A Progressive Economy blog earlier this year (14th April) highlighted the growing concern internationally with the phenomenon of wage theft, referring to situations where workers are not paid for work performed. Wage theft received some prominence here in recent years in union campaigns about tipping practices in hospitality. Other countries such as the USA and Australia have introduced, or are considering, legislation to combat wage theft. Ireland already has extensive employment legislation such as the National Minimum Wage Act 2000 but, as Summers writes, ‘the reality of the right depends on the effectiveness of the remedy’ i. If workers face significant challenges in making complaints against their employer to recoup unpaid monies, this points to a deficient employment rights system, and it could deter workers from speaking up about wage theft.
As would be expected, a significant proportion of workers who make complaints under the National Minimum Wage Act work in precarious jobs. An analysis of 64 decisions of the Workplace Relations Commission and Labour Court under the Act between 2018 and 2020 shows that almost 70 percent of workers were from 5 sectors: food and drink service, fishing, retail, cleaning, and security. This is a positive development given evidence internationally that legal claims can originate from industries with the fewest estimated violations. These are sectors with substantial non-compliance rates with employment legislation according to labour inspection data from the Workplace Relations Commission. At the same time, however, there were few complaints from industries with high rates of violations by labour inspectors such as in equine, professional services, meat processing, and real estate activities, and there were hardly any cases involving workers in jobs prone to extreme exploitation such as in nail bars or car washes. Low complaint levels from high violation industries can be due to employees’ fear of retaliation and insufficient legal knowledge.
It is not easy for workers to be successful in minimum wage claims. Of the 51 WRC decisions issued in the period 2018-2020, only nine were found in favour of workers. Over 40 percent of claims failed because the worker did not attend the hearing while in remaining cases, common reasons for failure were due to preliminary issues like the complaint was submitted outside statutory time limits, because the employer was incorrectly identified in the complaint or because the worker did not satisfy the procedural requirement under the Act to seek a statement of pay from their employer before they can submit a complaint. A similar pattern was evident in Labour Court appeals – nine of the 13 appeals were lodged by workers, and of these, eight failed. In the NMW Act, time limits relate not to the date that the minimum wage was not paid but to the date an employee receives a statement of pay from their employer or fails to receive a statement. The legislation requires workers to have substantial legal knowledge not only of time limits, but also of the need to request a statement of pay from employers. These are potentially onerous obligations on workers, particularly migrant workers, with low English-language skills. For example, a cleaner lost her claim because she submitted the complaint to the WRC within 22 days of making a request for a statement of pay from their employer, rather than the statutory four weeks. ii An employees’ request for a statement of pay must be in writing and must identify the pay reference period to which it relates. When a fast-food worker sent an email and Whatsapp message to their employer asking for “an email stating the average rate of pay per hour for my employment”, iii their complaint was deemed invalid because they had not identified a pay reference period in their request. Cases showed that some workers had difficulties in establishing the correct identity of their employer and illustrates the challenges workers in low-paid jobs face in obtaining basic information about their employment, even when legal requirements obligate employers to provide it. In this context, time limit provisions in the NMW Act should be simplified and lengthened, and the requirement for an employee to seek a statement of pay from their employer before making a complaint should be repealed given it is likely an impediment to remedying wage theft.
Where minimum wage complaints were well founded, redress can only consist of arrears of pay and the reasonable expenses of the employee in connection with the dispute, which restricts the level of awards. Of the nine decisions which the WRC found in favour of the worker, half made awards of less than €3,000, four were between €4,000 and €9,000 and there was one award of over €24,000. Given that additional penalties are not open to adjudicators, awards are unlikely to have a dissuasive effect. Research suggests that penalties need to be substantial to encourage compliance with employment laws; a study in the USA found a link between treble damages and statistically significant drops in minimum wage violations. iv There are criminal penalties for breaches of the legislation, but they are much lower than those recently introduced in Australian wage theft laws. Even where employees successfully pursue a legal claim, they can experience obstacles in obtaining the award payment from employers. The Migrant Rights Centre of Ireland reported that in cases where it represented migrant workers between 2006 and 2015, only one-third of the awards by statutory bodies or agreed in settlements with employers had been recovered, leading it to conclude that “in most cases it is difficult if not impossible to enforce the awards”. v
Labour inspectorates play a critical role in protecting workers in precarious jobs. In the mid-2000s there was a commitment by the government to increase the number of labour inspectors to 90 but by 2015, there were 55 inspectors. vi Illustrating the importance of enforcement capacity, when the number of investigators employed by the US Department of Labour increased by 30 per cent during the Obama administration, the amount of wages recovered trebled. vii Irish labour inspectors can issue compliance/fixed payment notices and can prosecute employers but they do not have powers available to some enforcement agencies in other countries. For example, in California, when an employer does not satisfy a judgement on wage theft, enforcement agencies can levy their bank accounts or assets, place liens on their property and can issue ‘stop work’ orders. viii
Further measures such as introducing wage theft as a crime may be worthy of consideration, but they are likely to divert policy attention from the role of existing legal provisions, the power and resourcing of the labour inspectorate, and on the collective representation of workers. There would be less dependency on the state to support labour inspectors if workers had strong collective representation, but this requires a regulatory framework that enables unions to access and represent workers particularly in precarious jobs.
i C. Summers, ‘Effective remedies for employment rights’ (1992) 141 Univ PA Law Rev 457.
ii A Cleaner v A Respondent ADJ-00011722.
iii Macrea’s Takeaway Ltd v Mr. Ioan Alin Andrei MWD201.
iv D.J. Galvin, ‘Deterring Wage Theft: Alt-Labor, State Politics, and the Policy Determinants of Minimum Wage Compliance’ (2016) 14 Perspectives on Politics 324.
v Migrant Rights Centre of Ireland (MRCI), All Work and No Pay: The Experience of Migrants Working in Ireland (MRCI 2015) 2.
vi Dáil Éireann Debate Topical Issue Debate: Workplace Relations Commission 25 March 2021, vol. 1005, no. 4; ETUC, Huge Fall In Labour Inspection Raises Covid Risk (ETUC 2021) www.etuc.org/en/pressrelease/huge-fall-labour-inspections-raises-covid-risk (accessed 4 June 2021).
vii N. Hallett, ‘The Problem Of Wage Theft’ (2018) 37 Yale Law & Pol Rev 93.
viii R. Fuentes, ‘Making Workers Whole: A Retrospective Analysis of SB 588 And Enhanced Post-Judgement Collection in California’ (2019) 40 Berkeley Journal of Employment and Labor Law 369.
Dr Michelle O'Sullivan
Dr Michelle O'Sullivan's expertise is primarily on the quality of work and precarious work, with particular attention on public policy.
Chair of the Irish Association for Industrial Relations, Co-Chair of the Work, Employment and Organisation Special Interest Group in the Irish Academy of Management, is a member of the Board of Directors of TASC and the Scientific Council of the Foundation for European Progressive Studies. She was a Board Member of the Workplace Relations Commission from 2015-2021.