WRC Rules Against Employer in Wage Deduction Case, But No Compensation Awarded
Background
This case was brought to the Workplace Relations Commission (WRC) under Section 6 of the Payment of Wages Act, 1991. The complaint was made by a retired employee who had returned on a fixed-term contract. The dispute concerned a six-month contract starting in April 2024, under which the employee claimed they were underpaid.
Complainant’s View
The employee stated that the signed contract clearly set out a total gross salary of €12,850 for the six-month term. This was accepted in good faith as the full agreed payment. However, the employer later paid only part of that amount, claiming the figure was incorrect. The employee argued this shortfall was an unlawful wage deduction and sought compensation of around €6,425. Efforts to resolve the issue internally were unsuccessful.
Respondent’s View
The employer acknowledged the salary figure was a mistake and was intended to represent an annual rate. They believed the employee should have realised this, as the amount was significantly above the usual rate. Once the error was discovered, the employer met with the employee and union representatives, offering alternatives such as adjusting working hours. The employer maintained it was a genuine administrative error and argued that financial compensation was not appropriate, particularly given the use of public funds.
Findings and Conclusions
The signed contract specified a salary of €12,850 for six months. The employer claimed this was an error and paid less, which the Adjudication Officer found to be an unlawful deduction under the Payment of Wages Act. However, the mistake was genuine, not computational, and the employer had attempted to resolve it.
Decision
The complaint was upheld, but no compensation was awarded due to the genuine nature of the error and the employer’s efforts to address it.
Recommendations
Here are key recommendations for employers, based on the case:
Prioritise accuracy in contract drafting: Exercise extreme care, especially with remuneration terms. Even unintentional administrative errors can lead to findings of unlawful deduction under the Payment of Wages Act 1991. Remember, if an Employee relies on a mistaken contract term, an Employer cannot just change it without their agreement.
Implement robust internal checks: Prevention is always better than a cure. Put strong systems in place to review contracts before they’re issued. Have HR or legal advisers check them over to catch errors and avoid costly disputes.
Act immediately when errors are found: If a mistake is identified, engage with the Employee right away. Be transparent and work towards a mutually agreed-upon correction in writing. Document all discussions and the Employer’s efforts to resolve the issue fairly; this can be crucial if a dispute comes up later.
Don’t rely on WRC discretion for compensation: While the WRC may decide not to award compensation for genuine errors, counting on that outcome is a risk. Proactive and early communication helps reduce the chance of a formal complaint escalating.