In Santry Sports Clinic –v- 5 Employees [PW 251/2001], the EAT determined that a reduction in pay is not the same thing as a deduction from pay and therefore a pay cut is not a ‘deduction’ for the purposes of the prohibition in Section 5 of the Act. In so deciding, the Tribunal expressly followed a decision of the High Court in 2009, declaring itself bound by that decision. [Michael McKenzie & others –v-Ireland and the Attorney General and Minister for Defence, 2009 551 JR].

In the Santry case, five employees brought claims under the Act after their employer, Santry Sports Clinic, cut its employees’ pay by 8% in the spring of 2010. The employees said that they had not agreed to the pay cut and that no consultation had taken place prior to the measure being implemented. The employees claimed to have had no knowledge of two general company meetings at which the employer had outlined the financial imperative behind the pay cut and put forward the rationale for pay cuts as an alternative to redundancies or even closure of the business.

The employer had issued letters outlining its course of action to its 145 employees. 30% of the employees returned the letters, duly signed, to denote acceptance of the cut in pay. However, no employee explicitly registered any resistance to the measure and the employer indicated in evidence that it believed on that basis that all employees had accepted the reduction in pay.

The employees succeeded in their claim before the Rights Commissioner and the employer appealed the decision to the EAT.

The EAT declared that it was bound to follow the decision of the High Court in the McKenzie case that a reduction in pay is not a ‘deduction’ for the purposes of Section 5 and that the Payment of Wages Act therefore can have no application to pay cuts.

The Act has generally offered the best and most straightforward means of redress for an aggrieved employee whose pay had been unilaterally cut. It will be interesting to see whether the EAT will follow the Santry determination in future pay cut claims under the Act and whether the decision will deter employees from pursing claims under the Act where what is in issue is a reduction in rather than a deduction from pay.

In the meantime employers should, notwithstanding the Santry decision, take care to follow robust procedures before implementing pay cuts without relevant employees’ agreement, not least because claims under the Act are not the sole form of redress available to an employee in those circumstances.