1. Introduction

The Supreme Court decision in Marek Balans v Tesco Ireland Limited [2020] IESC 71 transformed the analysis of Payment of Wages complaints. The Court held that the threshold question in every case is what wages were “properly payable” to the employee. Only after that question is answered can the WRC determine whether there has been an unlawful deduction.

This article considers the Balans framework, the difference between properly payable wages and contested entitlements, and the practical implications for both employers and complainants.

2. Legislation and Case Law

Section 5(1) of the Payment of Wages Act 1991 prohibits an employer from making a deduction from the wages of an employee unless the deduction is required or authorised by statute, by the contract of employment, or by the prior written consent of the employee.

Section 5(6) deems that, where the total amount of wages paid on any occasion is less than the amount properly payable, the deficiency is treated as a deduction of the full amount.

In Balans, the Supreme Court (Charleton J.) emphasised that adjudicators must first determine what was properly payable as a matter of contract law before proceeding to the Section 5 analysis. The Court rejected the approach of treating every shortfall as an automatic unlawful deduction.

The Court of Justice in Bjorn Sigurdsson v Fjarsymislan Bank C-396/96 confirmed the general principle that wages include all emoluments referable to the employment, an approach mirrored in Section 1 of the 1991 Act. 

3. Decision

WRC adjudication officers now uniformly apply the Balans framework. The first task is to identify what wages were properly payable, which involves an examination of the contract, custom and practice, and any statutory entitlements.

Where the wages claimed are genuinely contested (for example, where an employer disputes the existence of the entitlement), the WRC must form a view on the contractual position before reaching the Section 5 question.

Where the wages were properly payable but not paid, compensation under Section 5 is calculated by reference to the actual deduction. Compensation may extend back six months from the date of complaint, with an additional six months where reasonable cause is shown under Section 41(8).

4. Takeaway

Employers should ensure that the contractual basis for all elements of remuneration is clear in writing. Disputes about properly payable wages most often arise where the contract is silent or ambiguous on bonus, commission or allowance entitlements.

Complainants should be prepared to demonstrate, by reference to the contract and any relevant policy documents, why the wages claimed were properly payable. Section 5 is not a free-standing entitlement to fair pay; it depends on a prior contractual or statutory entitlement.

5. Further information

This article was prepared for informational purposes only. For further advice, please email enquiries@crushell.ie or contact the offices of Crushell & Co Solicitors.

6. About Crushell & Co

Crushell & Co is a specialist law firm focused on protecting and advancing the rights of employees in Ireland. We offer a nationwide service, advising individuals on a wide range of legal and regulatory issues arising at work, including employment law, employment immigration and workplace accidents and injuries.

We help employees understand their position and options by translating complex legal issues into clear, practical advice. Our approach is tailored to each client, ensuring that our strategy is aligned with their personal and professional circumstances.

Connect: @CrushellLaw or www.crushell.ie