Minimum Wage Rates in Ireland-the Minimalist Guide to the National Minimum Wage Act, 2000

minimum wage rates ireland

There’s a real sting in the tail of the legislation which provides for minimum rates of pay-the National Minimum Wage Act, 2000.

That sting is that breaches of the Act are criminal offences which are punishable with hefty fines and/or prison sentences.

The National Minimum Wage Act, 2000 provides for a minimum hourly rate of pay.

That minimum wage, since July 2011, is €8.65 per hour for an experienced adult worker.

An experience adult worker, for the purposes of the Act, is an employee who is not: (i) under age 18 or (ii) in the first two years after the date of first employment over age 18, or (iii) a trainee undergoing a course that satisfies the conditions set out in S.I. No. 99 of 2000.

All employees, including full time, part time, casual, and temporary are covered by the act with the exception of

  1. Close relatives of the employer
  2. Certain apprentices.

Employees who are paid by piece rate rather than hourly rate are still entitled to the minimum wage.

Also, in some industries different rates apply by virtue of employment regulation orders and registered employment agreements.

Here are the minimum hourly rates:

  1. Experienced adult worker-€8.65 per hour
  2. Under age 18-€6.06 per hour
  3. In the first year after the date of first employment over age 18, whether or not the employee changes employer during the year-€6.92 per hour
  4. In the second year after the date of first employment over age 18, whether or not the employee changes employer during the year-€7.79
  5. In a course of training or study over age 18, undertaken in normal working hours-1st one third period: €6.49 per hour; 2nd one third period:€6.92; 3rd one third period:€7.79 per hour.

NB Each one third period must be at least one month and no longer than twelve months.

  1. Experienced adult worker named by the Labour Court in granting a temporary exemption to an employer from paying €8.65 per working hour-the Labour Court will decide how much should be paid

Only work experience obtained after reaching the age of 18 is counted for the rates above.

It is a criminal offence for an employer to pay less than these rates.

The fact of an employee moving from one employer to another does not affect his entitlements.

Every employer must choose a pay reference period for each employee; this s can be a week, a fortnight, or a month but not longer than a month. The average hourly rate of pay is calculated by reference to this pay reference period.

When calculating the average hourly pay the working hours includes overtime worked and any time spent on standby.

The pay to be included in the calculation of the hourly rate of pay includes:

  • Basic pay
  • Shift premium
  • Commission, bonuses, piece and incentive rates
  • €7.73 per day in respect of board and lodgings
  • €4.60 per day in respect of board (entitlement to meals during the day)
  • €3.15 per day in respect of lodgings

Pay which is not included in the calculation includes:

  • An overtime premium
  • A call-out premium
  • Service pay
  • Unsocial hours premium
  • Tips/gratuities paid by the employer from a central fund controlled by the employer
  • Public holiday premium, Saturday and Sunday premium
  • Expenses
  • On-call or standby allowance
  • Pension contributions paid by the employer.

This list is non-exhaustive but I hope you have a clear idea of how the hourly rate of pay is calculated.

Statement of average hourly pay

An employee is entitled to a written statement from an employer detailing his/ her reckonable pay, working hours, average hourly rate of pay and statutory minimum hourly rate of pay entitlement under the Act, in a pay reference period or periods, within the previous twelve months.

However, if the employee has earned an average hourly rate of reckonable pay of €12.98 or over in the specific pay reference period, the employer is not obliged to supply the employee with the written statement.

Employer not able to pay?

The employer can be granted an exemption by the Labour Court from paying €8.65 per hour. In order to obtain it he must show that he would likely terminate the employment of an employee or put the employee on lay-off.

The employer must have the consent of an employee or at least the consent of the majority of employees affected to apply to the Labour Court for a temporary exemption.

An employer is not entitled to be granted a second temporary exemption by the Labour Court and may not apply for a temporary exemption in respect of an employee being paid a lower hourly rate of pay than €8.65.

Remedies for the employee

There are 2 courses of action open to the employee if he is not being paid the minimum wage:

  1. Refer a complaint to a Rights Commissioner or
  2. Make a complaint to NERA (National Employment Rights Authority)

The employee must choose, though, as he cannot take both routes with the same complaint.

Records and burden of proof

An employer must keep all records that are necessary to show whether this Act is being complied with in relation to an employee, for at least three years from the date any record is made.

In any dispute about national minimum wage entitlements, the onus is on the employer to prove that the law has been complied with. To enable the employer to do this, records will be required.

Records will also be required to show a NERA inspector that the law is being complied with if necessary.

It is a criminal offence to fail to comply with the obligations of the National Minimum Wage Act, 2000, and this applies to

  • record keeping,
  • failure to pay the minimum wage,
  • failure to give a written statement of average hourly pay within 4 weeks of being requested by the employee,
  • obstructing a NERA inspector.

New Minimum Wage Rates, January, 2016

The minimum wage in Ireland was increased on 1st January, 2016 to €9.15 per hour. This wage rate applies to all employees, regardless of whether part time, full time, temporary, or casual.

However, some employees are excluded:

  • close relatives of the employer
  • apprentices, other than hairdressing apprentices.

Minimum Wage Rates

Experienced adult worker: €9.15 per hour
Under 18 years: €6.41 per hour
In the first year after the date of first employment over age 18: €7.32 per hour
In the second year after the date of first employment over age:18 €8.24 per hour

In a course of training or study over age 18, undertaken in normal working hours
1st third period: €6.86
2nd third period: €7.32
3rd third period: €8.24

See statutory instrument 99/2000 in relation to Prescribed Courses of Study or Training.

See also the National Minimum Wage act, 2000.

New Minimum Wage, January, 2017

From 1st January, 2017 the new minimum wage is €9.25 (refer to statutory instrument 516 of 2016).

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.