TWSS – Employer Liability for Payment Shortfall

Introduction

The Temporary Wage Subsidy Scheme (TWSS) operated to enable employers who were negatively impacted by the Covid 19 pandemic to give significant supports directly to their employees. However, the Workplace Relations Commission recently found that there was an obligation on an employer to make good any shortfall that resulted in an employee being paid less than they usually would be paid. 

Purpose of the Temporary Wage Subsidy Scheme

The TWSS operated from 26 March 2020 until 31 August 2020. The purpose of the TWSS was to enable employers who were negatively impacted by the Covid 19 pandemic to give significant supports directly to their employees and keep their employees on the payroll throughout the requisite period.

Shortfall in Payment under TWSS

However, a number of employees experienced a shortfall in payment due to the operation of the TWSS.

A question that has been asked is who is responsible for that shortfall?

In Mark Reeves -v- Lake Region Medical Limited (ADJ00030224), the employee raised a complaint seeking adjudication by the Workplace Relations Commission under Section 6 of the Payment of Wages Act, 1991.

Mr Reeves commenced employment with the company in February 2020 and was employed on a full time basis as a manufacturing operative. Following the introduction of the Covid 19 restrictions and the accompanying measures by the government, the company availed of the TWSS. The complaint raised before the WRC was one in relation to the calculation of the complainant’s average wage under that scheme. Mr Reeves alleged that a 2 week absence in February, because of illness, resulted in a payment under that scheme that was significantly less than his normal fortnightly wage.

TWSS and the Payment of Wages Act

The complaint submitted was to the effect that the respondent is in breach of the Payment of Wages Act, 1991 in that the respondent company paid the complainant less than the amount due to him.

Section 5(1) of the Act states:

An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless –

(a)  the deduction (or payment) is required or authorised to be made virtue of any statute or instrument made under statute,

(b)  the deduction (or payment) is required or is authorised to be made by virtue of a term of the employee’s contract of employment including the contract before, and in force at the time of, the deduction or payment, or

(c)   in the case of a deduction, the employee has given his prior consent in writing to it.

Section 5(6) of the Act states:

Where –

(a)  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 to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

(b)  none of the wages that are properly payable to an employee by an employer on any occasion (after making any deductions as aforesaid) are paid to the employee,

then, except as in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction by the employer from the wages of the employee.

The position of the respondent was that any shortfall in payment in this particular instance is covered by the provisions of Section 5(1)(a) of the Act as detailed above.

Payment of Wages and Operation of TWSS

Whilst the operation of the TWSS might have resulted in a shortfall of wages during the operation of that particular scheme, the obligation to pay an employee what that employee is contractually entitled to remains.

The provisions of Part 7 of the Emergency Measures in the Public Interest (Covid-19) Act, 2020, are in relation to the operation of the wage subsidy scheme and were designed to provide assistance to an employer to maintain employees in employment even though they were suffering a reduction in turnover. The guidelines published by the Revenue Commissioners set out the parameters of the scheme and the details of its implementation.

The Adjudication Officer, in this instance, accepted that in order to avail fully of the scheme and be eligible for receipt of the subsidy the respondent company had to apply those rules.

Section 1.6 of the Operational TWSS FAQ states:

“If the employer makes excessive additional gross payments, then either the subsidy value applicable to the employee and refundable to the employer will be reduced, or the employee may not be eligible for the subsidy scheme.”

Conflict with the Payment of Wages Act

The object of these rules is to ensure that the employer is eligible to receive the subsidy payment.

The Workplace Relations Commission did not, however, see anything in the provisions of the legislation setting up the scheme that authorises or requires a deduction to be made from the wages paid to an employee.

There is accordingly an onus on the employer to make good any shortfall in wages that occurs as a result of the operation of the TWSS.

The Workplace Relations Commission did not accept that the deduction from the complainant’s wages that occurred in the case before me was allowable under Section 5(1)(a) of the Payment of Wages Act, 1991.

The Adjudication Officer therefore found this complaint to be well founded and ordered the respondent company to the complainant the sum of €439.63.

Further Information

For further information, please contact the author of this article, Barry Crushell.