Payment of Wages General

Payment of Wages

 The Payment of Wages Act 1991 establishes a range of legally acceptable modes of wage payment.  The Act also defines the circumstances in which deductions may be made and the nature of deductions permitted. The main provisions of the Act are outlined in this section.

The Employment Equality Act 1998, which basically gives an entitlement to equal pay for “like work” not only between males and females but between persons of different marital and family status, sexual orientation, religious belief/backgrounds, age, disability, race, or members of the travelling community who carry out the same work

Summary Points

 The Act applies to all employees including apprentices.

  • The lawful means by which an employer may pay wages include:

-           Cheque

-           Bank draft

-           Postal order

-           Money Order

-           Credit transfer (to an account specified by the employee)

-           Cash

  • A written statement specifying the gross amount and the nature and amount of any deductions must accompany payment, in an itemised format.
  • Deductions from wages other than statutory deductions must not be made without the prior written consent of the employee.
  • Employees who, prior to the coming into force of the Act, were being paid in cash, or by any other lawful method, are entitled to continue to be paid by this method unless another legal mode is agreed between the employer and the employee.

Wages

  • Wages mean any sum payable to the employee by the employer and include the following:

-           Normal basic pay including overtime

-           Shift allowances or similar payments

-           Any fee, Bonus payments, or Commission

-           Holiday pay, Sick or Maternity pay

-           Any other payment for work whether under a contract or not

-           Any pay due to an employee in lieu of termination notice.

 

  • The following payments are not included

-           Expenses

-           Pension

-           Redundancy payments

-           Any payment to the employee other than in his/her capacity as an employee

-           Benefit in kind

Itemised Pay Statements

With each wage payment, the employer must provide a written statement specifying:

  • The gross amount of the wage to the employee and
  • The nature and amount of any deduction.

 

The employer must ensure that the information contained in the statement is treated as confidential. If payment is by credit transfer, (which is specified by the employee) then the statement must be given as soon as possible thereafter.

 

Deductions

An employer shall not make a deduction unless:

-     The deduction is statutory in nature, e.g., PRSI, PAYE or

-     The deduction is agreed by both employer and employee and is a term of the contract of employment e.g., VHI, pension contributions or

-     The deduction has been consented to in writing by the employee.

 

A deduction may not be made in respect of:

  1. Any act or omission of the employee or
  2. Goods or services provided to the employee by the employer which are    necessary to the employment unless:
  • Agreed to in the contract of employment or
  • The employee is notified in writing of the likelihood of such deductions prior to the act or omission (at least one week). Where a written contract exists, a copy of the term of the contract, which provides for the deduction of payment must be given to the employee. In any other case, the employee must be given written notice of the existence and effect of the term.

 

  • In addition
  • The amount of the deduction must be fair and reasonable and have regard to the amount of the wages of the employee concerned.
  • Prior to a deduction in respect of an act or omission, the employee must receive written notice of the amount of the deduction to be made and particulars of the act or omission at least one week in advance of the deduction being made.
  • The deduction must not exceed the amount or the cost of the damage sustained by the employer. If in respect of goods or services provided, the deduction must not exceed the cost of those goods or services.
  • A deduction must take place within six months of the act or omission of the provision of the goods or services. Where there are likely to be a series of deductions arising but of the same incident, the first deduction must be made not later than 6 months after the provision of the goods or services, or the act or omission becomes known to the employer.
  • A deduction by virtue of a period of suspension without pay shall not be valid unless a term of the employee's contract allows for same or unless the employee is furnished with particulars of the deduction at least one week in advance of its occurrence.

 

NOTE:  Where the employer accepts a payment in place of a deduction and this satisfies the above conditions the employer must issue a receipt to the employee.

 

The restrictions outlined above do not apply to deductions made in respect of an overpayment of wages; where there is a legal requirement to make the deduction; deductions arising from the employee's participation in industrial disputes or strikes; deductions arising from Court orders or statutory disciplinary proceedings governed by legislation.

 

Non Payment of Wages or Deficiency in Wages

Non payment of wages or a deficiency in the amount of any wages payable by an employer to an employee will be regarded as an unlawful deduction unless the reason for the inaccuracy was a computable error.

 

Frequency of Payment

Aside from the provisions of the Act outlined above, employers should note that they are obliged to pay wages at the frequency agreed in the contract of employment, whether this is expressed orally or in writing.

Disputes

Employees have the right under the Act to complain to the Workplace Relations Commission against an unlawful deduction (or payment) from wages or in the event of non-payment of wages.