Employment Law & Payment of Wages

30 January 2015

Payment of Wages is regulated by the Payment of Wage Act 1991, and the National Minimum Wage Act, 2000. The Payment of Wages Act sets out the manner in which Employers are legally obliged to pay wages or salary to its Employees and also sets out where an Employer may make a deduction or require repayments from an Employee. The National Minimum Wage Act 2000 sets out requirements in relation to the hourly rate of pay for different categories of Employees.

Payment of Wages is regulated by the Payment of Wage Act 1991, and the National Minimum Wage Act, 2000. The Payment of Wages Act sets out the manner in which Employers are legally obliged to pay wages or salary to its Employees and also sets out where an Employer may make a deduction or require repayments from an Employee. The National Minimum Wage Act 2000 sets out requirements in relation to the hourly rate of pay for different categories of Employees.

"Wages" refers to:

  • Normal basic pay as well as any overtime
  • Shift allowances or other similar payments
  • Fees, bonuses or commission
  • Holiday Pay, pay whilst on Sick Leave, pay whilst on Maternity or Adoptive Leave
  • Another return or payment for work
  • Sum payable to an Employee in lieu of notice

"Wages" do not comprise:

  • Expenses
  • Payment by way of pension, allowance or gratuity
  • Payment relating to redundancy
  • Payment other than that made in the person's capacity as an Employee
  • Benefit in kind

Employees are entitled to receive a written statement, which is generally known as a payslip, setting out the explicit details in relation to the gross wage payable in the pay reference period, and details relating to any deductions, including the nature and amount of such a deduction for the pay reference period. A Pay Reference period may not exceed one month. The Employer must take steps to ensure that the statement and its content are confidential. This statement should be provided at the time of payment, or, where wages or salaries are paid via credit transfer, as the earliest opportunity thereafter.

The Employer may make deductions without restriction where:

  • Required by statute
  • Ratified by a term of contract of employment
  • The Employee has given consent in writing
  • Deductions are in respect of overpayment of salary or wages, provided that this deduction is not in excess of the overpayment

The right to make a deduction, or require payment, is restricted where the requirement arises due to an act or omission on the part of the Employee or where the requirement to make a deduction or require payment arises in relation to any goods or services provided by the Employer which are necessary for employment.

In order to calculate average hourly rate of pay, the gross remuneration should be divided by the total working hours in the pay reference period. Hours of work in a pay reference period may be calculated either as set out in the contract of employment or Employee Handbook, or actual working hours, whichever is the greater.

Should an Organisation not pay Employees the correct wages, or not adhere to the Acts, there is a risk that an employee may take a case to the Rights Commissioner.

Where a rights commissioner orders an Employer to pay compensation, the amount of compensation will be an amount which he or she feels is "reasonable in the circumstances", but not exceeding certain limitations as set out in the Act.

This article was written by Amy O’Sullivan from Adare Human Resource Management, one of Ireland's leading Employment Law and HR consultancies. Amy is a HR and Employment Law practitioner, supporting organisations on a wide range of human resource issues across a variety of sectors.