The High Court has sent a dispute over a 10% wage adjustment and withdrawn bonus back to the Employment Appeals Tribunal, finding that the tribunal had not properly considered the circumstances or explained its reasoning.
Mr Justice White delivered judgment on 20 January 2017 in a statutory appeal under the Payment of Wages Act 1991. The appeal concerned a tribunal determination that had overturned a Rights Commissioner’s decision in favour of 21 employees of Complete Highway Care Limited.
The employees alleged that the company unlawfully deducted 10% from their wages and withdrew a bonus. The company said difficult trading conditions led it to reduce wages from 2009 and stop the bonuses in 2010. The claims to the Rights Commissioner covered March to September 2011.
The Rights Commissioner found on 30 April 2013 that the 10% pay deduction breached section 5 of the Act, but rejected the bonus claim. The Employment Appeals Tribunal later treated the pay adjustment as a reduction rather than a deduction, reasoning that the change affected the employer’s statutory liabilities for PRSI, USC and PAYE. It concluded the Act did not apply and set aside the awards.
The High Court said the tribunal determination did not summarise the evidence, address the factual issues or set out the legal materials and reasoning comprehensively. It also failed to address the appeal concerning the bonus. The court noted that the tribunal’s determination did not explain its treatment of the McKenzie judgment, despite supplementary submissions on that case.
Justice White said the distinction between a reduction and a deduction was a mixed question of law and fact. An employer’s adjustment of wages without employee consent does not necessarily take it outside the Act simply because tax and social insurance liabilities change. He said McKenzie, which concerned an allowance for travel and subsistence expenses, was not precedent for allowing a wage reduction that would otherwise offend section 5.
The judge stressed that it was not for the High Court to decide the substantive issue of whether the reduction was permitted under the Act. The relevant decision-making body must determine that question. The court allowed the appeal on the ground that the tribunal had failed to consider the full circumstances and properly apply the legislation, and remitted the matter to the tribunal for further determination.