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Consultants invoked Health Act in pay dispute

21 Jan 2016

Ed Madden, BL, looks at the recent Employment Appeals Tribunal decisions in cases taken by two consultants under Payment of Wages legislation.

The Employment Appeals Tribunal recently issued decisions in two cases under the Payment of Wages Act, 1991 relating to the withholding of salary payments under the consultants contract.

Endocrinologist Dr John McDermott and retired Anaesthetist Dr Thomas Hogan appealed to the Tribunal against decisions of the Rights Commissioner in cases which they brought under the Payment of Wages legislation.

While the circumstances involved in each case were particular to the individual consultant concerned, both had their origin in the agreement reached between the two medical organisations and the HSE in 2008 concerning a new contract for consultants. On foot of that agreement, the two consultants signed detailed contracts in September 2008 that included specific provisions regarding pay and conditions. The failure to pay a scheduled salary increase due under the terms of the contract was at the heart of the dispute between the doctors and the HSE.

When the cases came on for hearing, the parties were in agreement that the Emergency Measures in the Public Interest (FEMPI) legislation was not relevant to the present proceedings. The position of the HSE was that they were precluded from paying the increase in question as the Minister for Health had not provided the necessary sanction as envisaged by Section 22(4) of the Health Act 2004. Insofar as relevant the section provides that: “The [Health Service Executive] shall, with the approval of the Minister given with the consent of the Minister for Finance, determine — (a) the terms and conditions of employment (including terms and conditions relating to remuneration and allowances) of employees appointed under this section…”

A HSE official told the Tribunal he believed that consultants were aware that ministerial sanction was required for the proposed salary increase and expected that the two medical organisations would have informed their members of this requirement.

However, it was conceded in the course of cross-examination that at the time the agreement was reached back in 2008 it was never contemplated that ministerial sanction would not be forthcoming.


Pic: Getty Images

It was explained that by the time the increase came to be paid to consultants generally (in June 2009), public sector finances “were of huge concern to the Government and the [HSE] was not in a position to dispute that with the Minister”. It was suggested that the absence of ministerial consent rendered the portion of the salary withheld from the consultants “as not properly payable”.

Giving its decisions in the two separate cases, the Tribunal said that the 2008 contract was quite specific in its terms. In its preamble it provided that the contract and related documentation would “embody the entire understanding of the parties in respect of the matters contained therein”. Although not a matter for the Tribunal (which was dealing with a statutory appeal), it was conceivable that the consultants on entering into the contracts would have formed a legitimate expectation that the relevant salary would be paid.

Absent approval?

While the Tribunal accepted that section 22(4) of the Health Act embodies a requirement for ministerial approval, it would not accept that an employee must be deemed to be on notice that such approval was absent at the time of entering into a contractual obligation. It was open to the HSE “to specifically set out any or all qualifications, be they statutory or otherwise, it wished or indeed was obliged to insert into the contract and/or the contract documents”, which it provided to consultants.

The Tribunal held that section 22(4) of the Health Act obliges the HSE to have any relevant provisions approved prior to entering into a contract and not retrospectively. The logical conclusion of the HSE argument in the present case was that it entered into contracts in 2008 without having obtained the necessary approval, at least in respect of significant elements of those contracts.

If contracts were entered into by the HSE in advance of the relevant approval being received “such practice was hardly sound on many fronts”.

In each case, the Tribunal was satisfied that the salary outlined in the contract was properly payable within the meaning of the Payment of Wages Act. It found that an unlawful deduction had occurred by virtue of section 6 of that Act on the basis that the consultants had not agreed in writing to the deduction. In allowing the appeals, the Tribunal awarded Dr McDermott €14,000 and Dr Hogan almost €100,000.

Section 7 of the Payment of Wages Act provides that a party to proceedings before the Tribunal may appeal to the High Court from a decision of the Tribunal on a point of law and that the decision of the High Court shall be final and conclusive. All the indications are that the HSE will appeal the decision in both of these cases.

References: PW770/2012; PW113/2012.

Note: For further background on Dr McDermott’s case see Ed Madden’s article ‘HSE Challenged Ruling on Consultant’s Claim’, Irish Medical Times, July 31, 2014.

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Click here to view the full article which appeared in Irish Medical Times: Opinion