FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : ABB TRANSFORMERS LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Keogh Worker Member: Mr O'Neill |
1. (1) Payment of bonus, (2) Interpretation of agreements.
BACKGROUND:
2. The Company employs approximately 150 staff at its premises in Tycor, Waterford. It is engaged in the manufacture of transformers for the electricity industry in Ireland and the U.K.
In 1995/1996 the Company introduced two profit-related bonus schemes entitled "Earnings After Financial Investment" (EAFI) 1 and (EAFI) 2. The EAFI 2 scheme is not part of this dispute. The EAFI 1scheme provided for payment of £500 per annum when profitability exceeded 110%. It was agreed by both sides that the bonus be split equally between Summer and Christmas and that the Summer bonus would be paid, based either on average overtime earnings or under the EAFI scheme, whichever was the greater.
(1)Payment of bonus
In the first half of 1997, the Company did not reach the profit level required to yield a bonus, and as such the bonus was paid on average overtime worked. Some workers received more than £250 and other received less. However, in the latter half of the year, the Company's trading position improved which yielded a bonus of £460 for the workers in respect of the full year. The Company proposed to "clawback" money where there was an overpayment to employees.
(2)Interpretation of agreements
The Union objected to the Company's proposal and stated that under a 1993 agreement that there was no provision for a "clawback" in relation to the current situation. It also claimed that in December, 1997, the Company made a presentation to staff indicating that £500 would be available to staff under the EAFI scheme at the end of that year.
As no agreement was possible between the parties, the dispute was referred to the Conciliation Service of the Labour Relations Commission. A conciliation conference was held on the 30th of June, 1998 but no agreement was reached. The dispute was referred to the Labour Court on the 11th of September, 1998 under Section 26(1) of the Industrial Relations Act, 1990. The Court heard the dispute in Kilkenny on the 23rd of September, 1998.
UNION'S ARGUMENTS:
3. 1. There should be no "clawback" where an overpayment has resulted under the terms of the EAFI scheme.
2. The Company announced in December, 1997 that all employees would receive a double payment under the bonus scheme.
3. There was no payment made under the bonus scheme during the first half of 1997. The bonus was earned in the second half of the year. The Company is trying to spread the bonus earned over the whole year.
4. Under the terms of the EAFI bonus scheme there are two payment periods, i.e., Summer and Christmas.
COMPANY'S ARGUMENTS:
4. 1. The EAFI scheme provided for either a Summer bonus payment up to a maximum of £250 or average overtime earnings whichever is the greater.
2. When it was decided that a bonus payment would arise in December, 1997 the Union claimed payment of the full £500 in addition to the average payments already made. This was in breach of the terms of the agreement.
3. There was no Summer bonus paid in 1997 under the EAFI scheme because the Company had not reached the profit level required to yield a bonus. However, under the terms of the scheme, employees received average overtime payments instead.
4. When the Company finalised the individual EAFI bonus calculations, it was evident that some individuals were overpaid. The Company wishes to clawback those overpayments.
RECOMMENDATION:
Having considered the submissions of the parties the Court recommends as follows:-
1. The parties should accept that the Minute of the meeting of the 24th of August,
1995, attached as appendix 2 of the Company's submission, accurately
records the basis on which the EAFI scheme should operate. It is clear from
that Minute that in respect of each six month period average overtime or EAFI, whichever is the greater, should apply subject to a maximum of £250 in respect of each period.
2. Notwithstanding 1 above, it is clear to the Court that in December, 1997 the
Company made a presentation to staff which could only be understood as meaning that employees would receive an EAFI payment of £500 at the end of that year. The Company must accept responsibility for the misunderstanding which occurred.
3. On the clear understanding of the import of the agreement, as set out above, and noting the Company's estimate of the amount involved, the Court recommends that no clawback should be applied in respect of 1997.
Signed on behalf of the Labour Court
Kevin Duffy
9th October, 1998______________________
L.W./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Larry Wisely, Court Secretary.