High Court Appeal on Point of Law – Section 6(4) Payment of Wages Act 1991

The recent case of the Health Service Executive v John McDermott [2014] IEHC 331 concerned an appeal pursuant to Section 7(4)(b) of the Payment of Wages Act 1991.For the purposes of this blog, we have referred extensively to the decision of the High Court including copying extracts of relevant sections of the judgement of Justice Hogan.BACKGROUND TO LABOUR RELATIONS COMMISSION AND EMLOYMENT APPEALS TRIBUNAL CLAIMSThe respondent was a medical consultant at Connolly Hospital, Blanchardstown, Dublin and was employed pursuant to a 2008 Consultant Contract (Type B contract). Clause 23 of the Contract provided for a particular salary scale, with certain additional payments due on particular dates from 2007 onwards. The salary increases due from 1st June, 2009, onwards were not paid by his employer, the Health Service Executive.On 16th June, 2011, the respondent referred a claim to the Rights Commissioner under the Payment of Wages Act 1991 and maintained that his pay had been unlawfully deducted between 1st January, 2011, and 30th June, 2011. The HSE argued that the complaint was time-barred because it claimed that the cause of action emanated from a decision of the then Minister for Health and Children in either June, 2009 or (at the very latest) August, 2009 not to sanction the increase which had been otherwise scheduled under the contract. Section 22(4) of the Health Act 2004 requires that terms of conditions of remuneration of all employees working in the HSE must be approved by the Minister and if no ministerial consent is obtained then the HSE could not lawfully make the payment as a matter of public law. WThe Rights Commissioner by decision dated 7th January, 2012 held that they had jurisdiction to hear the complaint in respect of alleged contraventions falling within the six months period commencing 30th December, 2010, and ending on 29th June, 2011. The Commissioner ultimately held against Mr. McDermott.Mr. McDermott then appealed to the Employment Appeal Tribunal where the time point arose as a preliminary issue. The EAT took the view that a cause of action arises with each and every contravention and that an employee has six months from every such contravention to make a claim against the employer.The HSE appealed the decision on a point of law pursuant to s. 7(4)(b) of the 1991 Act against the correctness of that decision.Background to PAYMENT OF WAGES ACT 1991 The High Court referred to the background to the 1991 Act which was designed to replace and repeal the former Truck Acts, 1831 to 1896. The 1991 Act sought to modernise that old law and, in particular, sought to facilitate the payment of wages otherwise than in cash.Section 6 of the 1991 Act creates a new mechanism whereby these rights can be enforced. Section 6(4) introduces a time limit for claims before the Rights Commissioner:“A Rights Commissioner shall not entertain a complaint under this section unless it is presented to him within the period of 6 months beginning on the date of the contravention to which the complaint relates or (in a case where the Rights Commissioner is satisfied that exceptional circumstances prevented the presentation of the complaint within the period aforesaid) such further period not exceeding 6 months as the Rights Commissioner considers reasonable.”Justice Hogan noted that the meaning of the words “on the date of the contravention to which the complaint relates” was at issue in the present case. He firstly noted that no special meaning had been attributed to the word “contravention” by the 1991 Act and it therefore had to be given its ordinary and natural meaning. He noted that the actual language of the sub-section was clear because it was the words “contravention to which the complaint relates” which were critical. It may be accepted that every distinct and separate breach of the 1991 Act amounts to a “contravention” of that Act and he gave an example of an employer making an unlawful deduction of salary for every month in a two year period and that it could be said that there have been 24 separate “contraventions” of the 1991 Act during that period.He noted that the key question is the “date of the contravention to which the complaint relates.” i.e. time runs from the date of the contravention “to which the complaint relates.” Accordingly he noted that everything turns on how the complaint is framed by the employee. Justice Hogan observed “If, for example, the employer has been unlawfully making deductions for a three year period, then provided that the complaint which has been presented relates to a period of six months beginning “on the date of the contravention to which the complaint relates”, the complaint will nonetheless be in time“.He observed that “if an employer has been making deduction X from the monthly salary of the employee since January 2010, a complaint which relates to deductions made from January, 2014 onwards and which is presented to the Rights Commissioner in June, 2014 will still be in time for the purposes of s. 6(4). He further noted that if the complaint were to have been framed in a different manner e.g. related to the period from January, 2010 onwards then it would have been out of time.Justice Hogan observed that the Supreme Court has indicated that it is not necessary or even appropriate for a court to go further on questions of statutory interpretation and he referred to the decision of Denham J. in Board of St. Malóga National School v. Minister for Education [2010] IESC 57, [2011] 1 I.R. 363:“As the words of s.29 [of the Education Act 1998] are clear, with a plain meaning, they should be so construed. The literal meaning is clear, unambiguous and not absurd. There is no necessity, indeed it would be wrong, to use other canons of construction to interpret sections of a statute which are clear. The Oireachtas has legislated in a clear fashion and that is the statutory law.”Justice Hogan noted that Counsel for the HSE, Mr. McDonald SC contended that this construction of the Act would lead to an absurd situation where there was, in effect, no time limit, depriving s. 6(4) of all meaning. Justice Hogan however failed to see how such a construction would lead to a state of affairs which was either absurd or which would produce the results feared.He noted that the issue of a rolling time limit was not unusual in the law and he cited a number of issues or problems which could arise if a different interpretation were given.”Suppose, for example, an employer made deduction X from his employees monthly salary from January 2010, but no complaint was made by the employees. Possibly emboldened by their passivity, the employer then commences to make deduction Y in March, 2014. An employee thereafter presents a complaint to the Rights Commissioner in June, 2014 to the effect that unlawful deductions X and Y have been made from his salary from March 2014 onwards. Is to be said that the Rights Commissioner cannot entertain any claim in relation to deduction X from March, 2014 because the evidence is that these deductions commenced in January, 2010?Suppose, for example, an employer hires a young employee with little English and who perhaps has little familiarity with Irish labour rights legislation. The employer makes a series of unlawful deductions from the employee’s wages and this state of affairs continues for many years due to the employee’s vulnerability and lack of awareness of his statutory entitlements. Is to be said that in those circumstances the employer should be permitted to continue to make these unlawful deductions every month, more or less in perpetuity, even though this result would be precisely the logical consequence of the argument now advanced by the HSE?Justice Hogan then referred to the decision in Moran v. Employment Appeals Tribunal where a number of similar arguments were raised but not ruled on by Justice Keane as the complaint in that case related to alleged contraventions which were time barred. Justice Keane had stated:“I do not believe that it is necessary or appropriate for the Court to address, much less resolve, the issue of statutory construction presented by the appellant in order to dispose of this appeal. The uncontroverted evidence presented to the rights commissioner, the Tribunal and to the Court establishes that the appellant did not, as a matter of fact, present a complaint to the rights commissioner relating to a contravention of the 1991 Act alleged to have occurred on any specific date or dates within 6 months of the 17th May 2010. The appellant himself identified the contravention to which his complaint relates as an “application … for payment of a 5% wage increase awarded by Government to [HSNs] in the [HSE] with effect from 14 September 2007.”Justice Hogan referred to the decision of Carroll J in Mhic Mhathuna v. Ireland [1989]1 I.R. 504 (at 510) where it was confirmed that the Court cannot take into account arguments based on assumptions or hypotheses outside the facts and circumstances of the action or the appeal before the court.If the appellant is correct in his contention concerning the proper construction of section 6(4) of the 1991 Act, then it is open to him to present a complaint to a rights commissioner relating to any alleged deduction in the wages paid to him on any specified date (or dates) within the period of 6 months beginning on the date of the first such payment. If he is incorrect in that contention, any such complaint will fail. But it would be wrong for the Court to seek to anticipate the outcome of such a complaint before the rights commissioner or the Tribunal for the purpose of the present appeal, just as it would be wrong for this Court to conduct this appeal as though the applicant had actually presented such a complaint to the rights commissioner or to the Tribunal in this case.”ConclusionJustice Hogan held that the EAT was correct in concluding that the complaint by the respondent was not time-barred by reason of the operation of s. 6(4) of the 1991 Act. He observed “Critically, the complaint in the present case related to a period of time (January, 2011 to June, 2011) which was presented to the Rights Commissioner on 16th June, 2011, within the six months time limit in respect of this particular complaint“.Justice Hogan dismissed the appeal by the HSE on the preliminary time issue directed that the matter be returned to the Tribunal so the merits of the complaint could be considered.