FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : TESCO IRELAND - AND - MANDATE DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Ms Ni Mhurchu |
1. Calculation Of Bonus, Option To Invest Full Bonus In Shares, Assimilation of Stamp 2 Employees
BACKGROUND:
2. The Union's claim before the Court concerns the Company's Share Bonus Scheme and the non-assimilation of Stamp 2 employees. In 2006 an Agreement was concluded between the Company and the Union which included a Share Bonus Scheme and Banded Hour Contracts. The Union claims that the Company breached the Agreement by declaring the bonus percentage in February and not May as agreed. The pay increase due to employees in May was not factored in. With the introduction of Banded Hour Contracts, each employee was assimilated onto an appropriate Band. It is the Union's claim that Stamp 2 employees were not assimilated onto contracts that reflected the new Bands. It is the Company's position that the bonus percentage was announced in April in order to facilitate payment in May and that the Share Bonus Scheme was always subject to Revenue's approval. In consideration of the legislation relating to employees on Stamp 2 visas, the Company provided them with a 20 hours per week contract during the college term. Extra hours out of term could be requested and approved based on business needs.
The dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 1st September, 2008 in accordance with Section 26 (1) of the Industrial Relations Act, 2007. A Labour Court hearing took place on the 4th November, 2008.
UNION'S ARGUMENTS:
3. 1 The Company declaring the percentage bonus in February instead of May is a clear breach of the Agreement between the parties. The Union's members are at a loss of a two and a half percent wage increase being reflected in the bonus due to this breach.
2 The Company is hugely profitable and can afford to add the wage increase into the bonus calculation. It cannot be argued that this is a cost increasing claim as it formed part of an Agreement between the parties.
3 The Agreement between the parties states that all staff will be assimilated onto Banded Hour Contracts. The period used for assimilation would have shown that Stamp 2 employees were working more than twenty hours and would have meant they would be assimilated onto a higher band which would have benefited them to work additional hours during college holidays when they are allowed to work up to forty hours per week. The Union is only claiming the additional hours for Stamp 2 employees during holiday periods.
COMPANY'S ARGUMENTS:
4. 1 The bonus percentage was announced in April, post the end of the Company's financial year. The rate of pay used in the calculation is based on the rate of pay at the end of the financial year, which is February.
2 To concede the Union's claim that the bonus percentage is based on the rate of pay in May 2008 would be a significant cost. This cost would not have been factored when conceding this new scheme as part of the 2006 Agreement.
3 The Contracts provided to Stamp 2 employees are in line with current legislation. To issue contracts on assimilation would be in breach of legislation. A process is in place to facilitate an increase in hours in line with business needs.
RECOMMENDATION:
The matters before the Court concern a dispute between the parties on the interpretation of an Agreement reached in 2006, in relation to a new Share Bonus Scheme and secondly, the Union’s claim for assimilation of “Stamp 2” Employees onto the appropriate Working Hour Bands, as provided for in the Agreement.
The Court has considered the submissions of both parties, and notes that the negotiations entered into in 2006 between the parties resulted in a comprehensive agreement, which set out the details of a number of issues, including theTesco Share Bonus SchemeandContracts and Patterns.
Calculation of Bonus
On examination of the wording of the Agreement on the Share Bonus Scheme, the presentation slides and the explanatory booklet, the Court is satisfied that sufficient clarification is not given on the date which the bonus is based upon and calculated. It is very specific on when the bonus is “declared” or announced i.e. in May of each year. The Court is of the view that to calculate the bonus on the basis of a Company’s end of financial year figures is reasonable and appropriate in the circumstances applying here; however, the terms of the scheme do not specifically state that. This lack of clarity has given rise to difficulty in its first year of operation.
The Court is of the view that this lack of clarity needs to be addressed and accordingly recommends that a new booklet should be produced which clearly identifies the date which the bonus is based upon and calculated. Due to the difficulty that has arisen the Court recommends that the Company should make a once off gesture of goodwill payment to those employees affected by the misunderstanding, as follows:-
-to those who were entitled to the basic declared bonus of 3% for 2007/08 a sum of €17.00 and
-to those who were entitled to the full 5% bonus for 2007/08 a sum of €28.00
Revenue Restrictions on Share Purchase Options
It is clear to the Court that the details of the options to invest the bonus in shares must be in compliance with Revenue rules and therefore the Court cannot accept that the Company were in breach of the Agreement in this regard. The Court notes the Union’s concerns over the possible contingency, which may arise if the Company’s declared bonus falls below 2%. The Court recommends that the implications of this possibility should be outlined in the redrafted booklet.
Non-Assimilation of Stamp 2 Employees
The Court recommends that “Stamp 2” employees covered by the Agreement 2006 should be assimilated in a similar fashion to all other employees.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
10th December, 2008______________________
DNDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to David P Noonan, Court Secretary.