Reasons behind non-payment of wages claims

Nóra Cashe

July 12 2023

First published: July 12th 2023
Last updated: July 12th 2023

The many reasons behind non-payment of wages claims

One of the key statistics in the WRC’s 2022 Annual Report was the amount of unpaid wages it recovered on behalf of employees. The grand total was around €1.4 million.

As payment of wages is so fundamental to the employment relationship, you might wonder why so many claims arise in this area?

Here we take a look at why employers are so often pursued for unpaid wages.

The Payment of Wages Act 1991

The law on payment of wages in Ireland is set out in the Payment of Wages Act 1991.

This legislation prescribes a range of statutory employee rights in relation to pay, how payments are made and what deductions are permitted.

Who is covered by the payment of wages legislation?

The legislation aims to protect all employees who are employed under a contract of employment or contract of apprenticeship. This includes civil servants and members of the Garda Síochána and the Defence Forces.

Employees employed by an employment agency are also covered. In these circumstances, whoever is liable to pay the employee’s wages is deemed to be the employer. This is typically the employment agency.

What is included in the definition of wages?

Wages are widely defined as payments made to employees in connection with their employment including:

  • any fee, bonus or commission
  • any holiday, sick or maternity pay
  • any other emolument whether payable under the contract of employment or otherwise, or
  • any sum payable in lieu of notice on termination.

The definition of wages does not include the following payments:

  • expenses paid in connection with the employee’s employment
  • pension, death in service payments, or compensation for loss of office, retirement or resignation
  • redundancy payments
  • payments not connected to the employee’s employment, or
  • any payment in kind or benefit in kind.

The mode of payment

Wages may only be paid by one or more of the methods laid down in the act to include:

  • a cheque, draft or other bill of exchange
  • a credit transfer or other similar method of crediting to the employee's account
  • a postal, money or paying order, or
  • cash.

If you fail to pay wages by one of the legal methods outlined in the legislation, you shall be guilty of an offence and liable to a maximum fine of €2,500.

Written statements of wages paid

You also need to provide employees with a written statement of the gross amount of wages payable together with details of the amount and nature of any deductions.

Most employers comply with this requirement by issuing a payslip on the day wages are paid.

Non-compliance with the obligation to provide a wage statement is also an offence that attracts a fine of no more than €2,500 on summary conviction.

Employee claims for non-payment of wages

Disputes between employers and employees tend to arise in a variety of ways when it comes to non-payment of wages.

The following is a non-exhaustive list of the most common reasons for non-payment of wages claims:

  • unlawful deductions from pay (only deductions required by law (tax deductions for PRSI/PAYE or court orders), agreed by contract/in writing or permitted under the Payment of Wages Act will be lawful)
  • failure to pay prescribed minimum wage rates under the National Minimum Wage legislation, Sectoral Employment Orders or Employment Regulation Orders
  • failure to pay the Sunday work premium
  • failure to share tips, gratuities and service charges amongst employees.

It’s vital to be aware of your employees’ pay-related legal entitlements.

Failure to pay the correct wages not only exposes your business to the risk of WRC claims but it also heightens the threat of disgruntled staff impacting your operations.

Expert HR advice with Irish employment law compliance

Paying the correct wages is not just a legal requirement, it’s a prerequisite for continuing to have a positive relationship with your employees.

For expert guidance on minimum wage compliance or any aspect of Irish employment law, speak to one of our HR experts now on 1800 719 216

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