

• The common law entitlement of the employer to protect trade secrets and confidential information

• The Competition Act 1991.

Regardless of the express term in any contract of employment dealing with this area, the Courts recognise the common law right of the employer to protect confidential information and trade secrets-even when the employment relationship is terminated.

However, there is no common law restriction on an employee competing with a former employer once she leaves employment. This is why a ‘restrictive covenant’ is a good idea in the contract-to protect, for a reasonable time and over a reasonable geographic area, the employer’s legitimate interest.

This is not a restriction on normal trade or general competition post-employment though; it must be a restriction to protect a specific legitimate interest.

However, if the employer breaks or repudiates the contract, he will generally be unable to rely on any restrictive covenant in this connection.

The Courts will also recognise a common law duty of obligation, fidelity, and loyalty in all contracts of employment. This duty has been held to include an obligation not to compete with the employer while in his employment.

There is no common law restriction on former employees canvassing or soliciting business being done by their former employer.

However Courts will recognise the validity of restrictive covenants in contracts of employment provided

  • the employer has a legitimate interest to protect
  • the conduct/activity sought to be restricted must be reasonable
  • the duration of the restriction must be reasonable
  • the geographical extent of the restriction must be reasonable.

It is worth noting that where an employer repudiates the contract or is involved in a fundamental breach he will normally be unable to rely on restrictive covenants in the contract which crystallized as a result of the employer’s action.

Springboard injunctions

An injunction may be granted to an employer where a departing employee seeks to rely on trade secrets or confidential information belonging to the former employer as a springboard to launching a new business.

Competition Act, 1991

The Competition Act, 1991 does have some impact on employment contracts, even though many think that the Act is inappropriate for governing the  employer/employee relationship. The most important case considered by the competition authority was Apex Fire Protection v Murtagh [1993].

17. Termination of Contract

The notice period for termination of employment is a critical clause. If there is none and the contract is silent in this regard, then ‘reasonable’ notice must be given by the employer.

Litigation over what is “reasonable” can be avoided very easily by providing a specified notice period in the contract and will also avoid a legal action for wrongful dismissal provided the notice period is given.

This will vary from contract to contract depending on a number of factors such as job function, length of service, age of employee, custom and practice, etc. In short, what is ‘reasonable notice’ in each case will depend on the facts of the individual case, bearing in mind the factors outlined above.

It is strongly advisable for the employer to specify a notice period in the contract in order to avoid a claim for wrongful dismissal.

Unless it is stated in the contract, notice does not have to be in writing; but it does have to be clear and unequivocal.

Notice given during times of leave or illness is valid, except for during maternity leave which is protected.

The notice period in the contract cannot be less than that provided for in the Minimum Notice and Terms of Employment Act, 1973 (as amended).However, if an employee is dismissed for misconduct s/he loses his/her entitlement to notice.

The employment does not come to an end until the end of the notice period, even where a person is not required to work the notice period and has been ‘paid off’.

Damages that can be awarded to employees for dismissal are generally limited to recoverable losses to which the employee was contractually entitled, but not punitive damages.

18. Search Clause

A search clause is commonly used in many contracts allowing the employer to search the employee’s locker, baggage, vehicle, etc.

Without this search clause, any search, without consent, could be considered to be an assault.

19. Patents, Inventions, and Copyright

Unless there is agreement to the contrary, any copyright in material which is made by the employee in the course of employment is the property of the employer. The same principle applies to research and development work carried out which leads to an invention.

20. Share Options

A share options clause may be necessary. Provision should be made for the employee moving location or changing job function.

21. Bullying and Harassment

An anti-bullying and harassment policy should be appended to the contract of employment as the employer is obliged by law to prevent bullying and harassment occurring in the workplace.

22. Internet and email

Reference should be made to the company’s policy on internet access, email and internet use. A separate policy in this regard should be provided by the company to the employee.

23. Resignation of Office or Directorships

Resignation from offices held, including directorships, should be provided for in the contract of employment.

24. Proper Law

The law governing the contract should be spelled out and is very important where an employee may be required to work abroad.

25. Other

Other clauses which may be included, depending on the specific requirements of the employer, may include

• Wearing of uniforms, dress code

• Punctuality and attendance

• Responsibility for tools, property, uniforms, clothing, boots, etc

• Requirement to hold a driving licence

• Compassionate leave

• Parental leave (subject to statutory entitlements)

• Work standards

• And more.

Work Practice or Contractual Provision?

The difference between a contractual provision and a work practice is very important. Read about the significance here.

If you are an employer and you don’t have existing contracts of employment for your employees, or you are concerned about the contracts you do have, we provide a professional, cost effective contract review and drafting service.

Are you an employer?

Need a quote for a contract of employment? Contact me.

We can supply you with

  1. a template contract which you will complete yourself for each employee. This would involve things like commencement date, job description/role, rate of pay, and any other specific details for the individual employee and/or
  2. individual contracts for each employee-we get all the necessary details from you for each employee and draft the contracts for you.

The Payment of Wages in Irish Employment Law | The Payment of Wages Act, 1991 in Plain English

payment-of-wages-ireland

Disputes about the payment of wages are commonplace.

Most of them are about non payment, late payment, or deductions from wages.

This piece will look at these issues and what redress is available to the employee.

The payment of wages in the employment contract is governed by the Payment of Wages Act, 1991 and this piece of legislation stipulates that wages be paid by cheque, cash, draft, credit transfer and postal order.

The definitions of a “contract of employment” and “wages” in the Act are critically important:

contract of employment” means—
(a) a contract of service or of apprenticeship, and
(b) any other contract whereby an individual agrees with another person to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract) whose status by virtue of the contract is not that of a client or customer of any profession or business undertaking carried on by the individual, and the person who is liable to pay the wages of the individual in respect of the work or service shall be deemed for the purposes of this Act to be his employer,
whether the contract is express or implied and if express, whether it is oral or in writing;

 

wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—
(a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and
(b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:

 

Modes of Payment of Wages

The 8 modes of payment of wages are provided in section 2 of the Payment of Wages, act, 1991.

2.(1) Wages may be paid by and only by one or more of the following modes:

(a) a cheque, draft or other bill of exchange within the meaning of the Bills of Exchange Act, 1882 ,

(b) a document issued by a person who maintains an account with the Central Bank of Ireland or a holder of a licence under section 9 of the Central Bank Act, 1971 , which, though not such a bill of exchange as aforesaid, is intended to enable a person to obtain payment from that bank or that holder of the amount specified in the document,

(c) a draft payable on demand drawn by a holder of such a licence as aforesaid upon himself, whether payable at the head office or some other office of the bank to which the licence relates,

(d) a postal, money or paying order, or a warrant, or any other like document, issued by or drawn on An Post or a document issued by an officer of a Minister of the Government that is intended to enable a person to obtain payment from that Minister of the Government of the sum specified in the document,

(e) a document issued by a person who maintains an account with a trustee savings bank within the meaning of the Trustee Savings Banks Act, 1989 , that is intended to enable a person to obtain payment from the bank of the sum specified in the document,

(f) a credit transfer or another mode of payment whereby an amount is credited to an account specified by the employee concerned,

(g) cash,

(h) any other mode of payment standing specified for the time being by regulations made by the Minister after consultation with the Minister for Finance.

(2) Where wages fall to be paid to an employee by a mode other than cash at a time when, owing to a strike or other industrial action affecting a financial institution, cash is not readily available to the employee, the employer concerned shall, if the employee consents, pay the wages by another mode (other than cash) specified in subsection (1) and, if the employee does not so consent, pay them in cash.

(3) An employer who pays wages to an employee otherwise than by a mode specified in subsection (1) or contravenes subsection (2) shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,000.

Written Statement of Wages and Deductions

The employer is obliged to provide a written statement of wages and deductions at the time of payment.(section 4 of the Act).

It is worth noting that in the case of schools in Ireland for the purposes of the Payment of Wages act, 1991 the Department of Education and Skills is deemed to the employer.

This is so even though the Board of Management of a Primary school or manager of a secondary school will have negotiated the contract.

Permitted Deductions of Wages

There are only a few situations, set out in section 5 of the Act, where deductions may be made from the employee’s wages and these situations include

  1.  if the law requires it,
  2.  if provision is made for the deduction in the contract of employment and
  3.  where the employee has given written consent for the deduction.

Deductions are permitted where they are the result of disciplinary proceedings or to reimburse the employer for over payment of wages.

This section also prohibits the employer from making deductions in respect of any failure by the employee in respect of:

(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—

There are exceptions to this prohibition. They are basically where such deductions are “required or authorised by the contract of employment” or are “fair and reasonable”.

Deductions may also be made where:

(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) in any other case, notice in writing of the existence and effect of the term,

(Section 5(2)(iii))

Notification Requirements

Where the employer is going to make a deduction there are notification requirements-in writing at least one week before the deduction.(Section 5(2)(iv))

Excluded Deductions

The Act does not apply in relation to deductions

  • which are reimbursements for overpayments
  • in consequence of any disciplinary proceedings held by virtue of a statutory provision
  • to make payments to a public authority on foot of a statutory provision/requirement.

Deficiency or Non Payment of Wages

The act also goes on to say that where an employee is shortchanged or not paid at all, then the shortage will be considered by the act to be a deduction which is unlawful. However a reduction in wages is not covered by this Act.

Section 5 (6):

(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.

Any employee who has a problem in this regard can make a complaint to the Rights Commissioner (within 6 months) and the Rights Commissioner can make an order directing the employer to make payment up to twice the net amount of wages that should have been made to the employee.

Any decision of the Rights Commissioner can be appealed to the Employment Appeals Tribunal and from there to the High Court, but only on a point of law in relation to the latter appeal.

It is worth noting that a decision of a Rights Commissioner or a decision of the Employment Appeals Tribunal has the same force as an order of the Circuit Court.

Any term in an employment contract which seeks to limit or exclude the operation of the Payment of Wages Act, 1991 is void and won’t be recognised.

Redress

Section 6 sets out how an employee is to seek redress for breach of section 5 of the Act-a complaint to the Rights Commissioner service.

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.
(3) (a) A rights commissioner shall not give a decision under this section in relation to a deduction or payment referred to in subsection (2) at any time after the commencement of the hearing of proceedings in a court brought by the employee concerned in respect of the deduction or payment.
(b) An employee shall not be entitled to recover any amount in proceedings in a court in respect of such a deduction or payment as aforesaid at any time after a rights commissioner has given a decision under this section in relation to the deduction or payment.
(4) A rights commissioner shall not entertain a complaint under this section unless it is presented to him within the period of 6 months beginning on the date of the contravention to which the complaint relates or (in a case where the rights commissioner is satisfied that exceptional circumstances prevented the presentation of the complaint within the period aforesaid) such further period not exceeding 6 months as the rights commissioner considers reasonable.
(5) (a) A complaint shall be presented by giving notice thereof in writing to a rights commissioner and the notice shall contain such particulars and be in such form as may be specified from time to time by the Minister.
(b) A copy of a notice under paragraph (a) shall be given to the other party concerned by the rights commissioner concerned.
(6) Proceedings under this section before a rights commissioner shall be conducted in public unless, and to the extent that, the commissioner, on application to him in that behalf by a party to the proceedings, decides otherwise.
(7) A rights commissioner shall furnish the Tribunal with a copy of any decision given by him under subsection (1).
(8) The Minister may by regulations provide for any matters relating to proceedings under this section that he considers appropriate.

The time limit for bringing a complaint is 6 months, unless there are exceptional circumstances which prevented the making of the claim within 6 months.

A right to appeal within 6 weeks to the Employment Appeals Tribunal service is provided.

A decision of a Rights Commissioner or a determination of the EAT is enforceable as if it was a Circuit Court order.

Section 11 of the Act states:

11.A provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of this Act) shall be void in so far as it purports to preclude or limit the application of, or is inconsistent with, any provision of this Act.

The Payment of Wages Act, 1991-some recent decisions of the Employment Appeals Tribunal

Is an employee entitled to be paid during a lay-off?

No. The Employment Appeals Tribunal, in this November 2013 appeal from a decision of the Rights Commissioner, held that:

“The question the Tribunal must answer is whether or not by virtue of the employer having invoked Section 11 of the 1967 Act the employee’s contractual and statutory right to pay during that period of lay-off is suspended. No evidence was produced before the Tribunal in relation to the custom and practice of the respondent. However, it can be said that generally throughout this country the custom and practice is that lay-off will be without pay. That custom and practice has existed since the coming into force of the Redundancy Payment Act.

The Tribunal finds that when Section 11 is genuinely invoked and the employer satisfies Section 11 1 (a) and (b) then, the contract of employment is temporarily suspended and there is no right to payment during that period. Furthermore, the Tribunal finds that there is a notorious custom and practice in this jurisdiction that employees will not be paid during a period of lay-off.”

In this EAT case from October, 2013, the question of non payment during lay off was also addressed:

“The Tribunal has considered the case-law opened by the appellant, and notes that in Industrial Yarns Ltd. V. Leo Greene and Arthur Manley [1984] ILRM 15 at page 21, Costello J. stated that “If there is no contractual power (express or implied) in the contract of employment to suspend the operation of the contract for a limited period then by ceasing to employ an employee and refusing to pay him wages the employer has been guilty of a serious breach of the contract amounting to a repudiation of it.” The corollary of this is that where there is such a provision, whether express or implied by statute or custom and practice, it is permissible to suspend the operation of the contract for a limited period.”

Reductions in Wages versus Deductions in Wages

The EAT in this case from December 2012 held that it had no jurisdiction to deal with cases involving reductions in wages as opposed to deductions.

This is as a result of a High Court case, Michael McKenzie & another –v- The Minister for Finance & others [2010] IEHC 461.

Update 2015: Important High Court Case Concerning Payment of Wages Act, 1991

Earagail Eisc Teoranta -v- Doherty & ors [2015] IEHC 347 is an important, recent decision concerning the Payment of Wages Act, 1991. It makes two extremely important findings:

  1. The Payment of Wages Act, 1991 applies to wage reductions as well as deductions. It made the important disctinciton that the McKenzie v The Minister for Finance & Others [2010] IEHC 462 case, referred to above, concerned travel expenses and subsistence, and not pay.
  2. Section 5 of the Payment of Wages, Act 1991 allows the employer to reduce wages in the following circumstances: (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. So, if the reduction in wages is allowed in accordance with the contract there is no further requirement to get the written consent of the employee.

Minimum Wage Rates

The minimum wage rate in Ireland since July, 2011 is €8.65 for an experienced adult employee. An experienced adult employee is a worker who has at least 2 years’ experience since turning 18 years of age.

However trainees, employees under 18 years of age, and employees entering employment for the first time after turning 18 can be paid slightly less.

Disputes can be referred to a Rights Commissioner by an employee after he/she has received a written statement of pay from his employer with the option of appealing the decision to the Labour Court.

7 Simple Steps For Employers to Avoid Costly Employment Law Claims from Employees

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It’s an easy mistake to make.

If you are an employer you are in danger of leaving yourself wide open to expensive claims by your employees if you fail to follow some basic but essential steps in your employment relationship with your employees.

In addition to settling successful claims brought by employees you also run the risk of fines and other sanctions from the National Employment Rights Authority (NERA) which has a dedicated unit, the Prosecution Services Unit, which can refer cases to the Chief State Solicitors Office for prosecution.

There is a wide body of employment legislation in force in Ireland which can be confusing for many employers.

In addition some industries have their own industry specific agreements called registered employment agreements (REA) and minimum wage rates. It is worth noting that these registered employment agreements are binding on all parties once registered with the Labour Court.

UPDATE May 2013

The Supreme Court, in May 2013, ruled that registered employment agreements are unconstitutional. You will find more updated information about registered employment agreements and employment regulation orders here.

Minimum requirements in employment law

1. Written statement of certain terms and conditions of employment

This statement must be given to the employee within two months of commencing employment.

The relevant act is the Terms of Employment (Information) Act 1994 which sets out the basic information that an employee is entitled to be given in writing about their contract of employment. You need to be careful that you provide the additional information set out in the revised act, which is

( fa ) a reference to any registered employment agreement or employment regulation order which applies to the employee and confirmation of where the employee may obtain a copy of such agreement or order, ]

F6 [ (g) the rate or method of calculation of the employee ’ s remuneration and the pay reference period for the purposes of the National Minimum Wage Act, 2000,

( ga ) that the employee may, under section 23 of the National Minimum Wage Act, 2000, request from the employer a written statement of the employee ’ s average hourly rate of pay for any pay reference period as provided in that section,

You need to be aware of statutory instrument S.I. No. 49/1998 – Terms of Employment (Additional Information) Order, 1998, which provides that you must give the employee a statement in writing containing particulars of the times and duration of the rest periods and breaks referred to in sections 11, 12 and 13 of the Act (The Organisation of Working Time Act, 1997.)

2. Written statement of pay

The Payment of Wages Act, 1991 obliges the employer to give a written statement of wages and deductions at the time of payment. Learn more about payment of wages here.

3. The minimum wage

There are exceptions to the minimum wage in Ireland of €8.65 per hour but most adults will be entitled to it; in addition certain industries have their own higher minimum wage. Learn more about minimum wage rates.

4. Maximum hours worked

Employers must keep records of hours worked by employees to ensure compliance with the maximum working week average of  48 hours which may be calculated over a 4, 6 or 12 month period depending on the industry. Learn more about working time and rest breaks here.

5. Working time and breaks

The breaks to which employees are entitled are set out in the Organization of Working Time Act, 1997. Currently break entitlements are 15 minutes per four and a half hours work and a 30 minute break for six hours worked.

6. Holiday entitlements

Holiday entitlements are also covered in the Organization of Working Time Act, 1997. In general full time workers are entitled to four  paid weeks holidays per year with part timers being entitled to similar holidays on a pro rata basis depending on hours worked which equates to one third of a week per month worked. (Learn more about how to calculate holiday entitlements.)

7. Minimum notice of termination of employment

The minimum notice periods are set out in the Minimum Notice and Terms of Employment Acts 1973 to 2001 and depend on the length of service with the minimum regardless of service being 1 week.

Conclusion

Employers can save themselves the considerable costs in money and time involved in defending or otherwise dealing with claims by their employees by some prudent management and housekeeping.

The list above is not exhaustive, but if you took care of those 7 areas you would be in good shape as an employer.

Doing business nowadays can be a worrying enough activity without inviting needless trouble on yourself for the want of a straightforward contract of employment and/or letter of offer and/or statement of your employees’ terms and conditions.

At a minimum you should carry out an audit of your

  • Contracts of employment
  • Staff handbooks
  • Disciplinary and grievance procedures
  • All workplace policy documents.

If you don’t have any of the above, you are asking for trouble, especially when there is a dispute or a NERA inspection.