High Court: Labour Court erred by conflating the issue of wages ‘properly payable’ with the issue of whether there had been a deduction
The Labour Court must reconsider a case involving a Tesco employee who was not paid in accordance with the terms of his contract.
Remitting the case back to the Court for consideration, Mr Justice Michael MacGrath found that the Labour Court had fallen into error by failing to appropriately assess the wages “properly payable” to the man within the meaning of the Payment of Wages Act 1991.
In 2012, Marek Balans was employed by Tesco Ireland Limited as a night warehouse operative on a part-time contract.
In November 2013, Mr Balans signed a contract which stated that the basic payment rate was €9.69; that unsocial hours (between 10pm and 6am) attracted “a consolidated rate of pay that includes a 20 per cent premium; and, that “hours worked between Saturday and Sunday attract a 20 per cent premium if part of rostered working week”.
Mr Balans signed a further contract in 2015, which stipulated that the basic rate of pay was €11.87 per hour.
Since June 2015, Mr Balans has been paid €10.29 per hour, rather than €11.87 as expressly stipulated in the contract.
Tesco maintained that an error was made in the 2015 contract in that the basic rate was calculated in a manner which incorrectly incorporated the 20 per cent premium for unsocial hours which he had received under the 2013 contract.
Mr Balans maintained that he was entitled to this rate of pay and 20 per cent premium for unsocial hours based on this figure.
After unsuccessfully complaining through Tesco’s internal grievance procedure, Mr Balans made a complaint to the Workplace Relations Commission
Workplace Relations Commission
In the Workplace Relations Commission in August 2018, the Adjudication Officer found that rate of pay in the 2015 contract arose as a result of a mistake – however, he said it was “…difficult to see grounds why this should be set aside because of such a unilateral mistake”. He said there was “nothing unconscionable about a rate of pay of €11.87, and although this was not “a prevailing rate of pay” in Tesco, “it was the rate of pay inserted into the contract”.
Mr Balans did not contribute to Tesco’s mistake, and applying the doctrine of mistake, the Adjudication Officer said there was no basis to set aside the binding nature of the terms of the 2015 contract. He found that the rate of €11.87 was properly payable and that the underpayment amounted to a deduction within the ambit of Section 5 of the Payment of Wages Act 1991.
Upholding the complaint that there had been a breach of the 1991 Act, the Adjudication Officer also recommended that Tesco pay Mr Balans redress of €1,000 for the manner in which its grievance process was operated.
In the Labour Court, it was noted that previous decisions had found that an error of the contract did not mean that the rate of pay set out in the contract was properly payable. It said that it was “clear in this case” that the rate of pay set out in the 2015 contract arose due to a computational error and was not properly payable.
In those circumstances, the Labour Court concluded that no unlawful deduction had been made from Mr Balans’ wages.
The Labour Court was also satisfied that Tesco’s grievance process was procedurally sound, and therefore overturned the recommendation to award compensation under the Industrial Relations Act 1969.
Mr Balans argued, inter alia, that the Labour Court fell into error in its interpretation of the contract of employment. He said that by interpreting the contract in the way it did, the Labour Court purported to rectify the contract and thereby exercise a jurisdiction which it does not enjoy.
Mr Justice MacGrath explained that Section 5 of the Act of 1991 prohibits the making of deductions from wages save in certain circumstances. Section 5(6) provides that where the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee, then, except insofar as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment should be treated as a deduction made by the employer from the wages of the employee on the occasion.
Therefore, Mr Justice MacGrath said that the concepts of wages properly payable and the circumstances in which, if there is a deficiency in respect of those such payments, it arose as a result of an error of computation must be central to the court’s analysis.
Dunnes Stores (Cornelscourt) Limited v Lacey  1 IR 478 supports the proposition that the first matter which should be addressed by the Labour Court is to determine what wages are properly payable under the contract.
Both parties relied on Babianskas v First Glass Ltd  IEHC 598 in support of their respective positions. Mr Justice MacGrath said there was nothing in that judgment which detracted from what was stated in Lacey or inconsistent with the approach which the Labour Court stated it was taking in this case – i.e. that, to ground the claim under the Payment of Wages Act 1991, wages must be properly payable.
Mr Justice MacGrath said that the difficulty arose because the Labour Court, rather than making the necessary assessment of wages properly payable, “proceeded to perhaps unwittingly conflate that issue with the separate issue of whether there had been a deduction and whether that deduction came within the exception governed by Section 5(6)”.
Mr Justice MacGrath said that, in doing so, the Labour Court “fell into error in failing to appropriately assess the wages properly payable” to Mr Balans within the meaning of the Payment of Wages Act 1991.
Mr Justice MacGrath also accepted Mr Balans’ submission that, in the circumstances of this case, “any error made in the drafting of the contract is not to be equated with a deficiency or non-payment attributable to a computational error within the meaning of Section 5(6)”. He added that Section 5(6) was not “designed to permit the effective rectification of a contract which, on the submission of one of the parties, contains an error”.
Allowing this ground of appeal, Mr Justice MacGrath said the matter should be remitted to the Labour Court for determination.