Complainant

Respondent

Anonymised Parties

A manager

A medical Services Company

Representatives

Self.

Shane MacSweeney MacSweeney & Company Solicitors

Act

Complaint/Dispute Reference No.

Date of Receipt

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

CA-00035485-001

28/03/2020

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

CA-00035682-001

14/04/2020

The Complainant commenced work in the role of Business Development Manager with the Respondent on 16 th September 2019. Her employment terminated on 25th February 2020.

This complaint was received by the Workplace Relations Commission on 28th March 2020.

During her recruitment process a verbal agreement of a bonus payment of €3,000 per quarter was agreed with the CEO on behalf of the company. This was an implied term, much as was the company’s request that Business Development Manager and not Business or Operations Manager be detailed as her contractual role to enable the procurement of partial funding from a state agency.

The duties for the position were clearly set out as Operations.

The XXX project was successfully delivered and completed by mid-December 2020. In January the Complainant approached the CEO for the inclusion of the bonus in her January payroll and to discuss KPIs for Q1 2020 bonus.

Several conversations and meetings on this and other opportunities within the company, mainly the direction that she led the sales division. The bonus value was never refuted, but the deliverables and ‘the Boards’ opposition to paying it was.

The Complainant received many excuses and reasons as to why the bonus could not be paid, each time after discussion the CEO offered to revert to the board, each time a new reason for non-payment was returned.

The Complainant draws attention to an email she received from the CEO in March 2020 regarding said bonus (it is noted that the Complainant’s employment ended on 21st February 2020):

“For what it’s worth, the business is not in a position to pay (and will not pay) bonuses to any member of staff and it is absurd to suggest that you might somehow have an entitlement to payment of same”

It was not until March 26th when receiving the above mentioned email that the Complainant realised that the excuses from the CEO were all to camouflage the fact that the Company had never any intention of paying this bonus.

In relation to a bonus payment for 2020 the Complainant made several attempts to engage with the CEO and agree some criteria and KPI’s for future bonus payments. It was during these attempts that the CEO suggested that the Complainant change her role from an operational one to one with a focus entirely on direct sales. The Complainant asked for the detail in writing to enable her think about this proposal. The Complainant contends that the CEO sought to press her into sales to create an impression that they had a strong sales pipeline for an imminent board meeting. The Complainant stated that she was not comfortable “making up” sales leads as she felt that in future the CEO and/or the board would blame her for achieving these figures. The Complainant, against her better judgement, conceded and accepted the role. The Complainant’s role in leading the sales effort was a temporary one and this was agreed with the CEO.

On Tuesday 18th February 2020 the Complainant was approached by the CEO who asked her to walk to the train station with him as he had to catch a train. During this walk the Complainant was informed that due to budgetary constraints, lack of ongoing projects and a lack of an immediate pipeline her employment was being terminated with immediate effect. Later that evening the Complainant received an official letter of termination with no reasons outlined.

Background.

The Complainant commenced work in the role of Business Development Manager with the Respondent on 16th September 2019. Her employment terminated on 25th February 2020. Accordingly, she was employed by the Respondent for a total of23 weeks and 1 day.

She was paid a basic salary of €5,416.66 per month, equivalent to €65,000 per annum. making her (then) the second highest paid employee of the Respondent.

The Respondent company was incorporated in November 2011 and currently employs a total of 6 staff.

The company is loss-making, with losses carried forward (to date) more than€1,000,000. Losses fell from €200,000 in 2019 to €40,000 in 2020. Its continued survival is dependent on the support of a private investor.

It is principally concerned with the provision of cloud-based technology infrastructure for large scale medical programmes. In addition, it provides some professional services, in the nature of screening programmes, health assessments, vaccine roll-out and testing. which is done both on a once-off/ad hoc and recurring basis.

Prior to her employment with the Respondent, the Complainant had been employed as a General Manager with a Dental Practice (until September 20 I 8) and had subsequently established her own business, which assists dentists with practice management.

Despite what is suggested in the Complainant's submission (and whilst this is not directly on point), it is worth noting that she continued to operate this business whilst employed with the Respondent and it was on that basis (and to allow her to continue to operate that business), that she was provided with flexible working hours.

In pre-employment discussions, she indicated that her salary expectations were €80.000 per annum (on the basis that she had earned this sum when employed in the GM role in 2018) and she claimed that she "needed" to earn €75,000 per annum.

The role ultimately carried a salary of €65,000, however the Respondent CEO suggested that subject to the achievement of certain key performance indicators, which would need to be discussed and agreed, the Complainant could earn up to an additional €10,000 by way of discretionary bonus on an annual basis.

There was no discussion around the specific criteria that might apply. other than the duties which were outlined in some detail in Schedule I to the (unsigned) Contract of Employment. The Respondent CEO indicated that the subject would be re-visited alter she had spent some time working and therefore, had a familiarity with the workings of the business and in particular, where her contribution could be recognised. In this respect, the parties would be better equipped to agree proper parameters for any bonus scheme at that juncture.

Therefore, the finer detail of how / when a bonus might be declared or awarded was left open-ended, on the basis that the parties envisaged that they would negotiate the terms in due course.

Neither THE Respondent CEO nor the Complainant envisaged that they would part company so quickly (after just 23 weeks) and ultimately, the parties never in fact agreed the hard parameters of a bonus scheme.

Notwithstanding this, it will be observed that THE Respondent CEO did attempt (without success) to agree parameters before the Respondent (ultimately) elected to terminate the Complainant's employment.

Specifically, it was never agreed, as is now asserted, that the Complainant would be paid a bonus of €3,000 on completion of the XXX project successfully or otherwise.

The Contract of Employment tendered on 13 th September 2019 specifically leaves the issue of the bonus structure and criteria open-ended - reflecting the inconclusive nature of the discussions. It is patently clear from same, that the scheme would have to operate in accordance with criteria that had not at that juncture been agreed.

If as is suggested, the bonus was firmly agreed and non-discretionary, then the written Contract of Employment would have reflected as much and/or at a minimum, the Complainant herself would have specifically queried this issue and would have challenged the apparent failure on the part of the Respondent to correctly document and record the terms allegedly "agreed". In this respect, it is noted that the Complainant is a strong and assertive character, who is an experienced manager and concurrently self-employed in her own business.

It is submitted that no such query or challenge was raised, precisely because no such agreement or commitment was ever actually reached. To that end, the discussions were aspirational and non-binding.

Quite apart from this (and as a secondary point), even on the Complainant's own version of events (which is disputed), a bonus would only have become payable on "successful" delivery of the XXX project and as will be observed below, the Respondent provided mainly negative feedback to the Complainant on the project and ultimately, elected to part company with her in its aftermath.

Contract of Employment.

As noted above, the Contract of Employment presented to the Complainant was never signed nor returned by her.

At clause 5.5, there is provision for payment of a "bonus" which reads as follows:

"A bonus will he paid in addition to the basic salary and this will be agreed with the employee in the first three months. "

In the event, the Complainant neither signed, queried nor returned the tendered Contract of Employment and the parties never "agreed" the amount, scope or criteria applicable to the awarding of a bonus.

In fact, it appears that the failure / refusal on the part of the Complainant to execute the Contract of Employment was deliberate. insofar as   it is noted that the Complainant remarks in her submission that "she never formally accepted the new role primarily because [she] had been assured not only al [her] interview that a Sales Director   was being sourced in  the company, but also a number of times since, and was concerned about accepting a role with sole responsibility for the targets that had been outlined”.

Therefore. the Complainant expressly avoided executing the Contract of Employment, as she didn't wish to accept, inter alia, the scope of the duties assigned to her. against which she envisaged that her performance would be measured. Despite this, she never raised any issue, either formally or informally. In this respect, it is submitted that the Complaint's behaviour can best be described as coy.

Subsequent Developments

Upon the Complainant's commencement with the Respondent, she was initially given responsibility for an important contract which the Respondent had won.

Ultimately, whilst the project was delivered, there were multiple issues with it and the Respondent did not retain the customer as a client.

The Respondent recruited an assistant "coordinator" to assist the Complainant on delivery of the project. Despite this, she was incapable of managing the project efficiently and it became a significant drain on the Respondent's overall resources requiring hands-on involvement from other members of the Respondent's team, including the CEO.

Moreover, as part of the project, the clients were to receive reports, but ultimately, much of the data contained in the reports tendered was inaccurate and reports were left incomplete for a substantial number of those members' employees. The Complainant appears to accept in her complaint form/submission that there were issues/concerns with the project delivery, but she blamed the Respondent's "system" and further laid blame on a part-time student resource having delegated data analysis to her, despite the fact that the student had been employed to assist the Complainant, with the project.

Ultimately, this proved very embarrassing for the Respondent and as noted, the client was not ultimately retained.

By early December 20 I 9, the project had concluded, albeit the administrative end (in terms of report delivery) remained outstanding post-Christmas.

On 20th January 2020, the Respondent CEO had a two-hour meeting with the Complainant, where he sought to discuss the parameters of the bonus scheme that was being offered to the Complainant, which would be tied to sales/turnover and overall company performance. He had concerns with respect to her operational capabilities, considering the issues which arose during the XXX project and her resistance to accepting that there was any fault or failing on her part, in terms of its execution and delivery.

It had always been envisaged she would fulfill a business development role of which sales/ turnover growth are an unavoidable and important component. At the meeting on 20th January 2020, the CEO signalled that he wanted to put in place a bonus scheme, pursuant to   which the Complainant would   commit to a sales/turnover growth   target of €500,000 over a 12-month period, with scope to earn a bonus of up to €25,000 on achieving same (and less than   that, if sales figures were less significant - e.g. growth   of €200,000 would signal a bonus of € I 0,000).

He indicated that a bonus could only be payable against hard measurable sales/ turnover targets. The Complainant proved inflexible and wholly resistant to the notion of hard targets and signalled that she didn't see herself as having a "sales" role but rather, she considered her role to be "operational". It was suggested that a target might be a "team" target for herself and sales lead generator, but again, this was not appealing to the Complainant.

The Respondent CEO had a subsequent 2-hour review meeting with the Complainant on 29th January 2020, to offer feedback on the XXX project and to discuss the Complainant's request/ expectations in relation to payment of a bonus. He sought to measure her performance against the duties set out in her Contract of Employment and to offer a rationale for the non-awarding of the bonus which had been requested.

Excluding the XXX Project which had been the Complainant's principal area of focus since commencement of her employment, the Complainant's work was reviewed, with mainly negative feedback provided under a range of other task/performance headings.

The Complainant ultimately was very inflexible in her demeanour and was unwilling to accept responsibility for her part in the issues/concerns that arose from the XXX project roll­ out.

Overall, the review was negative and the CEO signalled that for the Complainant to earn a "bonus", she needed to achieve clear targeted sales criteria, He indicated that the Complainant would not be awarded a bonus for Q4 20 I 9,

As noted by the Complainant, the CEO’s demeanour had changed in the period since she was first recruited, and he decided (and ultimately, this is the function of the probationary period), that she was not a good fit for the business and he notified her of the termination of her employment by letter dated I 8 th February 2020.

Relevant legal authorities

Section 5 of the Payment of Wages Act, 1991 provides, in part:

5.-(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless-

a)      the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

b)      the deduction (or payment) is required or authorised to be made by virtue of any term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

c)       in the case of a deduction, the employee has given his prior consent in writing to it.

This is the section on which the Complainant relies in support of her claim.

In this respect, the then President of the High Court, Finnegan J. emphasised in Dunnes Stores (Cornelscourt) Limited v Lacey [2007/ I IR 478 that it is essential in evaluating claims under the 1991 that [an Adjudication officer] determines what is “properly payable'' to an individual employee.

In this respect, it is accepted that the non-payment of a bonus that had been calculated and awarded or declared could amount to a "deduction" within the meaning of Section 5. However, that is not what we are concerned with here, as no bonus was in fact awarded or declared and no bonus is therefore "properly payable".

The nature of a Bonus

The Oxford Dictionary defines a "bonus" as:

"A payment or benefit in addition to what is usual or expected".

It is axiomatic that the Complainant was not entitled to payment of a bonus just for working, as if that was so, there would be little point in distinguishing between a bonus and basic salary.

In the present instance, the parties envisaged (as they often do) at the outset of their relationship that they would have a long and fruitful working relationship with one another. Ultimately, the relationship came to a mutually unhappy conclusion. just 23 weeks after it commenced.

The Contract of Employment, which the Complainant deliberately chose not to sign, envisaged the parties agreeing the parameters of a bonus scheme, within a period of 3 months. Ultimately, it was in the fourth month of employment that the parties commenced that discussion and ultimately, it lead to the breakdown of their relationship.

Overall, the parties had what by any standards amounts to a very short employment relationship.

There was no history or precedent of bonus calculation or award which the Complainant can point to, as commonly occurs in most "bonus" cases coming before this forum.

Instead, she agitates for the most benign possible interpretation of remarks which she alleges were made in a pre-employment discussion, overlooking the terms of the written agreement as presented to her.

The Complainant claims an entitlement to a bonus totalling €5,000. This is a figure that she herself has "declared" in her own favour. She claims in the Complaint Form that in salary negotiations the Respondent had "agreed" to offer a bonus of €3,000 every 3-month period, measured on KPls. This is disputed and, in any event, not reflected in the written agreement.

However, her claim contrasts (in any event) with her assertion in the Submission that her salary was "€65,000pa + quarterly bonus scheme (to take me to required earnings of' €75.000 + pa)", inferring that she envisaged the bonus potentially adding €10,000 per annum to her earnings, equating to €2,500 per quarter.

The Complainant claims that per her own account of the discussions, a "full" €3,000 bonus should be awarded to her for Q4 2019. She claims an additional sum of €2.000, on the basis that she believes she should have been awarded a full pro-rata QI 2020 bonus, even though even on her own submission, she was absent on from 13th February and to that extent, worked for just under 50% of the quarter in question.

The Complainant accepts that the bonus calculation methodology is not provided for in her Contract of Employment, but further acknowledges that she did not query this at the time her Contract of Employment was presented to her. It is submitted that this was the appropriate time to raise any issue, query or concern and it is submitted that she chose not to do so because no firm legally binding commitment had in fact been "agreed".

It is submitted that far from reflecting an "agreed" understanding of how any bonus scheme might work, the wording of the Contract of Employment reflects the fact that the parties had yet to agree an actual methodology. Moreover, it is submitted that if this was genuinely disputed by the Complainant, she would have immediately sought clarification on the criteria for awarding a bonus at that juncture.

The fact remains that no bonus was ever declared nor awarded to the Complainant and in fact, she was informed that she had not earned a bonus for Q4 2019, in response to her request.

The awarding of a bonus (or otherwise) is a matter that was entirely a matter at the discretion of the Respondent. There was no automatic entitlement to payment of a bonus and the Contract of Employment as presented reflects this.

As noted above, it cannot sensibly be argued that the Complainant would be awarded a bonus just for working, as if that were the case, the bonus and salary would in  essence amount to the same thing.

Whilst no bonus was awarded or declared, even if a clear scheme for assessment had been agreed, the Respondent's subjective view of the XXX Project roll out and the Complainant's stewardship thereof was negative -as communicated to her. Again, for good or for ill, this is a matter which is exclusively reserved to the Respondent's subjective evaluation of the work undertaken and it could never be compelled to award a bonus or, for that matter, to award it in the precise terms and sums, as claimed.

Conclusion

The Respondent submits that the within complaint is wholly without foundation and unmeritorious.

The Respondent further submits that no findings should be made in favour of the complainant on the basis of the facts as outlined.

There were many things said at this hearing that cannot be considered under the Payment of Wages Act, 1991. I have only taken consideration of what can be considered under this legislation.

In considering this complaint I have read the submissions and listened to what the parties have said at the virtual hearing of the complaint. In relation to the contract offered by the Respondent I note that clause 5.5 relates to the payment of a bonus:

Claus 5.5 of the contract offered to the Complainant reads as follows:

A bonus will be paid in addition to the basic salary and this will be agreed with the employee in the first three months.

At no point was the bonus referred to as ‘discretionary’ as presented in the Respondents’ submission. The onus on reaching an agreement on what would be considered under the heading of a bonus, I believe, sits with the Respondent. In this instance the Respondent has failed in this task.

I further note that the Complainant clearly states (in her submission):

·       During my recruitment process a verbal agreement of €3,000 per quarter was agreed with the CEO on behalf of the company.

·       The XXX project was successfully delivered and completed by mid-December 2020.

·       In January I approached the CEO for the inclusion of the bonus in my January payroll and to discuss KPIs for Q1 2020 bonus.

·       We had several conversations and meetings on this and other opportunities within the company, mainly the direction that I lead the sales division. The bonus value was never refuted, but the deliverables and ‘the Boards’ opposition to paying it was.

·       I received many excuses and reasons as to why the bonus could not be paid, each time after discussion the CEO offered to revert to the board, each time a new reason for non-payment was returned.

(It should be noted that points not under the Payment of Wages Act, 1991 have been removed.)

There can be little doubt that the Complainant raised the subject of a bonus on more than one occasion with the Respondent CEO and on more than one occasion she was informed by him that he would revert to the Board. The Respondent CEO was present at the hearing of the complaint and refuted none of this.

By email dated 26th March 2020 the CEO stated to the Complainant:

A “bonus” payment by its very nature is a reward for performance, results, goal achievement etc. and used as a staff retention tool. Regrettably, our employment relationship was not sustained for long enough for a bonus plan to be agreed with you and self-evidently, if we as a business hadn’t the confidence to retain you as a member of staff, we certainly didn’t view your performance as having merited any form of reward.

Put simply, you have neither earned nor been awarded a bonus.

For what it’s worth, the business is not in a position to pay (and will not pay) bonuses to any member of staff and it is absurd to suggest that you might somehow have an entitlement to payment of same.

I find this strange bearing in mind that he had issued the contract to the Complainant and had engaged with her on more than one occasion of the subject of bonus.

The representative for the Respondent quotes in his submission:

In this respect, the then President of the High Court, Finnegan J. emphasised in Dunnes Stores (Cornelscourt) Limited v Lacey [2007/ I IR 478 that it is essential in evaluating claims under the 1991 that [an Adjudication officer] determines what is “properly payable'' to an individual employee.

In this instance I find that the Complainant has justified why she has an expectation to a bonus payment for Quarter 4 of 2019. I now decide that a bonus payment for this period is properly payable and order the Respondent to make a gross payment of €3,000 to the Complainant.

The bonus offered to the Complainant was an amount per quarter. The Complainant was not employed for the entirety of Quarter 1 of 2020, there can be no question of a bonus for this period.

In this instance I find that the Complainant has justified why she has an expectation to a bonus payment for Quarter 4 of 2019. I now decide that a bonus payment for this period is properly payable and order the Respondent to make a gross payment of €3,000 to the Complainant.

The bonus offered to the Complainant was an amount per quarter. The Complainant was not employed for the entirety of Quarter 1 of 2020, there can be no question of a bonus for this period.

Payment of the amount specified should be made within 42 days from the date of this decision.

Payment of Wages Act, 1991.