In a recent decision of the Labour Court of 11th January 2022, Homebond Technical Services Limited and David Faulkner ADJ-00030850, CA-00041150-001, the Labour Court considered an appeal by the employer (Homebond) from a Workplace Relations Commission decision whereby it was held that the employer had illegally withheld a payment from the employee’s salary which it stated was owed after the employee had left employment.
The employer argued that the Workplace Relations Commission had erred or made mistakes in respect of a number of issues including that the Company Handbook had allowed for deduction for course fees.
The Court considered all of the background and relevant caselaw and observed:
“The Act (Payment of Wages Act 1991) is very clear that deductions from wages are not permitted except in very particular circumstances”.
It observed that the employer had relied heavily on the employees handbook and that the employee’s contract made it clear that its terms could not be viewed separately from the handbook but it noted “…………the 2020 handbook was not in place in September 2019 when agreement was reached between the parties that the Respondent would pay the relevant course fees……New arrangements cannot be used retrospectively to justify a deduction from wages”.
The Labour Court observed therefore that the relevant handbook was the 2004 handbook where “…..the company contributes financially to the courses, the employee may be asked to commit to the company for a period of time’. The use of the word ‘may’ is permissive rather than definitive. In any event, there is no reference to, nor can agreement be implied to, a right to make deductions from wages solely on the basis of this provision.
It also observed that while the 2018 contract was more definitive and outlined the requirement for the employee to remain in employment for a certain timeframe after fees were paid, but that it made no provision for any deduction from wages in the event that an employee failed to remain in the employment for the requisite time. The Court noted that had the employer “exercised the right provided for in the contract when agreeing to pay the fees by stipulating that such agreement was subject to the terms of the Complainant’s contract, by specifying the requisite period for the Complainant to remain in the employment and, crucially, by specifying that any failure to meet these requirements would render the Complainant liable to refund the amounts concerned while clarifying that the Respondent would reserve the right to effect any such refund by deductions from wages. If the Respondent had then required the Complainant to agree these terms as a condition of agreement to pay the fees and if such agreement had been forthcoming, the Respondent would have been well within its rights to act as they did in making deductions”.
It was therefore found that the company had made an illegal deduction and the decision of the Workplace Relations Commission was upheld. The employee was therefore entitled to be refunded the course fees which had been deducted from him.
Case Learning
Employers should be very careful in setting out any deductions it proposes to make in an employment contract and/or handbook and that both are linked together to ensure there is no confusion. In this case the employer sought to rely on an old handbook which was not sufficiently clear and a contract which did not make specific provision for deduction from salary in the event an employee left employment within a stipulated timeframe after payment of course fees.
