ONE of the country's leading clerics, Archbishop of Dublin Diarmuid Martin, signed off on pay cuts for staff that were found to be illegal.
A Rights Commissioner ruled that employment law was breached when the wage cuts were imposed on three workers without their agreement.
However, despite being found to be in the wrong, the commissioner ruled the archdiocese did not have to repay the staff because of its precarious financial position.
The staff involved in the case were hit with pay cuts despite refusing to sign a letter authorising the archdiocese to reduce their salaries.
The row is now set to deepen as the workers have lodged an appeal with the Employment Appeals Tribunal after failing to win compensation.
The pay cuts introduced by the archdiocese last year ranged from 5pc to 5.8pc for two-thirds of staff, while the higher paid workers took a reduction of between 8pc and 8.7pc.
Around 55 staff are employed in the archdiocese's Central Pastoral and Administrative Services section.
Even the lowest-paid staff in the archdiocese were not spared, with those earning less than €25,000 hit by a 5pc pay cut, in a bid to save €500,000.
Clerical assistant Maria Malone, accounts assistant Anne Smyth and secretary Mary Dent wanted the deduction imposed in January last year to be returned. It is worth in the region of €1,461 to €2,700 a year each, or between €28 and €52 a week.
t is understood that a fourth individual has also taken a case against the archdiocese in relation to the pay cut.
Rights Commissioner John Walsh said the workers' complaint that their wages were deducted without their agreement was "well founded".
He said there was a breach of the Payment of Wages Act, as there was no provision in their contracts that allowed the archdiocese to make any change to their terms and conditions of employment. In addition, the staff had not given their prior consent in writing for the pay cuts.
However, he said it was reasonable to make no award given the archdiocese's financial difficulties.
The workers, all employed in the archdiocese's Central Services Office, said they were open to a pay cut they could afford -- once it was negotiated.
But their trade union, SIPTU, said talks with the archdiocese collapsed when it refused to reduce the 5pc pay cut on earnings below €25,000.
SIPTU said it was only willing to compromise on cuts to wages above this amount. "We feel there is a moral obligation on the church to comply with the laws of the State," said SIPTU sector organiser Adrian Kane.
"There was no consultation on this pay cut and it was delivered as a diktat. We are also disappointed with the decision in that there is no compensation being paid, as the important thing is that there is a deterrent."
The diocese aimed to tackle a €500,000 funding crisis by raising €235,000 in annual savings from the pay cut, as well as €90,000 from flexible working and €80,000 by not replacing those who retired.
In its submission to the commissioner, the diocese said staff were informed that the proposals would be communicated to Archbishop Martin and the diocesan finance committee for their approval before staff would be written to regarding the changes that affected them.
It said each staff member then received a letter that asked them to sign it as an acceptance of the proposals to reduce their salary.
The diocese said the need for cost savings "cannot be overstated as the organisation goes through the most difficult period in its recent history".
It said parishioners' contributions had fallen due to the fallout from the abuse scandals, a 21pc decline in numbers attending church in three years, the age profile of those contributing and the national financial crisis.
The archdiocese defended the pay cut and claimed it followed consultations with staff. A spokeswoman said Central Services Office staff are mainly paid out of the income from the 'Share Collection', the second collection at Sunday mass. This slumped by 13pc in the last three years.
The archdiocese said priests, who are supported by the first Mass collection, called the 'Common Fund', also suffered cuts to their income.
It said it was important to note that "the process" involving the Rights Commissioner is ongoing and it would not comment on individual staff members, or former staff members.