Ninth Level Ireland

The issue of overpayments to university staff seems now to have been settled, in a way which recognises that the payments should never have been made, yet penalising universities by making them redirect money to student services rather than making them compensate for wasted funds; and the recipients of the overpayments can keep the money.  None of this was ever sanctioned by a court. As with so many settlements, the truth is that neither side  would have been on very firm ground before a judge, and if ever the matter were to be litigated, it would almost certainly be necessary to look at each alleged over-payment separately.

I have no intention of doing that here, but I will sketch out the main issues that seem likely to arise, in the light of the Auditor General’s report, the Committee of Public Accounts (CPA) hearing, the subsequent Dáil debate, and the Auditor General’s follow-up report.

The key provision is the Universities Act, 1997, s 25(4), which reads in part:

… there shall be paid by a university to the employees of that university, such remuneration, fees, allowances and expenses as may be approved from time to time by the Minister [for Education and Skills] with the consent of the Minister for Finance.

There does not seem to be much dispute – so far at least – that the university staff in question have been paid rather more than is usually permitted. There are however a number of issues arising, which I group under five heads:

1. Was there ministerial consent to the payments?
2. If no, is there any way out of the conclusion that s 25(4) was breached?
3. If no, were the payments ultra vires (i.e. beyond the legal powers of) the universities?
4. If the payments were ultra vires, does it follow that individual payees have to refund them?
5. Whether or not individuals have to re-pay, can the government make a deduction from future block grant payments to the universities?

Taking these one at a time:

1. Ministerial consent. Both the universities and the HEA somewhat overstated their case to the CPA, as it seems to me. As Hugh Brady of UCD emphasised, the Universities Act does not say what form consent has to take – however, it had to take some form, if it existed at all. It is not entirely fair to ask, as Tom Boland of the HEA did, “what part of ‘No’ did UCD not understand” – a clear ‘No’ is barely discernible from the documentation made public until rather late in the negotiations (end of 2006), a point emphasised by Deputy Shortall, who criticised the HEA for being “too polite” before then. The matter is not straightforward at all, especially as the persons whose approval and consent was required – the Ministers, acting through their Departments – played very little part in the correspondence. Much of the anger directed at UCD assumes that it could, and should, have cancelled arrangements for extra payments as soon as it emerged that they might not attract ministerial consent – but it is hard to get this from the wording of the Act, and (as Hugh Brady was keen to emphasise) you can’t run a modern university that way. There are many legal duties on university heads, quite a few of which would be infringed by sitting around until the HEA tells you what to do.

2. Other ways out of s 25(4)? The sub-section’s coverage is not entirely clear. Does it apply only where source of the payment was Exchequer funds? Can more of the payments be justified under a “framework” as contemplated by s 25(5)? And does s 25(4) regulate only the payment scale, or can it also be stretched to cover the initial point of placement on scale, as the Auditor General’s report seems to suggest? Each of these points might need to be argued out.

3. Assuming that s 25(4) was infringed, does that put the payments outside the powers of the universities? In other word, does it follow that the universities were acting ultra vires when they made the payments? This is asserted time and again by the HEA and the Auditor General, but it is not a very obvious reading of the sub-section, which does not mention vires at all, and is more naturally read as conferring rights on staff rather than as setting limits to the universities’ legal powers. Universities are autonomous corporations (or at least, that’s what the law says), and while of course statute can deprive such corporations of powers they might otherwise have, we might have expected this to be done explicitly if it was done at all. If s 25(4) is not read as a simple denial of vires, there might need to be further argument over whether each university had the necessary vires apart from the Act – which would very probably turn out to be a different enquiry for each university. The older, chartered ones might possibly turn out to be in a better position than the newer, statutory ones, as they could rely on a general presumption that they had full powers of contract and disposition of property, rather than having to find such powers implicit within the statute establishing them.

4. Is there a duty on individuals to repay? If the payments to individuals were indeed ultra vires, does that imply that they have to be repaid? This is seriously technical restitution territory, with various of the parties claiming to have taken legal advice, which however none of them have seen fit to disclose. For what it is worth, one such matter has already reached a Labour Court – UCD v IFUT, 16 August 2010 – and the court’s recommendation clearly envisaged that a university might be bound by a contract with a staff member even if that contract should never have been made – in other words, not only can the university not recover the payments, but also they have might have to go on making repeat payments until the relevant contract expired. Before the CPA the issue might simply be whether the payments should have been made, but before a Labour Court the issue is whether the agreement to pay, and the staff member’s reliance on the agreement, created rights. The university cannot simply break the agreement, or substitute new and lawful arrangements without consultation – the staff member can consent to the substitution of new arrangements, but has the alternative of keeping the old ones until they expire under their own terms. Of course, the issue, or one like it, could be taken to a higher court, which might not necessarily take the same view as the Labour Court. But it is quite a leap from saying that the payments should not be made, to saying that the old and illegal arrangements can simply be ripped up. Basic liability would have to be established first, and then possible defences (such as limitation) considered. None of this was done in the Auditor General’s report or before the CPA.

5. Can the amount of the over-payment be deducted from future grant payments? Again, this is far from obvious, especially if it were clear that the universities were unable and/or entirely unwilling to recover the payments from staff. As Tom Boland put it, “It would be an intolerable situation where unauthorised payments would continue, while we continued to penalise the universities, which could only have the effect of affecting services and students, and not the people who were receiving the unauthorised payments” – a good political argument as well as a legal one. There are certainly possible defences, such as limitation or passing-on. 

Update: This matter was still rumbling on in late 2012.  See Committee of Public Accounts discussions of 27 September 2012 and 4 October 2012.