PWD1919

FULL RECOMMENDATION

PW/19/23

DETERMINATIONNO.PWD1919

ADJ-00010769 CA-00014076-001

SECTION 7(1), PAYMENT OF WAGES ACT, 1991

PARTIES :

BOSTON SCIENTIFIC LTD
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)

- AND -

MR TREVOR COTTER
(REPRESENTED BY CROWLEY SOLICITORS)

DIVISION :

Chairman: Mr Haugh
Employer Member: Mr Marie
Worker Member: Ms Tanham

SUBJECT:
1. Appeal of Adjudication Officer Decision No. ADJ-00010769.

BACKGROUND:

2. The Employer appealed the Adjudication Officer's Decision to the Labour Court in accordance with Section 7(1) of the Payment of Wages Act, 1991 on the 26th March 2019. The Court heard the appeal on the 25th June 2019.

DETERMINATION:

Background to the Appeal

This is an appeal on behalf of Boston Scientific Ireland Limited (‘the Respondent’) from a decision of an Adjudication Officer (ADJ-00010769, dated 18 February 2019) under the Payment of Wages Act 1991 (‘the Act’). The Adjudication Officer had awarded Mr Trevor Cotter (‘the Complainant’) €5,098.47, less statutory deductions, in respect of an alleged underpayment of bonus in March 2017. The Respondent’s Notice of Appeal was received by the Court on 26 March 2019. The Court heard the appeal in Cork on 25 June 2019.

The Complainant’s Submission and Evidence

The within appeal concerns the level at which the Complainant’s bonus was paid in March 2017 for the year 2016. At all material times the Complainant was employed on a full-time basis as a manufacturing engineer at the Respondent’s plant in Cork. He told the Court that he had been employed there since 2002 and had received an annual bonus of between 8% and 12.5% of annual salary.

The Respondent’s year runs from January to December each year in line with the performance management year. The Respondent’s bonus plan sets out a number of criteria for participation in the bonus scheme as follows:

•“You are either a Regular Exempt Employee or an Eligible International Employee;
•You are not eligible for commissions under any sales compensation plan of the Company;
•You are not eligible to participate in any other incentive plan or program of the Company (unless the written terms of that plan or program expressly permit participation in both that plan or program and the Plan); and
•You complete at least two full months of Eligible Service during the Performance Year.”

The following additional criteria also apply:

“If you cease employment … before the [bonus] Payment Date, you will not be eligible to receive any Bonus Award … Conversely, if you are an employee of the Company on the Payment Date, you will be entitled to your bonus Award, if any, even if you are not actively performing your duties on that date.”

The Complainant submits that he fulfilled all of the above qualifying criteria for the year 2016. The Complainant gave detailed evidence to the Court in relation to the level of responsibility he had in early 2016 which included bringing three significant engineering projects through to capital approval stage. The projects concerned were flagged for delivery in the August to October period. However, the Complainant had some concerns about achieving those timelines with the projects running concurrently and having regard to resource constraints. He flagged up those concerns at regular project meetings and at meetings of the engineering group. Although, it was indicated that additional resources would be deployed to the projects this didn’t happen, according to the witness, until the latter end of the project periods.

During 2016 the Complainant took extended sick leave on two separate occasions. He was absent from work on sick leave for 22 days in June-July and for another 34 days from November until the end of the year.

As a consequence of his absence at the end of the year, the Complainant did not participate in the end-of-year performance review process. He submits that no mid-year performance appraisal had been scheduled for him in 2016 either due to what he describes as “an inexplicable inconsistent approach by the company in the performance review system and bonus calculation process” in his case. As it transpired, however, the management component of the mid-year assessment was completed and this resulted in a negative feedback to the Complainant in the form of an ‘improvement needed’ notice. However, in the Complainant’s submission, this lacks any credibility because no one-to-one appraisal meeting had taken place as part of the process.

The Complainant told the Court that the Company proceeded to calculate his bonus for 2016 having regard to mid-year performance review and an end-of-year review, neither of which he had participated in, with the result that he received a bonus “75% less than his bonus would have been had he received a bonus of 12% of his annual salary, 12% being an approximation of the bonuses awarded to [his] fellow employees”. The amount of bonus actually paid to the Complainant in March 2017, for year 2016, was €1,699.49.

The Complainant did, however, accept - when asked by the Court – that he had had a formal counselling session with his line manager (JM) on 16 March 2016 in respect of his non-attendance at work due to periods of sick leave. He also accepted that on 9 May 2016 an issue had been raised with him about unacceptable deviations from specified engineering tolerances in certain aspects of the work he was responsible for at that time. Ultimately, the Complainant conceded – again when asked by the Court -that the Respondent had no option but to complete his end-of-year appraisal based on the information to hand at the time. Payment of the 2016 bonus was notified to staff on 22 March 2017. The Complainant initiated a formal grievance in relation to the calculation of his bonus by letter dated 4 May 2017. His grievance was not upheld.

Complainant’s Legal Submissions

The Complainant’s case on the appeal is that the Respondent exercised its discretion vis-�-vis the application of the bonus scheme to the Complainant in respect of year 2016 in an unreasonable manner and contrary to law. The Complainant’s Solicitor, Ms Deirdre Crowley, put before the Court a very comprehensive and erudite legal submission in which she refers at length to the judgments in a number of decided cases in support of her client’s case, including:Devlin v ESB[2015] ELR 278;Lichters & Haas v Depfa[2012] IEHC 10;Cleary v B&Q Ireland Limited[2016] IEHC 119.

The Respondent’s Submission

It was submitted in the first instance, on behalf of the Respondent, that there had been no breach of his contractual rights visited on the Complainant in respect of bonus year 2016: his right as an eligible employee is to participate in the Respondent’s bonus scheme. This, in the Respondent’s submission, does not equate to a legal entitlement to receive a particular level of bonus in any given year.

The Respondent’s written submission emphasises the non-contractual and discretionary nature of the bonus scheme. For example, the Court’s attention was drawn to the following provisions in the scheme documents:

“… The Committee delegates to the Company’s highest human resources officer the authority to administer … and interpret all applicable terms and conditions for employees who are not executive officers of the Company. The determinations and interpretations of the Committee and its delegates will be conclusive.”
“This document sets forth the terms of the Plan and is not intended to be a contract or employment agreement between you or any other participant and the company …”.

The Respondent’s representative told the Court that there were thirty-nine employees at the same grade (Management Engineer II) who had been rated ‘Satisfactory’ in their performance appraisals in 2016. The average bonus paid to employees in this grade and with this rating that year was €2,474.00. However, three engineers at this grade had received a ‘needs improvement’ notice and the average payment made to them was €1,560.00. The Complainant had in fact received a payment in excess of the average made to others in his grade, who like him, had received a ‘needs improvement’ notice. Finally, seven employees at the same grade scored ‘Outstanding’ in their performance appraisals and received an average bonus of €5,830.00.

Discussion and Decision

The Respondent’s bonus scheme is a variable scheme in respect of which the Company, through its senior management team, exercises a considerable degree of discretion. Annual bonuses are determined having regard both to company performance globally and individual employee performance. It is not a fixed bonus scheme.

It is common case between the Parties that the Complainant had a contractual right to participate in the scheme and to have his bonus, if any, for 2016 calculated in a reasonable and fair manner. The Complainant was one of three employees at his grade in the Cork plant who received a ‘Needs improvement’ rating. The bonus received by those employees – including the Complainant – reflected their level of performance in 2016. The bonus the Complainant received exceed the average bonus paid to that group. In the circumstances, the Court is unable to accept the case being advanced on behalf of the Complainant to the effect that the Respondent exercised its discretion in calculating his bonus for 2016 in an unfair, unreasonable or capricious manner that gives to a breach of the Act.

In all the circumstances, therefore, the appeal succeeds and the decision of the Adjudication Officer is set aside.

The Court so determines.

Signed on behalf of the Labour Court

Alan Haugh
TH______________________
22nd July 2019Deputy Chairman

NOTE

Enquiries concerning this Determination should be addressed to Therese Hickey, Court Secretary.