Payment of Wages Act 1991
Updated June 2015
The payment of wages act 1991 came into operation on 1st January 1992. It established for the first time a range of rights for all employees relating to the payment of wages. The key rights established under the Act are:
In any proceedings the burden of proof lies with the Employer to demonstrate compliance with the Act and associated regulations.
"Authorised Officers" are appointed under the Act for the purpose of ensuring that its provisions are observed. The Minister may prosecute any party for an offence under the Act.
For the purposes of the Act, the following payments are regarded as wages:
The following payments are not regarded as wages:
The Act allows an employer to make the following deductions from the wages of an employee without any restrictions being imposed on them:.
The Act specifies a range of legally acceptable modes of wage payment which include:
National Minimum Wage Act, 2000
The National Minimum Wage Act, 2000 sets out to establish a framework supporting the implementation of a national minimum wage and sub minimum rates applicable to employees.
The Act permits Employers to make deductions in respect of board and lodgings where these are provided for employees.
Calculating the Average Hourly Rate of Pay
Should a query ever arise as to whether an employee is in receipt of minimum wage or not, it is important that the Employer is in a position to calculate the Employee’s hourly rate to ensure compliance with the legislation. It is important to understand that certain elements of pay may be considered as contributing to the hourly rate as well as regular wages.
In order to calculate an Employee’s average hourly rate of pay, the Employee’s gross remuneration should be divided by the total working hours of the Employee in the pay reference period.
The hours of work in a pay reference period may be calculated either as the hours of work set out in an agreement between the Employer and Employee (e.g. the contract of employment), or alternatively the actual working hours, whichever is greater.
Updated June 2015
The payment of wages act 1991 came into operation on 1st January 1992. It established for the first time a range of rights for all employees relating to the payment of wages. The key rights established under the Act are:
- A right to a readily negotiable mode of wage payment.
- A right to a written statement of wages and deductions specifying the following:
- the gross amount of the wages payable
- the nature and amount of any deductions made. - Protection against unlawful deductions from wages. An Employer’s right to make a deduction, or require a payment, from an employee is restricted in the following circumstances:
- Where the requirement to make a deduction or require payment from the employee arises due to any act or omission of the employee e.g. breakages or
- Where the requirement to make a deduction or require payment from the employee arises in relation to any goods or services provided by the Employer which are necessary for employment e.g. uniforms.
In any proceedings the burden of proof lies with the Employer to demonstrate compliance with the Act and associated regulations.
"Authorised Officers" are appointed under the Act for the purpose of ensuring that its provisions are observed. The Minister may prosecute any party for an offence under the Act.
For the purposes of the Act, the following payments are regarded as wages:
- Normal basic pay as well as overtime.
- Shift allowances or other similar payments.
- Any fee, bonus or commission.
- Holiday, sick or maternity pay.
- Any other return or payment for work.
- Any sum payable to an employee in lieu of notice or termination of employment.
The following payments are not regarded as wages:
- Any payment of expenses incurred by the employee in carrying out his/her employment.
- Any payment by way of a pension, allowance or gratuity in connection with the death, retirement or resignation of an employee or as compensation for loss of office.
- Any payment referable to the employee’s redundancy.
- Any payment in kind or benefit in kind.
- Any payment to the employee other than that made in the person’s capacity as an employee.
The Act allows an employer to make the following deductions from the wages of an employee without any restrictions being imposed on them:.
- Any deduction required by law e.g. PAYE and PRSI.
- Any deduction authorised by a term of an employee’s contract e.g. Pension Contributions
- Any deduction agreed in writing e.g. Trade Union Subscriptions or VHI Premia.
The Act specifies a range of legally acceptable modes of wage payment which include:
- Cheque or Bank Draft.
- Payable Order Warrant.
- Postal Money Order or Warrant (Issued by An Post).
- Credit Transfer (To a specified Account).
- Cash.
National Minimum Wage Act, 2000
The National Minimum Wage Act, 2000 sets out to establish a framework supporting the implementation of a national minimum wage and sub minimum rates applicable to employees.
The Act permits Employers to make deductions in respect of board and lodgings where these are provided for employees.
Calculating the Average Hourly Rate of Pay
Should a query ever arise as to whether an employee is in receipt of minimum wage or not, it is important that the Employer is in a position to calculate the Employee’s hourly rate to ensure compliance with the legislation. It is important to understand that certain elements of pay may be considered as contributing to the hourly rate as well as regular wages.
In order to calculate an Employee’s average hourly rate of pay, the Employee’s gross remuneration should be divided by the total working hours of the Employee in the pay reference period.
The hours of work in a pay reference period may be calculated either as the hours of work set out in an agreement between the Employer and Employee (e.g. the contract of employment), or alternatively the actual working hours, whichever is greater.
