ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00003012

Complaints for Resolution:

Date of Adjudication Hearing: 09/08/2016

Workplace Relations Commission Adjudication Officer: Pat Brady

Procedure:

In accordance with Section 41(4) of the Workplace Relations Act, 2015 following the referral of the complaints to me by the Director General, I inquired into the complaints and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaints.

Complainant’s Submission and Presentation:

There were two complainants in this case, (hereafter Ms A and Ms B).

The facts are identical in respect of all matters relating to the claim except that a further deduction of €68 was made from Ms A’s bonus which the respondent conceded would be due to her if the case went in her favour.

Both claim an entitlement to the payment of a Christmas bonus in cash, (as defined in the Payment of Wages Act) which arose from a Collective Agreement between their Trade Union and the respondent in 1997.

The agreement stated that they will receive an increase in the Christmas bonus from 1 week's pay to 1.5 week's pay with effect from Christmas 1997.

This matter has been before the Rights Commissioner on numerous occasions (estimated at eleven) and the Rights Commissioner found that the Christmas Bonus constituted wages for the purpose of the Payment of Wages Act 1991. The Employment Appeals Tribunal has upheld the complainants’ case on three occasions.

In 2004 the Company made a unilateral change to the payment of the Christmas Bonus and decided, without agreement or consultation, to pay it in the form of vouchers. Furthermore, there was no notification to staff, at anytime, by Management of the change.

In 2004, the Company stated that due to changes in taxation policy, that henceforth the vouchers would be taxable, not that the bonus could not be taken in cash.

Furthermore, the Company decided last year to deduct €69.28 from Ms A's bonus as she had been on sick leave during that period. There is no policy which outlines that deductions may be made from an employee’s Christmas bonus as a result of absence. Ms. O'Neill queried this deduction with her line manager and received no response. Ms. O'Neill then queried this deduction further through the Company's grievance procedure and again received no response.

Respondent’s Submission and Presentation:

The respondent accepts the facts as outlined above but says it was entitled to vary the nature of the payment as it was discretionary. Examples were given, especially where companies were facing economic challenges of bonus schemes being suspended or abolished.

The respondent says that the Payment of Wages Act does not apply to these payments. It notes the sequence of claims made by the complainants but says it is not a party to any agreement ‘as contended for by them’. On the contrary it says that there is no evidence that there is an agreement which supports the complainants’ right to such a payment in cash.

The overwhelming majority of the workforce (some eleven thousand) with the exception of about ten employees) have accepted the change and the respondent says that the trade union has not raised an objection to the payment of vouchers. The respondent says that the union has accepted that the 1997 agreement does not mean that payments may only be made in cash, and indeed the agreement is silent on that point.

Therefore the respondent had a discretion as to how the bonus should be paid and, by the time the scheme was changed ‘the overwhelming majority of the company’s employees’ were already accepting vouchers.

The respondent opened Noreside Construction Limited v Irish Asphalt Limited [2014] IESC 98 in support of its case that contracts can be varied or have terms implied into them by custom and practice.

The respondent further argued that some regard must be had to the other employees in the company; 99% of whom accepted the change. It argues that the respondent never agreed that the bonus would be paid only in cash, and that it has on one occasion varied the payment in 1997 (by increasing it) and in 2004 by changing the form of payment to vouchers.

Conclusions and Findings

The company says that it is entitled to vary the nature of the bonus as it is a discretionary payment. When it did so most of its very large workforce accepted the payment in voucher form but a small number, including the complainants did not and have consistently resisted the change ever since.

It is important to disentangle the issues in the case, although only one of these is for decision in this adjudication; (providing all the more reason to disentangle them).

The first is the original agreement. There is no dispute about this. Then there is the entitlement of the company to make the change in 2004. It is important to note that by the time of this change the complainants had been paid the bonus in cash for some seven years. As conceded by the respondent the original agreement provided that there would be a;

‘Christmas box of 1 ½ weeks pay starting Christmas 1997’.

I see no relevance in the arguments advanced by the respondent regarding the numbers of other employees who have accepted the change. This is all the more so in that the respondent did not consider it necessary to put the proposed change to a ballot of its employees, which might, but only might have given this argument some moral force, if not legal effect. It is especially ironic in that context that the respondent should rely on the Trade Union’s acquiescence in the matter. The complainants in this case come seeking a decision on the basis of their legal rights under the Payment of Wages Act.

There can be no doubt that the cash payment had, by 2004 become part of the remuneration package and fell to be paid ‘as pay’ to those employees who had not consented to this significant change in their contractual conditions.

The respondent made legal submissions on when a custom may be incorporated into a contract of employment. It argued that the 1997 agreement has been varied. But there are two very separate issues here. One is whether their contract of employment has been varied. The other is whether they have rights under the Payment of Wages Act to be paid in cash which is the issue for decision in the case.

In any event, on the basis of the respondent’s own submission a collective agreement may result in the variation of a contract of employment where this is consented to by acquiescence, performance or ballot.

The reliance on Noreside Construction Limited v Irish Asphalt Limited [2014] IESC 98 in support of its case that contracts can be varied or have terms implied into them by custom and practice is in fact helpful to the complainants.

There, Dunne J quoting McDermott on Contract Law states the requirements that must be fulfilled before a custom would be implied into a contract, only one of which is relevant to this case;

The custom would have to have acquired such notoriety that the parties must be taken to have known of it and intended it should form part of the contract

In this case the complainants have insisted from the outset that they did not agree to a variation in their contracts of employment and have vigorously resisted it.. At no stage did this change become a ‘custom’ as far as they were concerned, and at no stage did they, as a party ‘intend it to form part of the contract’.

In this respect a contract of employment may, in some respects be said to resemble a valve in that new elements (especially beneficial elements) may be admitted to it by various means, but once they are incorporated they may not be removed from the contract quite so easily without the explicit consent of the employee.

In any event the complaint here is whether the bonus falls within the pay provisions of the Payment of Wages Act.

The complainants first brought their case to the Rights Commissioner Service in 2005 under the Payment of Wages Act. Their claim was upheld by the Rights Commissioner and on appeal by the EAT. The company then paid the bonus in cash to the successful complainants. Something similar has happened almost every year since and I return to this below. The decisions of the Rights Commissioners have consistently been in favour of the complainants.

Further the Employment Appeals tribunal has, on three occasions decided that the bonus constitutes wages.

In O’Neill v Dunne’s Stores PW 44/2005, which was a case decided on similar facts to these, the Tribunal stated that;

‘..The Tribunal is of the opinion that the Bonus is wages and that the Tribunal has jurisdiction to hear and determine this matter. The Tribunal upholds the decision of the Rights Commissioner and determines that the Bonus is in fact wages.

The respondent says that it never agreed a contract with the complainants which would entitle them to be paid only in cash and that such a term never formed part of the 1997 agreement.

But it clearly did. The commitment to give one week’s ‘pay’ means precisely that. It then proceeded to do so for about seven years before unilaterally changing it in 2004. By that time it had become established as part of the complainants’ contractual terms worth just under 3% of their annual salary.

The respondent’s assertion that the bonus ‘was always subject to variation’ is disingenuous and has no merit; it was varied twice, once in 1997 when it was increased, and once in 2004 when the form of payment was unilaterally changed and replaced with the vouchers. But in between it became an established part of the complainants’ contracts of employment as part of their remuneration and protected by the Payment of Wages Act definition of wages in section 1 of that Act where it is stated to include;

‘Any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under contract of employment or otherwise’

In 2014 the Rights Commissioner made it clear that the payment fell to be considered under the Payment of Wages Act, and that it must be paid in cash or other legal tender.

In the face of this overwhelming and consistent set of decisions in favour of the complainants I asked the respondent why, the following year, they essentially ignored and set aside the decisions of the Rights Commissioners and the Employment Appeals Tribunal and again subjected the complainants to the trouble and expense of running the exact same case. The definition above appears in the 2014 Decision of the Rights Commissioner at which all but one of the parties who appeared in this case were in attendance. (Rights Commissioner Decision r-140616-pw-rg/RG and 140618-pw-rg/RG)

The answer was that, to do otherwise it would be seen to acquiesce in making the payment in cash, with, I assume, concern about implications for other employees making similar claims.

There are two answers to this. The outcome of any claim under section 1 of the Payment of Wages Act, which is quoted above, is something that will be determined as a matter of law, rather than precedent or industrial relations.

Secondly, it is a manifestation of quite formidable disrespect for the decisions and status of the then Rights Commissioner Service and of the Employment Appeals Tribunal to persist with this campaign of attrition against the complainants, presumably with the intention of wearing them down to the point where they would abandon the pursuit of their legal rights. The legal position in respect of these complainants is well settled and it behoves the respondent to respect, accept and apply it on a continuing basis. All future payments of the bonus to the complainants should be in line with the decision below.

Decision:

Section 41(4) of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under Schedule 6 of that Act.

I uphold the complaint under CA-00004178-001 and also the complaint under CA-00004180-001 and I award each complainant the sum of €831.37 to be paid in monetary form in line with its normal practice for the payment of wages and in conformity with Section 2 of the Payment of Wages Act within forty two days.

Dated:   26^th October 2016