The High Court has remitted a pay-cut dispute involving seafood company Earagail Eisc Teoranta and 24 employees to the Employment Appeals Tribunal for fresh adjudication, after finding errors of law and inadequate reasons in the Tribunal’s decision.
In a judgment delivered on 5 June 2015, Kearns P. rejected the company’s argument that the Tribunal was not the appropriate body to hear the complaints. The existence of employment contracts and a company handbook did not prevent the Tribunal from considering the statutory claims, the Court said.
The dispute arose after the company introduced a 10% reduction in payroll costs from 9 May 2011. The employees complained under the Payment of Wages Act 1991. Rights Commissioners upheld their complaints, and the Employment Appeals Tribunal later upheld and reaffirmed those decisions.
The company appealed to the High Court on a point of law. It argued, among other things, that the pay change was a general salary reduction rather than a “deduction” under the Act, that the Tribunal had misread the law and the employee handbook, and that it had not adequately considered the company’s financial circumstances or its request not to award compensation. The employees disputed the company’s account and argued that the Tribunal’s decision should stand.
The High Court held that the Tribunal could consider whether the reduction in salary might amount to a deduction under the Act. It distinguished an earlier case involving a reduced travel and subsistence allowance, which concerned expenses excluded from the Act’s definition of wages.
But the Tribunal had made a manifest error by treating the three exceptions in section 5(1) of the Act as if they applied together. The provisions are alternatives, the Court said. In particular, the Tribunal should have considered separately whether the employment contract authorised the change, rather than treating written employee consent as necessary in every case.
The Court also found the Tribunal had not adequately explained its treatment of the “reduction or deduction” argument, the relevant handbook provisions, the company’s financial circumstances, or its decision not to exercise discretion over compensation. It did not decide whether the wage reduction was lawful or whether compensation should be awarded. Those matters remain for the Tribunal on fresh adjudication in light of the High Court’s findings.