National emergencies and the payment of wages
Met Éireann placed the entire country on a “status red” wind warning on Sunday evening the 15th of October 2017, adding that there was a potential risk to lives as the tropical storm passed over the country. Schools, third level organisations and creches were closed, and all non-emergency medical procedures postponed. Employers were advised to facilitate employees as far as possible, with a clear message being sent that the health and safety of employees, clients, customers and the general public was the paramount consideration. As a result, most employers providing non-essential goods and services made the decision to close their businesses for the day.
Legal position
Various news reports emerged over the course of the day attempting to address the main consideration – were employees entitled to be paid for the day’s absence? No generic answer can adequately capture the wide variety of individual circumstances which will have arisen across the country, but the legal position can be broadly summarised as follows:
There is no statutory provision which addresses directly the question of whether employees should be paid a day’s pay in the event of unforeseen business closure due to force majeure. Some media reports made reference yesterday to “force majeure leave” which is addressed in the Parental Leave Act 1998 and 2006. Section 13 refers to an entitlement to three paid days’ leave in any period of 12 consecutive months or 5 days in any 36 month period in the event of “urgent family reasons” as defined by the Acts. However, that provision addresses situations where a family member has suffered an injury or has an illness, rather than extremes of weather or some other unforeseen event. The provision has been construed conservatively in the past and is highly unlikely to be considered applicable to circumstances such as a weather red alert.
Relevant statute
The Payment of Wages Act 1991 is the statute which generally addresses potential disputes relating to employees’ wages and the circumstances in which pay may be lawfully withheld. Section 5 regulates deductions from pay, and generally prohibits deductions unless they fall within one of the situations listed in the Act. These include circumstances where the deduction is authorised by a term in the contract of employment, whether express or implied and whether oral or in writing. Because the Act does not overtly address circumstances such as business closures for extreme weather events, an employer, depending on the circumstances, could argue that the contract envisages payment for work done. In the event that the work is not carried out, for whatever reason, the employer is under no obligation to pay the wages for that day. Employees may respond with a claim under the 1991 Act that the wages are properly due and owing, as their failure to carry out their work for that day was due to circumstances beyond their control. That is an argument which would have to be resolved by an Adjudication Officer after considering the circumstances in question. Under section 6 of the Act, it is open to an Adjudication Officer to find that there was a breach of the Act but that the circumstances are such that he or she will not make an award against the employer.
It would also be open to an employee to sue the employer in the civil courts for breach of contract. Similar arguments and defences would likely arise as those arising under the 1991 Act, although once a finding is made that a breach of the contract has occurred, the judge would have less discretion than an Adjudication Officer would have not to make an award against the employer. Again, the particular circumstances in the dispute would likely have a considerable impact on the outcome of the case.
“Depending on the circumstances”
It is not within the scope of this article to address every possible scenario which could arise in each individual contract of employment. It is even possible that some contracts of employment may address exceptional events such as closure for extreme weather in which case those clauses will take precedence over the general advice listed below. However, most contracts will be silent on the matter.
Ibec is keen to emphasise that there is no neat answer to this issue. It is important that member companies understand that there is no specific legal obligation to pay employees in the event of closure due to unforeseen events. However, in situations where there is no specific legal answer, the legal test normally applied is that the employer must behave “reasonably” in all the circumstances. In trying to decide on an appropriate response to Monday’s events, employers need to consider whether the decision they are making could be said to be “reasonable”.
Most employers addressing yesterday’s scenario closed their premises and required employees to remain at home. In some cases, it will have been possible to allow the employees to work remotely, in which case, no dispute in relation to payment should arise. Where remote working was not an option, some employers may have suggested that their employees could take a day’s paid annual leave from their existing contractual or statutory leave entitlement under the Organisation of Working Time Act 1997. Employers and employees should be aware of the need to provide notice of the taking of annual leave, but in circumstances such as extreme weather events, employees may be willing to agree to take a day’s leave if they have the leave to take and the alternative is loss of pay for the hours not worked.
Requiring employees to take unpaid leave
Where an employee has exhausted their leave entitlement for the year, an employer may consider whether they will require the employee to take a day’s unpaid leave, or whether there is an alternative option. It may be the case in certain sectors that the employer will not be financially impacted by the decision to close for the day e.g. where their goods or services or paid for in advance and they will not be required to reimburse service users or clients. In that case, it would be difficult for the individual employer to justify refusing to pay their employees for the day.
If on the other hand the employer is a small business owner in a sector where the profit margins are small, the employer may be forced to require employees to take the day’s leave as unpaid leave. As a reasonable response, the employer may look for opportunities whereby the employee in question could work up the lost time as soon as possible, to ensure that they are not too severely impacted by the closure. However, employers in this situation should be aware that they may still face a claim under the Payment of Wages Act 1991 and be prepared to defend their decision in that context.
What about employees who were already absent from work on approved leave?
If the employer decides to pay employees notwithstanding the closure of the place of work, they may face queries from employees already on a pre-booked day’s leave for an additional paid day off. While again there is no specific legal answer to this question, Ibec is reluctant to recommend that the “status red” weather event could be viewed as an employee benefit at the cost to the employer. A reasonable response from an employer would be that annual leave is only restored in line with the provisions of the Organisation of Working Time Act 1997 due to certified sick leave. For those employees on some other form of leave such as unpaid parental leave, the response should be that the employee was not rostered to work and is not at a loss as a result of the forced closure of the business. Whereas there may be an argument that employees should not be at a loss because of the unforeseen event, no reasonable argument can be made that employees should profit from it.
Half day closures and non-attendance for work
The summary of legislation and recommendations referred to above will be similarly applicable to situations where employees presented for work and worked for a couple of hours before being sent home. In other words, employees will be entitled to be paid for time worked, but questions will arise as to whether the balance of the working day will be treated as paid or unpaid leave, or annual leave depending on the circumstances.
Another scenario which may arise following Monday’s events is the possibility of a place of work remaining open for business but an employee choosing to heed the warnings from Met Éireann and making a decision not to leave their home to attend for work. Given the level of warning issued by emergency services, Ibec is of the view that an employee making that decision would be given a sympathetic hearing before any Adjudication Officer and a similar response of “reasonableness” would be required by employers in the event that they determined that they would not pay for a day’s leave in such circumstances.
Conclusion
Status red weather events are rare and Ibec recognises the challenges for employers and employees posed by the events of the 16th of October 2017. It is acknowledged that the paramount concern must always be the health and safety of individuals going about their daily lives. Employers should consider the reasonableness of their response when deciding how to engage with employees on the issue, while remembering that there is no clear requirement for the forced absence to be treated as paid leave. If in doubt, or in the event of a specific question on the issue, members are encouraged to contact Ibec at 01 605 1500 for further advice.
Tuesday, 17 October 2017