Unlawful deduction of wages

 

Unlawful deduction of wages

 

A very recent decision of the High Court in Marek Balans -v- Tesco Ireland Limited considered circumstances in which an employee was not paid in accordance with the terms of his Contract.

 

This case involved an interpretation of Section 5(6) of the Payment of Wages Act 1991. The Act prohibits unlawful deductions from an employee’s wages. Section 5(6) states that if the total amount of wages paid is less than the total amount that is properly payable then the deficiency should be treated as an unlawful deduction unless the employer can show that the deduction was due to an error of computation.

 

This was a case that was initially dealt with by the WRC and was appealed to the Labour Court and subsequently appealed to the High Court.

 

The Employee had entered into a number of Contracts with his employer in 2012, 2013 and in 2015. The 2015 Contract provided for an increase of his basic pay from €9.69 to €11.87 but the employer contended that this was an error in that the basic rate was calculate in a manner which incorrectly incorporated an agreed 20% premium for unsocial hours which the Employee had received under his 2013 Contract. The employer paid the wages in accordance with the 2015 Contract between June 2015 and October 2016 but thereafter paid the employee a reduced figure of €10.29. The employee contended that this was an unlawful deduction with which the WRC agreed. This was overturned by the Labour Court and that there was no unlawful deduction as the rate of pay specified in the plaintiff’s contract of employment arose as a result of a computational error and was not therefore properly payable.

 

The matter came before Mr. Justice McGrath in the High Court and he determined that the crucial issue was the interpretation of wages that were “properly payable” and in this regard he had to assess whether the deficiency in payment arose as a result of an error of computation. He disagreed with the Labour Court in that he held that the labour Court had unwittingly conflated as to whether wages were properly payable under the 1991 Act with the question as whether there had been a deduction or whether there had been a deduction and whether the deduction came with being the exception governed by Section 5(6).

 

He allowed the Plaintiff’s appeal and sent it back to the labour Court for further consideration. Holding the Plaintiff’s claim he was simply accepting that the Labour Court may still have found that the appellant’s case was without merit. The Labour Court had to determine it on the correct basis. The question which the Labour Court had to determine was whether the wages were properly payable and not to confuse that issue as to whether there had been a deduction or whether the deduction came within the definition of Section 5(6).

 

In summary, the Court was essentially saying that if an employer is paying somebody less than is set out in the Contract of employment this will not be considered as a computational error for the purpose of the exception set out in Section 5(6) of the 1991 Act. The burden of proof will lie with the employer to prove that the amount that the employer has been paying was properly payable.

 

For many it highlights the importance of employers making it very clear as  to what was intended by the employment Contract.

 

For further information on any employment issue, please contact Brendan Dillon or Donna Phelan on 01-2960666 or info@dillon.ie