Complainant

Respondent

Parties

Gabriel McCabe

AB Group Packaging Ireland Ltd

Complainant

Respondent

Anonymised Parties

n/a

n/a

Representatives

The Complainant attended in person and was not represented

Ms. MP Guinness BL on the instructions of Ms. Elizabeth Ryan, Solicitor, Mason Hayes and Curran 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-00038927-001

28/07/2020

The Complainant was employed by the Respondent as Operations Manager from 17 October, 2011 until 12 May, 2019 when his employment was terminated by way of redundancy.

The Complainant claims that he has an outstanding contractual entitlement to a bonus payment amounting to €11,272 arising from his employment with the Respondent. The Complainant claims that the Respondent has failed to make this payment and that this constitutes an unlawful deduction from his wages contrary to Section 5 of the Payment of Wages Act, 1991. The Respondent disputes the claim in relation to the bonus payment and contends that no unlawful deductions were made from the Complainant’s wages arising from his employment contrary to the Act.

The Respondent submits that the WRC does not have jurisdiction to inquire into the Complainant’s claim under the Payment of Wages Act, 1991 in circumstances where he signed a written severance agreement on the termination of his employment waving any future claims against the Respondent. The Respondent contends that the Complainant signed a Severance Agreement on 9 August, 2019 after taking legal advice from his solicitor which specifically precluded him from initiating the within proceedings.

The Respondent submits that the following clauses in the Severance Agreement which expressly precludes the Complainant has compromised his entitlement to maintain the claim comprised in the within proceedings, namely:

Clause 3.1 stated that the agreement was “…. In full and final settlement, satisfaction, release and discharge of any and all claims, actions or causes of action, suits, complaints, contracts, liabilities, agreements, promises, debts or damages, whether existing or contingent, known or unknown, and whether arising under statute, common law (including personal injury), equity or otherwise arising out of the Employee’s employment with the Company …. “.

Clause 3.2 stated that “It is acknowledged by the Employee that the reference to statute in clause 3.1 above includes but is not limited to the Redundancy Payments Acts 1967 to 2014; the Unfair Dismissals Acts 1977 to 2015; the Payment of Wages Act 1991 ….”.

Clause 8.1 stated that “The employee acknowledges that he has taken legal advice from [XXX Solicitor] on and understands the effect and implications of this agreement and part thereof. The Employee fully acknowledges that he has entered into this agreement without any coercion of any description”.

The Respondent disputes the Complainant’s contention that any contractual entitlement which may have existed in relation to the payment of a bonus supersedes the application of the terms of the Severance Agreement by virtue of the inclusion of Clause 6.1 in the agreement. Clause 6.1 reads as follows: “This agreement contains the whole agreement between the Parties hereto relating to the transactions provided for in this agreement and supersedes all previous agreements (if any) between such Parties in respect of such matters, except those provisions of the Employee’s contract of employment which are expressly stated to survive the termination of his employment ….”.  

In summary, the Respondent submits that that Complainant is bound by the terms of the Severance Agreement and the WRC does not have jurisdiction to inquire into his complaint under the Payment of Wages Act 1991.

The Respondent relied upon the following cases in support of its position on this matter, namely: A Customer Success Guru -v- An Ecommerce Company ADJ-00020068 and Dept. of Foreign Affairs -v- Geraldine Higgins UDD1969.

The Complainant submits that he had a contractual agreement with the Respondent under which he was entitled to receive a profit share bonus in the amount of 5% of the Group adjusted profit. The profit share was to be paid within two months of the financial year end under the terms of the contract. The Complainant submits that there was a further term in his contract which stated that “Should your employment terminate during the Company Financial year for reasons other than those which justify summary dismissal, then within two months of the end of the Company Financial Year the profit share would be paid on a pro-rata basis of time employed during the Company Financial year just ended”.

The Complainant submits that he received notice of the termination of his employment by reason of redundancy on 12 November, 2018 and that his date of termination of employment was 12 May, 2019. The Complainant submits that the Company’s financial year ends on the last day of February each year, so in the financial year ending February, 2020 he was employed by the Respondent for 73 days giving him and entitlement to 73/365 of the Annual Profit to be paid on 30 April, 2020. The Complainant submits that he contacted the Respondent by letter dated 2 June, 2020 to seek payment of his outstanding bonus entitlement. However, the Respondent by return letter dated 17 June, 2020 indicated that the calculation of his bonus should be based on the profits generated in the months that he was employed in the 2019/20 financial year rather than the entirety of the year. The Complainant submits that the Respondent calculated his bonus for these months on the basis of 73/92 (being three months) of the total profits which amounted to €1,846.07 which was subsequently paid to him. The Complainant contends that the Respondent miscalculated his bonus and that there is an outstanding payment of €11,272 due to him arising from his employment with the company. The Complainant claims that the failure by the Respondent to make this payment and constitutes an unlawful deduction from his wages contrary to Section 5 of the Payment of Wages Act 1991.

In response to the preliminary objection raised by the Respondent in respect of the Director General’s jurisdiction to adjudicate on the instant complaint, the Complainant disputes the contention that he is precluded from pursing the complaint under the Payment of Wages Act, 1991 as a result of signing the Severance Agreement following the termination of his employment.

The Complainant submits that he had a contractual entitlement to payment of the bonus and that such entitlement was specifically excluded from the terms of the Severance Agreement by virtue of the inclusion of Clause 6.1 in the document. Clause 6.1 reads as follows: “This agreement contains the whole agreement between the Parties hereto relating to the transactions provided for in this agreement and supersedes all previous agreements (if any) between such Parties in respect of such matters, except those provisions of the Employee’s contract of employment which are expressly stated to survive the termination of his employment ….”. 

The Complainant submits that he received legal advice from his solicitor to the effect that the entitlement to this bonus payment would not be compromised by virtue of signing the Severance Agreement. The Complainant contends that the Respondent clearly shared the same interpretation of the provisions of Clause 6.1 on the basis that the company made partial payment to him in respect of his bonus entitlement after the Severance Agreement was concluded between the parties.

The first issue that I must decide relates to the jurisdictional issue raised by the Respondent as to whether the Complainant has compromised his right to maintain the instant proceedings under the Payment of Wages Act 1991 on the basis of the Severance Agreement which he signed upon the termination of his employment.

In considering this matter, I note that the Severance Agreement in question was concluded between the parties by way of settlement of a number of separate complaints which the Complainant had referred to the WRC for adjudication under other employment enactments arising from his employment with the Respondent.

The Respondent submits that the Complainant signed this Severance Agreement in full and final settlement of these complaints and that the agreement also included provisions within which he agreed to waive his right to initiate any future claims against the Respondent including any claims under the Payment of Wages Act, 1991. The Complainant does not dispute that he signed the Severance Agreement on the termination of his employment. However, the Complainant contends that his entitlement to the bonus in question was specifically excluded from the scope of the Severance Agreement by virtue of the inclusion of Clause 6.1 in the agreement and therefore that he is not precluded from maintain the within proceedings under the Payment of Wages Act, 1991.

In considering this case, I have taken into account of the High Court judgment of Smyth J. in the case of Sunday Newspapers -v- Kinsella & Anor (2008) 19 E.L.R. 53. This case concerned a severance agreement purporting to compromise entitlements under the Protection of Employees (Fixed Term Workers) Act 2003. Smyth J. held that the question of whether or not statutory rights have been compromised is a matter for the proper construction of the agreement itself and that informed consent and appropriate advice is crucial if the compromise is to be upheld. Smith J. also went on to state that where an employee is being offered a severance package he or she is entitled to be advised of his or her entitlements under the employment protection legislation and any agreement should list the various applicable statutes or at least make it clear that the same has been taken into account by the employee.

In this case, Smith J. also endorsed the dicta of the Circuit Court in Hurley v the Royal Yacht Club [1997] ELR 225 where Buckley J. set out the principles of a settlement agreement have been set out in the Circuit Court stated:  “I am satisfied that the applicant was entitled to be advised of his entitlements under the employment protection legislation and that any agreement or compromise should have listed the various Acts which were applicable, or at least made it clear that they had been taken into account by the employee. I am also satisfied that the applicant should have been advised in writing that he should take appropriate advice as to his rights, which presumably in this case, would have been legal advice. In the absence of such advice I find the agreement to be void.”

In applying these principles to the circumstances of the instant case, I am satisfied that firstly as a matter of construction, the severance agreement concluded between the parties was intended as full and final settlement of any existing and potential claims arising from the employment relationship between the parties including a complaint under the Payment of Wages Act, 1991. In this regard, I have carefully examined the content of the Agreement and I am satisfied that the provisions of Clauses 3.1 and 3.2 specifically preclude the Complainant from initiating any future complaint against the Respondent under a wide ambit of stated employment enactments including the Payment of Wages Act, 1991.

Secondly, I am satisfied that the Complainant obtained legal advice from a solicitor in relation to the implications and effect of the agreement and was financially facilitated in doing so by the Respondent, as part of the terms of the agreement. In the circumstances, I find that there was fully informed consent on the part of the Complainant and that there was not any undue influence or coercion applied on him by the Respondent to sign the Agreement during the course of negotiations in relation to this matter.

Thirdly, I cannot accept the Complainant’s contention that the provisions of Clause 6.1 of the Agreement have the effect of allowing him to pursue the within proceedings under the Payment of Wages Act, 1991 in respect of any outstanding bonus payment entitlements. As already stated above, I am satisfied that the Complainant’s rights to initiate any complaint against the Respondent under this enactment has been specifically precluded by virtue of the provisions of Clauses 3.1 and 3.2 of the Severance Agreement. Furthermore, I wish to note that I do not have any authority or jurisdiction as an Adjudication Officer to adjudicate upon matters which fall outside of my statutory remit including disputes concerning the enforcement of contractual obligations between the parties.

Having regard to the foregoing, I find therefore that the Severance Agreement as signed by the parties compromises any claims the Complainant has arising from his employment with the Respondent under the Payment of Wages Act, 1991. Accordingly, I find that I do not have jurisdiction to inquire into the within complaint.

I find that the severance agreement as signed by the parties compromises any claims the Complainant has under the Payment of Wages Act 1991. Accordingly, I do not have any jurisdiction to inquire into any complaint made by the Complainant under this enactment.

Jurisdiction – Severance Agreement – Settlement - Complaint Compromised