Claims taken under the Payment of Wages Act for a reduction in wages may be at an end following a decision in a recent case from the EAT. Traditionally employees who have suffered a deduction from their wages, or a reduction in their wages have taken claims under the Payment of Wages Act and have had these heard by a tribunal. However a recent decision in the appeal of a Rights Commissioner decision in the case of Santry Sports Clinic v 5 employees (PW251/2011) may change this practice.
The employees in this case are claiming for an 8% reduction in their pay between February and March 2010. The Company argued that this was a necessary reduction and all employees received letters to this effect, and although only 30% were signed and returned no one raised issue and claimed they would not agree to this.
This is a standard reductions claim where an employer is looking for a reduction in wages and does this without the employees express agreement. However what is noteworthy in this case is the decision of the Tribunal.
"The Tribunal considered the evidence given at the hearing and the representations made by the parties and the extensive legal and other submissions made. The Tribunal also note the decision of Edwards J. in the High Court case of Michael McKenzie and others and Ireland and the Attorney General and the Minister for Defence Rec. No. 2009. 551JR and in particular paragraph 5.8 thereof where the learned Judge states that the Payment of Wages Act has no application to reductions as distinct from “deductions”. Where the High Court has made such a decision on a point of law the Tribunal is bound to follow this and must therefore find that this appeal must succeed and the decision of the Rights Commissioner must be overturned in its entirety.”
the High court decision as referenced is as follows "5.8 Finally, the Court agrees with the respondents’ submission that the Payment of Wages Act, 1991 has no application in the circumstances of this case. First, as has been pointed out, correctly in the Court’s view, the reduction in the PDF allowance is not a “deduction” from wages payable. It is a reduction of the allowance payable. The Act has no application to reductions as distinct from “deductions”. Secondly, even if that were not so, any alleged breach of the Payment of Wages Act, 1991 is not a justiciable controversy before the High Court in circumstances where that Act sets up a specific enforcement mechanism to be availed of elsewhere in such circumstances." Employer Advice
This case essentially removes the option of an employee taking a claim for reductions under the Payment of Wages Act, and leaves a Constructive Dismissal Claim, Industrial Relations Claim or a Breach of Contract Claim as the remaining options. Where an employee has unilaterally had their pay reduced they would have a solid case for Constructive Dismissal, however it would require them to resign their role to avail of this.
Employers should still be cautious when taking any action to unilaterally reduce wages however this case is very noteworthy for any claims currently making their way through to tribunal or which are currently up for decision.
