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In the recent case of Trinity Leisure Holdings Limited (t/a Trinity City Hotel) v Kolesnik & Anor [2019] IEHC 654, an employer was successful before the High Court in appealing the Labour Court’s decision which had previously found in favour of the two employees, overruling the long-held standard that employees were entitled to a separate clause setting out their Sunday Premium distinct to their hourly rate; stating that same may be incorporated into the hourly rate, provided such is expressly clear in the terms of employment.  

Under s 14 (1) of the Organisation Working Time Act 1997 (as amended), an obligation is imposed on employers to provide employees with compensation for working Sunday’s in one of the following manners:

  1. Payment of an allowance;
  2. An increase in rate of pay;
  3. Paid time off; or
  4. Some combination of two or more of the above.

Upon a cursory review of the legislation, it is striking that there is no specific amount referenced in relation to a suggested rate of pay, rather it refers to ‘what is reasonable having regard to all the circumstances’. This leaves the Sunday premium rate of pay open to negotiation between the parties. Practitioners and employers have looked to the Labour Court for guidance as to what amounts to ‘reasonable’; which has continuously reflected a range from 25% to 33% premium to their hourly rate as in Chicken and Chips Limited t/a Chicken Hut and Malinowski [DWT159]; Viking Security Limited and Valent [DWT1489]; Cadbury Ireland Limited v SIPTU [DWTO0720].  

In addition, under s 3 (1) (g) Terms of Employment (Information) Act 1994 (as amended), employers are required to specify the method of calculation of the employee’s remuneration. This has long supported the view that an employee’s Sunday premium should include a distinct clause, detailing the precise amount pertaining to same.    

In the above titled case, the respective claimants, were two employees whose contracts of employment provided for a payment of salary at an hourly rate of €9.53, which was 25 cent above the national minimum wage at the time of the claim. Their contracts specifically stated the following:

‘… this includes your Sunday Premium based on you getting every third Sunday off (ie, you work two Sundays out of three). Payment will be made weekly with one in arrears and will be paid directly into your account…’

It was the employee’s contention before the Labour Court and the Rights Commissioner that where a Sunday premium included in an employee’s rate of pay, then some element of the employees pay must be specifically referable to the obligation to work on Sundays. Since in this immediate case, the contract did not identify any element of the claimants pay as being a premium for working on Sundays, then it follows that the fact of the employees having to work on Sundays has not been taken into account and were ultimately not properly compensated in accordance with s 14 (1) of the 1997 Act. The Labour Court in its decision reaffirmed the WRC opinion, that the employees in question should be afforded a 30% premium to their normal hourly rate, as in line with previous precedent: see Danesbury Limited, T/A Old Ground Hotel v Mary Frost [DWT1032]. 

In response, the employer contended that the employee’s pay does take account of the fact that they are required to work on Sundays because this is expressly stated to be so in the contracts and there is no requirement that the contract should identify how much of the hourly rate of pay is specifically referable to Sunday work.  

Justice Binchy in his decision stated that at all times the employee’s hourly rate included the Sunday premium. Moreover, there was no discernable evidence provided to the court, to show that the amount in excess of the minimum wage was unrelated to the Sunday Premium. In fact, the Court relied on the express wording used in the contract to show that a premium was catered for. The contract stated the hourly rate of pay ‘includes your Sunday premium based on you getting every third Sunday off’. Binchy J further held ‘the wording is not buried in small print somewhere in the middle of the contract, but appears on the front page thereof, in the third clause of the contract’Here stating that the hourly rate of pay includes the employees Sunday premium, as their contracts makes it clear that the requirement to work on Sundays, as in accordance with legislation, is ‘taken into account in the rate of pay of the employee’ thus satisfying Section 14 of the 1997 Act and Section 3 of the 1994 ActCourt concluded by stating if the employee wishes to assert that the rate of pay does not do so then they must advance ‘some credible evidence’ to rebut the express provision in the employment contract.    

In essence, if a contract of employment contains a provision stating that the rate of pay has been calculated to take into account the requirement to work on Sunday this will almost certainly be sufficient, meaning the employer will not be required to provide evidence as to how much is being paid for working in respect of Sunday premiums.  

This is a much-welcome approach for employers, who have been required to specifically create individual clauses in employee’s contracts and/or employee handbooks to give effect to their Sunday premiums, often giving allowance of up to 33% to employee’s hourly rates. Now, it seems, once an employee is paid over the minimum wage and the difference is specifically labelled as accounting for the Sunday premium, this will be sufficient going forward to satisfy the criteria under s 14 of the 1997 Act.  

 

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