LCR22633

FULL RECOMMENDATION

SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990

PARTIES :

EIRGRID

- AND -

470 TECHNICAL STAFF
(REPRESENTED BY UNITE THE UNION)

DIVISION :

SUBJECT:

1.Payment Of Annual Bonus and Communications

BACKGROUND:

2.This dispute could not be resolved at local level and was the subject of Conciliation Conferences under the auspices of the Workplace Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on 9 May 2022 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 15 June 2022.

UNION’S ARGUMENTS:

3. 1. The Company has breached the collective agreement with the Union and its members by making a 50% reduction in performance pay

2. The Company did not consult the Union as per the collective agreement

3. The Union is seeking the full restoration of the payments due to members and a penalty payment

EMPLOYER'S ARGUMENTS:

4. 1. Due to the COVID-19 pandemic, the Company did not achieve its objectives, resulting in the 50% reduction in performance pay

2. There is no obligation, under the collective agreement to obtain consent from unions on decisions regarding levels of performance pay

3. The company has engaged with the Union to try and resolve the matter including offering additional staff benefits

RECOMMENDATION:

The dispute before the Court relates to the payment of an annual performance-related bonus for the year 2020. The Union is seeking restoration of a 100% bonus payment for that year. In addition, it seeks compensation for delays in progressing the dispute. The Company rejects the claim.

The Company-Union agreement states that “key company objectives will be communicated to staff annually and regular updates on the status of these objectives will be communicated periodically”.

The Union submits that the Company breached that agreement by failing to adequately communicate to staff about the status of key company objectives. The agreement further states that “...if in any year there are indicators that the key company objectives may not be achieved then the overall bonus budget may be adjusted following consultation with the GOU”. The Union submits that the Company did not consult the Union about the bonus budget until November 2020, when a decision had already been taken to reduce the budget by 50%. It submits that communications were inconsistent and did not give members any expectation of the likelihood of a reduction in performance related pay.

For its part, the Company submits that it adhered fully to the terms of the collective agreement and communicated extensively with the Union over the course of 2020. In November 2020, the Union was briefed on the decision to reduce the level of bonus pay-out.

The Union did not accept that decision. It was subsequently provided with a detailed response, addressing both the extent of communications from the Company and the substantive reasons for the bonus reduction.

There is no obligation under the collective agreement or otherwise to obtain consent in advance of a decision to pay a bonus in any given year. The decision to pay (or not to pay) a performance related bonus lies solely with the company and is subject to normal governance arrangements, including Executive recommendation and approval by the Board Remuneration Committee and Board of Directors. It submits that the Union was well aware of the challenges throughout the year and the potential impact that this could have on the discretionary bonus payment.

The Court has given careful consideration to the oral and written submissions made by both parties.

The core issue in dispute is the level of consultation by the Company with the Union about a 50% reduction in the annual performance related bonus for employees in 2020.

The Union fully accepts that the Company has discretion over setting the annual bonus budget. Furthermore, the Union acknowledged to the Court that certain key company objectives were not met and that, in those circumstances, the Company was not necessarily obliged to pay out a 100% bonus payment. However, it submits that the Company’s failure to adequately consult meant that the Union was denied an opportunity to influence the outcome or submit a counter proposal, as a decision was already made.

Its members had no expectation that bonus earnings would be reduced, as payments had been made in the past when objectives were not met.

The Company refutes that it breached the collective agreement and submits that it fully consulted with the Union in November. The Union objected to the decision to reduce the bonus pay out but did not submit any counter proposal.

The Company subsequently responded to the Union in December 2020 addressing the issues raised about the extent of communications and the substantive reasons for the bonus reduction.

It is clear to the Court that the dispute before it arose as a result of the level of consultation between the parties regarding the implications of failing to meet key company objectives on the level of pay-out under the annual performance related bonus. Having listened carefully to the parties, the Court cannot say that the engagement that took place between the parties could be considered to be a breach of the Company/Union Agreement, as consultation did take place between the parties.

Furthermore, an obligation to consult does not provide the party to be consulted with a right of veto. However, it does require that the Company consult with the Union in good time so as to provide the union with an opportunity to put forward its views on what is proposed in order to allow real and constructive input into any decision-making process.

In this regard, the Court notes that both parties at the hearing emphasised to the Court that they are open to review communications on matters generally to ensure more effective consultation between the parties into the future.

Having regard to all of the circumstances, the Court recommends that the parties engage to review their communications generally and in particular with a view to give meaningful effect to the wording provided in the collective agreement.

The Court further recommends that the offer made by the Company at the WRC of one day’s additional paid holiday as a one-off gesture of goodwill be reinstated.

During the course of the hearing, the Court was made aware of disagreement between the parties about the operation of the normal dispute resolution procedures in the Company. The Court is of the view that the parties may benefit from engagement to clarify and ensure that those procedures operate as intended by both parties.

The Court so recommends.

NOTE

Enquiries concerning this Recommendation should be addressed to Orla Collender, Court Secretary.