National Minimum Wage

National Minimum Wage Act 2000

This Act was passed to ensure that all employment contracts, collective agreements and, legislative provisions should meet a minimum standard of remuneration as defined within the Act. It facilitates that the Minister for Jobs, Enterprise and, Innovation specify a national minimum hourly rate as by Statutory Order. The Act states that the present minimum wage for an experienced adult worker should be €8.65 per hour.

The Act permits employers to pay less than the minimum hourly rate of pay to specific groups of employees who are defined as follows:

  • those below the age 18 years must receive at least 70% of the wage (i.e. €6.06 per hour);
  • those workers who either enter into employment for the first time or continue in their jobs after reaching the age of 18 years will be paid at least 80% of the hourly rate (i.e. €6.92 per hour) in year 1 and 90% in year 2 (i.e. €7.79 per hour);
  • those trainees/apprentices who are embarking upon certified study or training are entitled to 75% for the first one-third of the training/study period, 80% for the second one-third period and 90% for the final one-third period (note: in each case, one third is defined as at least one month and no more than one year).

Enforcement and Procedure

In the case of a dispute, the employee can refer to a Rights Commissioner, but before the hearing, he/she must obtain a written declaration of the wage received and, this must be produced within four weeks of the request for a hearing.

After hearing the dispute, the Rights Commissioner will come to a decision. The decision might encompass an arrears award which is likely to be the difference between the wage received and the minimum wage for the period of time in question plus reasonable expenses incurred by the appellant in relation to the dispute. In addition, the Rights Commissioner may order the employer, if in breach of the Act, to rectify the payment rate within a specific time (usually not later than six weeks from the date the decision was confirmed to him/her).

It is possible to lodge an appeal against the decision of the Right’s Commissioner to the Labour Court within a period of six weeks. In cases where an employer fails to adopt the decision of Commissioner the employee can refer the case to the Labour Court. If there is a failure to adhere to the recommendation of the Labour Court the case may then be passed to the Circuit Court.

The Payment of Wages Act 1991

The 1991 Act articulates an array of employees’ rights in respect to the payment of their wages. It ensures their right to a transparent and negotiable method of the payment of wages and the right to a written statement of payments and deductions, thus ensuring that no illegal deductions should be made.

The Act facilitates the right of complainants to take their cases to a Rights Commissioner in cases where employees have had unlawful deductions from wages. The following specifically defines as wages:

  • regular basic pay in addition to overtime;
  • shift allowances or any other similar payments;
  • any fee, commission or bonus;
  • any holidays, maternity or sick pay; and also
  • any other return or payment for work (whether made under employment contract or otherwise and any sum which is payable to an employee in lieu of notice of termination of employment).

The Act states that the following parts of an employee’s wages are excluded from the Act:

  • any payment resulting from expenses incurred by the employee in carrying out the duties of his employment;
  • any payment of the nature of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his/her employment, of the employee or as compensation for loss of office;
  • any payment connected to the employee’s redundancy;
  • any payment made to the employee other than in his capacity as an employee; and
  • any payment in kind or benefit in kind.

The Act clearly articulates an array of legally acceptable modes of wage payment.

Employers must comply with the rule that a written statement of earnings is given to each employee with every payment of wages. If wages are paid by credit transfer, the statement of wages earned should be provided to the employee as soon as possible after the credit transfer has been authorised. In all other cases, the statement of wages must accompany the wages.

Each statement must show the gross amount of wages payable to the employee and itemise the reason for and the amount of each deduction.

The Act permits an employer to make the following deductions from the wages of an employee:

  • any deduction required or authorised by law (e.g, PAYE, USC, PRSI);
  • any deduction or payment required or authorised by a written term of the employee’s contract; and
  • any deduction agreed to in writing in advance by the employee, for example trade union subscriptions or VHI premia.

Any deductions resulting from any act or omission of an employee must meet certain criteria:

  • the deduction (or payment to the employer) must be clearly provided for in the written contract of employment in a term whether express or implied and, if express, whether oral or in writing;
  • the amount of the deduction (or payment to the employer) from wages must be fair and reasonable having regard to all the relevant circumstances including the amount of the wages of the employee;
  • written details of the terms in the contract of employment governing the deduction (or payment to the employer) from wages must be given to the employee, at some time, previous to the act or omission or the provision of the goods or services. When a written contract exists, the employee must receive a copy of the term of the contract which provides for the deduction (or payment). In any other case, the employee must be given written notice of the existence and effect of the term;
  • the employee must be given a clear explanation in writing of the act or omission or the goods or services and the amount of deduction or payment at least seven days prior to the deduction being made; and
  • the deduction must take place no later than six months after the act or omission or the goods or services became known to the employer.

Procedures and Enforcement

An employee has the right to take his/her case to a Rights Commissioner in cases where it seems that the employer has made an illegal deduction, or insisted upon an unlawful payment, from the wage earned. Complaints of such a nature need to be made within six months of the date of the deduction or unlawful payment which has given rise to the complaint. There is provision for this to be extended by six more months where the Rights Commissioner is of the opinion that there are exceptional circumstances.

In those instances where the Rights Commissioner concludes that the complaint is valid, he can order the employer to pay to the employee compensation of such amount (if any) as he considers reasonable within the circumstances but, in essence it should not be an amount in excess of the net amount of the wages (after the making of any lawful deduction therefrom) that:

  1. in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or
  2. in case the complaint related to a payment, were paid to the employee in respect of the week immediately preceding the date of payment.

Either of the parties can launch an appeal against a Rights Commissioner’s decision to the Employment Appeals Tribunal, but this must be done within six weeks of the decision. A party to proceedings before the Tribunal has the right to appeal to the High Court from a determination of the Tribunal on a point of law. In such cases, the determination of the High Court shall be final and conclusive. An employee may appeal to the Circuit Court to ensure the enforcement of a Rights Commissioner decision or Employment Appeals Tribunal determination if the employer neglects to comply with the decision within a period of six weeks. The Circuit Court has the power to issue an Order compelling the employer to comply.