Background

Domantas Petkevicius (“the Appellant”) was employed from November 2005 with the Respondent company as a general operative until he was laid off, and eventually made redundant in December 2009.

• 19.08.09 The Appellant was given notice by way of letter of the need to lay him off.
• 04.09.09 The Appellant was laid off.
• 16.12.09 The Appellant was notified that he was being made redundant. He was paid two weeks’ remuneration in lieu of notice and redundancy. The Appellant was not paid any remuneration for the period of the lay-off.
• 13.10.10 The Appellant brought a complaint under the Payment of Wages Act seeking full pay for the sixteen week lay-off period, claiming custom and practice directed that he be paid. This complaint was dismissed.
• 19.04.12 The EAT upheld the decision of the Rights Commissioner on appeal. This decision was Judicially Reviewed.
• 26.11.12 The decision of the EAT on 19.04.12 was quashed by way of Judicial Review. Hogan J. sent the case back to the EAT for reconsideration holding that the EAT did not adequately contemplate the issue of custom and practice of payment/non-payment during a period of lay-off and whether this was in compliance with the Payment of Wages Act 1991(“1991 Act”) and/or the Redundancy Payments Act 1967 (“1967 Act”).
• 23.09.13 The EAT again held against the Appellant stating that the question of custom and practice is not so compelling where the contract of employment actually provides for lay-off as was the case here.

The EAT held that while the contract did not specify that there would be no wages paid during lay-off, any other interpretation would be “a nonsense”. 

The EAT also noted that the Respondent reasonably believed that the lay-off would not be permanent and that the appropriate notice was given to the Appellant, in accordance with the 1967 Act.

These proceedings issued on foot of the Appellant’s appeal of the second determination of the EAT mentioned above. 

Relief Sought

The Appellant sought to overturn the decisions of the EAT on both the 19.04.12 and 23.09.13. The Appellant sought the following:

1. A declaration that the EAT erred in its interpretation of Section 11 of the 1967 Act (dealing with lay-off and short-time). The Appellant argued that an employer must genuinely believe that the cessation of employment will be temporary only.
2. A declaration that the EAT erred in its interpretation in relation to the statutory and contractual right to pay in a period of lay-off. It was argued that the Respondent breached its obligation under the 1991 Act. Section 5 of the Act generally prohibits employers from making deductions from employee’s wages, unless the deduction is as provided for under the Act. It was also argued by that a deduction could be made where there is a term permitting such a deduction in the contract. 
3. Full remuneration for a sixteen week period of lay-off, amounting to €6,552.00.

Court's Decision

Kearns P outlined the law relating to when an employer may make a legitimate deduction from an employee’s wage (Section 5 of the 1991 Act) and also the requirements for a legitimate lay-off (Section 11 of the 1967 Act). Kearns P concluded:

1. “A court may only interfere with a finding of an expert tribunal where there was no evidence whatsoever to support it.” In this case, the findings of the EAT were held to be comprehensive and the relevant case law and legislation were discussed.
2. The Respondent could not have known of the “freefall” that was to come in construction industry at the time of the lay-off, and therefore it could not be said that the Respondent was in breach of Section 11 of the 1967 Act. The Court also found that the original letter of notice of the lay-off on the 19.04.09 was sufficient.
3. There is no right to lay-off with pay.

It is well established that lay-off without pay can occur where it is a custom and practice of that trade, however, this custom must be reasonable, certain and notorious.

The EAT stated that the practise in the construction industry is lay-off without pay. The Court appeared to be influenced by the fact that in this case, the contract of employment made specific reference to the employer’s right to lay-off employees, where, through no fault of the employer, it is unable to provide full time employment.

Kearns P refused the appeal of the EAT decision, noting that “any other conclusion would be quite illogical”.

What to Learn From the Case

1. There is no automatic right to lay-off with pay.
2. Best practice suggests that all written contracts of employment include a specific clause dealing with lay-off and its terms. In the absence of such a clause, the industry custom and practice is likely to apply.
3. The same rule applies to all other contractual terms in the employment relationship. An employer should always set out the precise terms agreed in writing to avoid conflict at a later stage.

Full case decision:
http://www.bailii.org/ie/cases/IEHC/2014/H66.html