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Case Law Reviewed - Employee Awarded For Unlawful Deductions From Pay During Pandemic

January 04, 2023

Key Learnings

This Case highlights that even during unprecedented times like the Covid-19 Pandemic, Employers can only change a major term and condition, such as an Employee’s wage, with their expressed consent. In this Case, the Employer committed to repaying the deduction initially after a 6-month period, but this never transpired. Also highlighted is that an Employee who is resigning and who wishes to work their full contractual notice period is entitled to this – whether notice is worked or paid in lieu – and any shorter notice period than the contractual notice period would need to be agreed in writing by both parties.


Background

The Complainant stated that his contract of employment provides for a 3 months’ notice period.  He gave notice to the Respondent and communicated his intention to work his full notice period on or about the 1st March 2022. He alleges that the Respondent stopped paying him on or about the 31st of March 2022. The Complainant stated that the Respondent informed him that they had stopped paying him as he had waived his right to working his notice. The Complainant refutes that assertion.

The Complainant also stated that during the first months of Covid lockdown, the Respondent reduced his salary by 25% and had communicated to him and others that it was their intention to repay the loss at a point in the future. This period of payroll deduction took place from about April 2020 until August 2020. The Complainant lodged a complaint under the Payment of Wages Act 1991.


Summary of Complainant’s Case

The contract clause relied upon by the Complainant states:
17. Termination & Notice
In the event of termination of your employment, you are required to give the Company, and the Company undertakes to give you three months’ notice in writing or such longer period as may be required by law. The Company reserves the right at its discretion to pay you in lieu of notice or place you on Garden Leave for some or all of your notice period.

The Respondent unilaterally terminated his employment. The Complainant never waived his contractual right to work out his notice.

Secondly, the Respondent reduced his salary by 25% during the first months of Covid lockdown and made a promise to repay the deduction initially after a 6-month period and then reframed that promise to a time when they could repay.


Summary of Respondent’s Case

The Respondent failed to attend the hearing. The Adjudicator noted that as they were given the opportunity to present their case and failed to do so, the matters could only be determined based on the sworn evidence given by the Complainant.


Findings and Conclusions

The Complainant opened a comprehensive exchange of emails between him, his manager and legal representatives who corresponded with the Complainant on behalf of the Respondent, and also opened his employment contract. This correspondence trail and contract shows that a dispute existed between the parties concerning whether the Complainant had resigned; refused to work on a specific project or had been dismissed for failing to work on that project and had he waived his right to work 3 months’ notice.

In the absence of any oral evidence by the Respondent, the Adjudicator determined that the Complainant was entitled to work his notice period of 3 months. As payment ceased on or about the 30th of March 2022 and he gave notice of termination on the 1st of March 2022, the Adjudicator determined that 2 month’s salary was unlawfully deducted by the Respondent. On the facts there is no agreement between the parties for making this deduction and no consent in writing from the Complainant.

The payments deducted commencing April 2020 do not appear to be lawful deductions. The amount of deduction appears to be a full month followed by 3 deductions of 25% of monthly salary. In other words, a total deduction of 1.75 times monthly salary.

The Complainant maintains that there was a representation made by the Respondent that they would repay that deduction. That representation was made on several occasions and the paperwork provided supports that assertion. The last date that representation was made was on the 5th of August 2021.


Decision

There was found to be no agreement between the parties for making this deduction and no consent in writing from the Complainant. The failure to honour the contractual term of notice and the withholding of 2 months’ salary was unlawful. The Adjudicator found the complaint in relation to the notice period to be well founded, and the Complainant was awarded 2 months’ salary – a total compensation of €5833.32.

A further €5104.15 was awarded for the unlawful deduction by way of salary reduction. On the facts there is no agreement between the parties for making this deduction and no consent in writing from the Complainant. The deduction was unlawful, and the Respondent made misleading representations to the Complainant that the monies would be repaid over the coming months.