Introduction

The Payment of Wages Act gives all employees a right to a pay slip which will show the gross wage and details of all deductions. A pay slip is essentially a statement in writing from the employer to the employee that outlines the total pay before tax and all details of any deductions from pay. It can be provided to you either in electronic format or in hard copy. Your right to a pay slip is set down in Section 4 of this Act.

Calculating the hourly rate

Under Section 20 of the National Minimum Wage Act the basic method of calculation is to divide the gross pay by the total number of hours worked. To begin with, however, it is necessary to note what pay is considered, what hours are included as working hours and what is the pay reference period (over what period the calculation is made).

What does not count as pay?

There are many items that are not to be included in the minimum wage calculation, these are:

• Overtime premium
• Call-out premium
• Service pay
• Unsocial hours premium
• Tips which are placed in a central fund managed by the employer and paid as part of your wages
• Premiums for working public holidays, Saturdays or Sundays
• Allowances for special or additional duties
• On-call or standby allowances
• Certain payments in relation to absences from work, for example, sick pay, holiday pay or pay during health and safety leave
• Payment connected with leaving the employment including retirement
• Contributions paid by the employer into any occupational pension scheme available to you
• Redundancy payments
• An advance payment of, for example, salary: the amount involved will be considered for the period in which it would normally have been paid
• Payment in kind or benefit in kind, other than board and/or lodgings
• Payment not connected with the person’s employment
• Compensation for injury or loss of tools
• Award as part of a staff suggestion scheme
• Loan by the employer to you

Working hours

Your working hours are whichever is the greater:

• The hours set out in any document such as a contract of employment, collective agreement or statement of terms of employment provided under the Terms of Employment (Information) Act; or

• The actual hours worked or available for work and paid

“Working hours” include:

• Overtime
• Travel time where this is part of the job
• Time spent on training authorised by the employer and during normal working hours

“Working hours” does not include:

• Time spent on standby other than at the workplace
• Time on leave, lay-off, strike or after payment in lieu of notice
• Time spent travelling to or from work

Pay reference period

The employer selects the period, known as the pay reference period, from which the average hourly pay will be calculated. This might be, for example, on a weekly or fortnightly basis, but cannot be for a period longer than a month.

The employer must include details of the pay reference period in the statement of employment conditions to be given to an employee under the Terms of Employment (Information) Act.

You may request a written statement from your employer of your average rate of pay for any pay reference period within the last 12 months. The employer has 4 weeks to supply the statement.

Exceptions to those entitled to receive the national minimum wage

There are some exceptions to those entitled to receive the national minimum wage. The legislation does not apply to a person employed by a close relative (for example, a spouse, civil partner or parent) nor does it apply to those in statutory apprenticeships. Also, some employees such as young people under 18 and trainees are only guaranteed a reduced or sub-minimum rate of the national minimum wage.

Sub-minimum rates

Under the National Minimum Wage Act young people and those in the first 2 years of employment can be paid lower rates – called sub-minimum rates.

Trainees

The National Minimum Wage Act also provides sub-minimum rates which apply to employees who are aged over 18 and undergoing a course of structured training or directed study that is authorised or approved of by the employer.

The Act provides certain criteria which the training course must meet if the trainee rates are to apply. For example, the training or study must be for the purposes of improving the work performance of the employee; the employee’s participation on the training or study must be directed or approved by the employer; at least 10% of the training must occur away from the employee’s ordinary operational duties; there must be an assessment and certification procedure or written confirmation on the completion of the training course.

Exemption for employer

If an employer cannot afford to pay the national minimum wage due to financial difficulty the Labour Court may exempt an employer from paying the minimum wage rate for between 3 months and one year. Only one such exemption can be allowed.

The employer must apply to the Labour Court for the exemption with the consent of most of the employees, who must also agree to be bound by the Labour Court decision.

The employer must demonstrate that they are unable to pay the national minimum wage and that, if compelled to do so, would have to lay-off employees or terminate their employment.

An exemption may only be sought from paying the full rate of the national minimum wage, not for cases covered by the reduced rate, for example, employees who are under 18 years of age.

Victimisation

If you seek your entitlement to the national minimum wage you are protected from victimisation or dismissal. Victimisation is prohibited by the legislation. In addition, if you are dismissed for seeking the national minimum wage, you may bring a claim for unfair dismissal regardless of length of service or number of hours worked per week.

If you are due an increase under the National Minimum Wage Act your employer cannot reduce your working hours without a corresponding reduction in duties or the amount of work.

Deductions from pay

The Payment of Wages Act refers to situations where either deduction is made from pay or the employee is required to make a payment to the employer.

The following deductions from your pay by your employer are allowed when:

• They are required by law, for example, tax (PAYE) and social insurance (PRSI),
• They are provided for in the contract of employment, for example occupational pension contributions.
• They are made with your written consent, for example, trade union subscriptions
• They are to recover an overpayment of wages or expenses
• They are required by a court order, for example, an attachment of earnings order in a family law case
• They arise due to your being on strike

Where your employer suffers loss through your fault, for example breakages or till shortages or your employer supplies a service as part of the job, for example, a uniform, deductions may be allowed. In these cases, a deduction (or payment by the employee) is only allowed where:

• It is allowed for in your contract
• It is fair and reasonable
• You have received a written notice of the deduction – a full week’s notice if the deduction arises from your mistake
• The amount of the deduction does not exceed the loss or cost of the service
• The deduction takes place within 6 months of the loss/cost occurring

Failure to pay all or part of the wages due to an employee is considered an unlawful deduction and a complaint can be made under the Payment of Wages Act. Likewise, unpaid notice, holiday pay, bonus and commission payments can also form part of a claim under the Act.

When you leave work

On the day your employment ends, that is the date of dismissal, there are certain things your employer should give you. They include the following:

• The pay you are owed and a payslip
• A P45 giving details of your pay with the tax and PRSI deducted to date
• If you have been made redundant, the redundancy payment due to you
• Your entitlement to notice and pay for holidays which you have not taken.

Further information

For further information please email Barry Crushell of Aperture Partners Advisory at bcrushell@aperturepartners.ie or call 01-9053503.

Please note that the material contained herein is for general information purposes only and does not constitute legal or other professional advice. Reference accurate at time of publication but subject to change.