This article looks at Andrius Babianskas v First Glass Limited, a case which was appealed on a point of law to the High Court following a decision of the Labour Court regarding alleged underpayment of annual leave and public holidays. 

CASE NAME AND REFERENCE: Andrius Babianskas v First Glass Limited [2016] IE HC 598

COURT OR TRIBUNAL: High Court

JURISDICTION/SUBJECT MATTER: Organisation of Working Time Act Determination of Pay for Holidays) Regulations 1997

DATE OF JUDGEMENT: Hunt J, 3rd October 2016

Background

Mr Babianskas (“the Appellant”) was employed as a lorry driver by First Glass Limited (“the Respondent”) from 5th September 2005. He had a written contract of employment with the Respondent setting out his terms and conditions.

The employment relationship gave rise to a number of different disputes and claims. The Appellant lodged a complaint to the Workplace Relations Commission and ultimately appealed to the Labour Court under three headings, namely:-

1. Underpayment for annual leave.
2. Underpayment for public holidays.
3. Failing to provide the Appellant with statutory notice of his start and finishing times.

The Labour Court held that the claims in respect of annual leave and public holiday leave were not well founded.

Appeal on a Point of Law

The Appellant appealed on a point of law to the High Court that the Labour Court had erred in law in determining that the claims for annual leave and public holidays were not well founded.

The Appellant’s claim issued pursuant to sections 20 and 21 of the Organisation of Working Time 1997. These sections address time and pay for annual leave and entitlements relating to public holidays.

For the purpose of the legislation, pay is provided to an employee at a “normal weekly rate”. The specific rate of pay is calculated in accordance with the Organisation of Working Time

(Determination of Pay for Holidays) Regulations 1997. The Regulations at Clause 2.2 provide that pay for an employee in relation to their holidays includes a sum “liable to be paid to the employee in respect of time worked by him or her ….”. 

In determining the sum “liable” to be paid to this employee, the Labour Court considered the following:-

1. The written contract of employment dated 4th December 2005 provided a gross weekly wage of €668.75. At all relevant times, the Appellant was paid €554.48 per week by the Respondent.
2. Even though the Appellant’s contract of employment provided for payment at a higher sum, the Appellant “appears to have accepted the adjustment over an extended period”. In other words, the Labour Court felt that the normal weekly pay was the sum paid to the Appellant on a weekly basis and not the higher sum provided in his contract of employment.

No evidence was provided by the Appellant or the Respondent regarding the “normal weekly pay” at the hearing. The Labour Court did not question the adjustment in the Appellant’s pay.

High Court Decision

The Court noted that it was “regrettable” that the Labour Court had not availed of the opportunity (nor had the representatives acting on behalf of either party) to address the issue of how the rate of pay was calculated.

The Court referred to the decision of Baker J in Health Service Executive v Abdel Raouf Sallam [2014] IE HC C298, wherein she outlined the requirement of the High Court to show appropriate deference to the specialist tribunal when exercising its expertise on industrial relations issues. Baker J confirmed that that the same deference was not required where the Court or Tribunal was dealing with issues of law. The Court held that it was appropriate in the circumstances for it to consider the Labour Court’s determination.

The Court held that the Labour Court was correct to refer to Regulation 2 (outlined above) however, it did not provide a clear analysis of the legal basis as to why it considered that the amount liable to be paid was the amount actually paid rather than the figure provided in the Appellant’s contract. The Court held that it was “insufficient on its own” for the Labour Court to determine that the lower amount was the appropriate one to use simply because that sum had been accepted by the Appellant each week.

In conclusion, the Court remitted the matter to the Labour Court for further consideration of the meaning of the term “liable to be paid” and specifically to provide a factual and legal analysis as to whether that term is synonymous with payments actually made.

Legal Review

Employers regularly face queries from employees in relation to the precise sum of money to which an employee will qualify in respect of their annual leave.

Annual leave is calculated on the basis of hours worked in one of the following three ways:

a. 4 working weeks in a leave year in which he or she works at least 1,365 hours (unless it is a leave year in which he or she changes employment).

b. One-third of a working week for each month in the leave year in which he or she works at least 117 hours.

c. 8% of the hours he or she works in a leave year (subject to a maximum of 4 working weeks)

Payment in respect of annual leave must be provided on the following basis:

a. In advance of the employee’s leave

b. At the normal weekly rate

c. In the event that board or lodging is provided and forms part of the usual normal working week, it must be included in the payment.

d. Employers and employees may agree more favourable terms for the employee.

Ireland has yet to implement the EU Working Time Directive 2003. As such, the Organisation of Working Time Act (Determination of Pay for Holidays) Regulations 1997 defines “pay” as a sum, including any regular bonus or allowance which does not vary in relation to the work done by the employee, but excluding overtime.

In the event of a material change to an employee’s normal weekly rate, the reduction and the consent to accept the lower sum on a permanent (or otherwise) basis should be documented and signed by the employee, to ensure compliance with the Organisation of Working Time Act 1997.

While it remains to be seen what the Labour Court will ultimately determine from a factual and legal analysis of Regulation 2 in the context of this employee, it is critical that employers ensure that they have written proof in place to provide substance and enforceability to the variation of a contract. This is particularly important in circumstances where a reduction in pay has been agreed between an employer and its employee.