Complainant

Respondent

Anonymised Parties

Maintenance Operator

A Building Company

Representatives

Daniel Snihur, Independent Workers Union

Cathal Lombard, Cathal Lombard Solicitors

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00028433-001

15/05/2019

This case centres on a non-payment of Christmas Bonus payment in December 2018. The Respondent disputes the claim advanced and has submitted that the complainant did not satisfy the discretionary criteria for the scheme. The Respondent was entitled to rely on this criterion. The Complainant was represented by the Independent Workers Union and the Respondent by their Solicitor. Both parties made helpful written submissions. Neither party furnished the requested details on the actual date attributed to bonus payment. I have relied on the evidence adduced in that vein.

The complainant worked as a full time Maintenance Operative from May 2002 to the end of December 2018. The Union on behalf of the complainant asserted that the complainant received a Christmas bonus during every year of his employment with the Respondent. The Union exhibited a pay slip dated 21 December 2017 which outlined a payment referred to as “Christmas at €2,488.00”. A further pay slip incorporated an identical payment on 22 December 2016. The Union submitted that lesser payments had been made in 2014 and 2015. The Complainant sought an order for a payment of €2,488 in unpaid wages. The Union had sought to resolve the situation in advance of the hearing but had been unsuccessful. The Complainant had repatriated to Poland in January 2019.

IN referring to the non-payment of the anticipated bonus, the complainant contended that he had been penalised by the respondent as he had advanced a case under PIAB. He understood that the bonus was paid on 14 December 2018. The Complainant undertook to send in any details he had in relation to this payment.

The Complainant recalled that he finished night work on Monday morning, December 17 ,2018 and approached Human Resources to enquire as to why he had not received his habitual bonus? He was informed that the bonus was a gift at the behest of the company and he had not qualified for payment.

The Respondent outlined that the company had been in business for over 40 years and manufactured Doors and Windows. The Company employed over 1500 employees The Complainant had served three personal injury claims on the Respondent, the most recent at the latter end of 2018. This concerned the Respondent as the company carried its own risks.

The Respondent, in disputing the claim, confirmed that bonus was paid to some employees, but not all. The Complainant had not been singled out and Mr A, Managing Director was the final decision maker. The discretionary bonus was paid to employees on December 22, 2018.

The Respondent submitted that the complainant had no contractual entitlement to payment of a bonus in 2018, a copy of the contract of employment was exhibited.

The Respondent practices an absolute discretion in paying bonus to qualifying employees at year end. To qualify for consideration, employees had to be in employment on the payment date and been in employment throughout the full calendar year. In exercising their discretion in each case, the beneficial owners considered a range of factors relating to each employee personally.

Reception of bonus was contingent on an employee being in active employment. The Complainant had tendered his resignation on 23 October, with a leaving date of December 21, 2018.

In relying on Bord Gais Energy Ltd and Niall Thomas PWD 17/44, November 2017, the Respondent representative contended that the Labour Court recognised that that active employment was a requirement of the bonus scheme payment scheme. The complainant in that case was unable to satisfy that criteria and could not secure a bonus payment.

The Respondent was not obliged to pay the 2018 bonus the complainant and it was not properly payable under the Payment of Wages Act, 1991.

The Respondent re-affirmed that the respondent held absolute discretion on bonus payments. Bonus was not paid to employees not considered to be in good standing with the company. Having previously lodged a Personal Injury Claim against the company, the Complainant has since lodged two more personal injury claims in late 2018. The Complainant was not deemed to be in good standing with the company and on that basis had ruled himself out of active consideration for bonus payment for 2018.

The Respondent disputed any contended breach of the Payment of Wages Act, 1991.

I have taken some time to consider both presentations, written and oral in this case. I have considered the contract of employment pro-offered and the copies of the pay slips from 2016 and 2017.

The Complainant has submitted that denial of his habitual bonus constituted an illegal deduction in his wages. This has been completely disputed by the Respondent who argued that the complainant was firmly outside the realm for consideration of payment of a discretionary bonus on tenure, live employment and good standing grounds.

Section 1 of the Payment of Wages Act,1991 provides that:

“wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

(a)    any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise,

I have taken some time to consider the circumstances surrounding payment of bonus at the company. I had difficulty accepting that the bonus could be viewed as a gift as it is recognised as “wages “in Section 1 of the Act and I noted that the 2016 and 2017 payments were subject to statutory deductions as listed on the pay slips. This separates the payment from a “gift “.

I asked the complainant how he had identified his intended termination date? He told me that he structured his leaving date with the “shut down “date for Christmas 2018. Nobody had flagged that he was not to be considered for the bonus payment, neither did he exercise a formal appeal of the decision.

The Respondent accepted that bonus was not expressly delineated on the contract of employment dated May 2002.

I noted that Rate of Pay was drafted as €400 weekly in arrears (upwardly aligned in the interim). Accommodation and Transport was provided. The Company closed for two weeks in Summer and two weeks at Christmas.

Both parties accepted that the bonus was paid annually. However, the Respondent qualified this by expressing that it was not a universal application and was always subject to a universally understood criteria. The Respondent held an over arching discretion in its application.

It was very difficult for me in the absence of drafted contractual terms to understand this criterion. This is where the case differed from Bord Gais, where both parties accepted a stated criterion was in being. In the instant case, the contract was silent on any contractual term relating to bonus. I had to rely on the evidence adduced by the parties to guide me further.

The Complainant stated that he was paid bonus annually at the same time. It was not prefaced by conversation or discussion and he understood everybody received it. The Complainant stated that the bonus was paid on 14 December 2018. The Respondent stated that it was paid on December 22.

The Respondent has asked that I consider the Rights of the Respondent to exercise a rightful discretion in the application of the bonus and in this case the decision taken in this case not to apply the bonus to the complainant.

At the outset, I must express my opinion that the contract would have been of greater benefit in this case had it been graced by a contractual term on bonus. In the absence of an express term on bonus I have considered the discretion exercised by the Respondent in this case and balance it with the Complainants evidence on receiving sequential bonus payments .

I did not have the benefit of any documentation which linked payment of bonus to live employment , full years’ service and   recourse to litigation against the respondent .Instead I had two pay slips which pointed to a full award of bonus in 2016 and 2017 .In Boston Scientific Ireland ltd and Trevor Cotter PWD 1919 , the Labour Court identified a Test on payment of discretionary bonus by analysing the exercise of discretion through the mechanism of whether the discretion had been applied in an” unfair, unreasonable and capricious manner ?”

In Cleary and Others and B and Q Ireland ltd [2016], Mc Dermott J in the High Court found that a retrospective bonus payment had been earned by a group of employees who had enjoyed stratified seasonal bonus payments.

I have considered both cases in application to the facts of the instant case. I appreciate that compiling and preparing a bonus payment for a potential 1500 target audience is a mammoth task. The quantum of the bonus in 2016 and 2017 was a generous amount from any employer. However, I must now consider whether the complainant had a legitimate expectation to receive a bonus payment in 2018 and whether the exercising of the Respondent discretion entered the realm of the test advanced in Boston Scientific?

I note that the complainant timed his intended departure to the two-week Christmas shut down, which appears to have commenced on December 21. The Respondent disputed that the complainant had raised the issue on December 17. The Respondent also submitted that the complainant was on sick leave during the last week of his employment. The Complainant was a long server at the company and I accept that he had a legitimate expectation based on the sequential nature of past bonus payments made to him to look towards Christmas 2018 in the same vein as Christmas 2016 and 2017. I must follow Mc Dermott’s reasoning that he had earned his bonus.

I now must consider the strident defence of the Respondent to this position. I was not provided with any details of how the discretion to apply or withhold the bonus was exercised. I have no idea just who declared the bonus and to what percentage of the target audience. In short, I found a distinct lack of transparency in the entire subject of the bonus payment scheme. This could be easily rectified by Policy.

I was struck by the Christmas closing date. Nobody was to work over Christmas, therefore 21 December 2018 was framed as the last working day before Christmas. It coincided with the complainants last working day. I was not provided with details of the attendance records for the complainant or the successful bonus recipients. I believe that based on the evidence adduced that the bonus pay was most likely declared on December 14 while the complainant was in active service. It may not have been paid out until some time later . I note that neither of the parties accepted my invitation to clarify the dates here .

I have reluctantly concluded that based on the balance of probabilities, the respondent made a conscious decision to omit the complainant from the round of bonus payments due to his declared intention to litigate against the company. It seemed to me that the Respondent viewed this as an act of disloyalty which automatically disentitled him to bonus.

While I have some understanding of the frustration expressed by the Respondent on this topic, I must look at this case through the provisions of Section 5 of the Act. Did the non-payment of bonus amount to a deduction in wages?

The matter of potential Personal Injury litigation is a separate and distinct matter to a bonus payment. I could not establish that the previous episode of litigation had caused a with holding of the bonus payment.

I cannot uphold the way the Respondent exercised their discretion in relation to the 2018 Christmas payment in the complainant’s case. I have found that the discretion was applied in an unfair, unreasonable and capricious manner and compounded by a vacuum of discernible transparent rules on the bonus payment.

I find that the complainant ought to have raised a formal grievance prior to referring the claim to the WRC. He was a long server and ought to have respected the company procedures.

I have identified that the complainant was entitled to receive the bonus payment. It was properly payable to him as he had earned it. I find his complaint to be well founded.

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I decide in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.

Section 6 of the Payment of Wages Act, 1991, requires that I decide in relation to the complaint in accordance with the relevant redress provisions under that Act.

I have found the complaint well founded. I order the Respondent to pay the Complainant €2,000 as reasonable compensation for the contravention of Section 5 of the Act.

Non application of bonus payment