FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : BORD NA MONA - AND - A WORKER (REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION) DIVISION : Chairman: Mr Hayes Employer Member: Mr Murphy Worker Member: Mr Nash |
1. Changes to bonus scheme.
BACKGROUND:
2. The Worker commenced his employment with the Bord in 1989 at their plant in Oweninny, Co. Mayo and was later transferred in 2005 to their plant at Boora Leabeg where he worked on the Payroll Team. At the time of his transfer his performance bonus payment amounted to 10% and depended on both team performance and him achieving personal targets which were agreed with his line manager. However in 2007/2008 management changed to "Company performance" as the main criterion upon which the quantum of the bonus would be calculated. The other members of the payroll team continue to enjoy the higher rate of bonus which is 10% for historical reasons, while the Worker bringing the claim received the reduced rate of only 8.2% for the year in question, 2007/2008. The change in the method of the calculation of the bonus to be paid to the Worker is at the heart of this dispute.
On the 26th November, 2009, the Union referred the issue to the Labour Court, in accordance with Section 20(1) of the Industrial Relations Act, 1969. A Labour Court hearing took place on the 25th May, 2010 in the Courthouse in Portlaoise.
The Union agreed to be bound by the Court's Recommendation.
UNION'S ARGUMENTS:
3. 1. Changes to the bonus structure were never agreed between the parties, nor was the Worker informed of changes in the method of its calculation. The 1.8% reduction in the bonus payment was both unexpected and unreasonable considering his colleagues continue to get their full rate.
2. There is no issue regarding the work performance of the Worker who has given loyal and committed service over a period of 21 years.
COMPANY'S ARGUMENTS:
4. 1. Bonus payments are at the discretion of Management and are paid in July each year following approval of the accounts for the previous year. As the Company earned only 82% of EBITDA (earnings before interest, tax, depreciation and amortisation) in the year 2007/2008 a decision was made to pay the approximately 250 Employees 82% of their maximum rate bonus. The position was reversed the following year when Company performance exceeded target and a bonus of 10.5% was paid.
2. Any concession in this matter could have knock-on effects across the group and lead to further claims that could cost the Company in excess of €250,000.
3.It is not reasonable for the Worker to expect his maximum bonus payment at a time when the Company has not achieved its financial targets.
RECOMMENDATION:
The Court has carefully considered the submissions of both parties.
Until 2007 the Company operated a bonus scheme that provided for the payment of a 10% bonus to staff annually on achievement of specified individual and team performances. Overall, Company performance acted as a backdrop to the scheme but had very little direct impact in determining the percentage of payroll set aside for bonus purposes.
In 2007 the Company changed the method by which it calculated the annual bonus. Overall Company performance became the primary criterion for setting the value of the bonus. If the Company met its overall performance targets an amount equal to 10% of payroll was set aside for bonus purposes. If the Company failed to meet its performance targets the amount of payroll set aside for bonus purposes was reduced pro rata and vice versa if the Company exceeded its performance targets. The Company performed at 82% of target for the year 2007/2008 and a bonus of 8.2% of pay was applied generally across the Company.
This change was introduced late in the year and without written notice to the staff. Most of the staff acquiesced in this change. However, a small number of staff lodged claims to have the bonus paid in accordance with the terms set out in their contracts of employment. The Company rejected the claims on the grounds that the bonus scheme was a discretionary payment and that management at all times reserved the right to adjust the scheme in the context of changing circumstances.
Whilst management submitted that the bonus scheme was discretionary and subject to change, the Court is of the view that the staff were entitled to be advised of the change at the start of the bonus year rather than at the point of payment. In those particular circumstances the Court recommends that the Claimant was entitled to be paid the bonus based on 10% of salary if he met the personal and team performance criteria set out in the scheme before the changed method of calculation was introduced.
The Court recommends this strictly on the basis that the Claimant acted without delay in lodging the claim. Had the Claimant delayed in lodging the claim the Court would adopt an entirely different view of this matter. The Court notes that most members of staff have, some two years later, accepted or acquiesced in the revised method of calculating the bonus and indeed accepted payment of a bonus at 10.5% the following year in line with Company performance when it exceeded its target.
The Court so recommends.
Signed on behalf of the Labour Court
Brendan Hayes
18th June, 2010.______________________
JF.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.