Complainant

Respondent

Parties

Danijel Jancikic

Tifco Limited

Representatives

Represented himself 

Lisa Moloney, IBEC

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-00051417-001

30/06/2022

The complainant commenced employment with the respondent on October 29th 2019 as a food and beverage assistant.  Two years later, he was promoted to the role of food and beverage supervisor.  He earned €542.30 per week.  He left his job on June 17th 2022, having given two weeks’ notice.

In November 2021, the respondent entered into a contract with the Department of Children and Youth Affairs to provide accommodation to refugees in accordance with the government’s International Protection Procurement Services (IPPS) contract.  On condition that they remained in employment until June 30th 2022, the respondent decided to pay employees a retention bonus.  Because he left on June 17th, the complainant was not eligible for the bonus.

At the hearing, the complainant said that, in November 2021, when the staff were informed about the international protection residents coming to stay in the hotel and the bonus to be paid to staff, they were told that the contract would end in February 2022.  In January 2022, he said that they were told that the contract would end in April, and then they were told it would end in May, and then in June.  The bonus was to be paid when the contract ended.

The complainant said that he had an offer of a new job, but he put off starting so that he would be paid the bonus.  By June 2022, however, he had to take up the offer, and on June 3rd, he resigned.  He sent a letter to three members of the management team, confirming that his last day at work would be June 17th.  He did not refer to any concern about the bonus in his resignation letter, and he did not mention the bonus to management until after he left his job.  The complainant had outstanding holidays when he gave in his notice and, at the hearing, the group HR manager confirmed that he was paid €980.87 in lieu of just under 70 hours or nine days of holidays that he had not taken before he resigned.

Following his departure, on June 23rd, the complainant wrote to the then deputy manager of the hotel where he worked, Mr Michael Masterson.  Mr Masterson attended the hearing of this complaint.  In his email, the complainant said that he was keen to receive his bonus.  He claimed that the company should pay the bonus because there was no consultation with employees when the bonus scheme was constructed and the date for payment of the bonus was changed and it was reasonable for employees to expect the exact date of payment to be provided on the notification they received.

On November 21st 2021, the management at the Crowne Plaza in Northwood, Santry, had a meeting with employees in the hotel about a retention bonus in relation to the IPPS contract.  The respondent’s submission states that the IPPS contract would not result in any change of duties to employees, but would result in a change of customers.

Correspondence included in the respondent’s submission described the purpose of the bonus as “to reward loyalty for the duration of the contract and to thank you for your continued support to facilitate this contract.”  The bonus period commenced on December 2nd 2021.  If employees remained in employment until the end of the IPPS contract, they would be paid 10% of gross wages earned since the commencement of the contract, and 5% of gross wages three months later.  

On January 28th 2022, the complainant and his colleagues received a letter from the general manager in which he confirmed that the company had been requested by the Department of Children and Youth Affairs to extend the contract until the end of June.

In a further communication to employees on March 25th 2022, the general manager wrote to employees to confirm that the IPPS contract had been extended until the end of December 2022.  He also informed staff that, for those in employment on June 30th, the company had decided on an early payment of 10% of gross wages for the period from December 2nd 2021 until June 30th 2022.  If the complainant had remained in employment until June 30th, his 10% bonus would have been worth around €1,600 gross. 

In email correspondence between the complainant and the deputy general manager after he left his job, the complainant argued that he was entitled to the bonus.  He did not suggest that his outstanding annual leave should have been used the “bridge the gap” between his end date on June 17th and June 30th, when he would have become eligible for 10% of the bonus.

It is the respondent’s case that there has been no unlawful deduction from the complainant’s wages because he was paid the wages stated in his contract of employment.  There was no deduction from the complainant’s wages as defined in section 5 of the Payment of Wages Act, where the total amount of his wages were not less than the amount properly payable to him.   

The retention bonus was due to be paid at the end of June 2020 and this was clearly communicated to the complainant on January 28th 2022.  A further communication on March 25th 2022 confirmed that the bonus would be paid “early” on June 30th, and that the contract was presumed to end on December 31st 2022.

It is the position of the respondent that, to succeed in this claim the complainant needs to demonstrate that he was entitled to receive the retention bonus; however, the terms of the scheme which were communicated to him in January and March 2022, clearly indicate that this is not the case.

The Relevant Law

This complaint was submitted under the Payment of Wages Act 1991 (“the Act.”)  Section 1 of the Act sets out a definition of Wages:

“[W]ages 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, and,

(b)  any sum payable to the employee upon the termination by the employer of his contract without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice.”

It is apparent therefore, that a bonus is included in the definition of “wages” and the failure to pay a bonus may be considered to a breach of section 5(6) of the Act:

“Where –

(a)  the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefore that fall to be made and are in accordance with this Act), or

(b)  none of the wages that are properly payable to an employee by an employer on any occasion (after making any deductions as aforesaid) are paid to the employee,

then, except insofar as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on that occasion.”

Consideration of the Complaint

There is no provision in the complainant’s contract of employment for the payment of a bonus; however, this does not diminish the nature of the commitment of the employer to pay a bonus, subject to certain terms.  The purpose of the bonus introduced in December 2021 was to encourage employees to remain working in the hotel for the duration of the IPPS contract.  It is regrettable that no document was provided at the hearing which records the intention of the employer in December 2021 and the timeframe envisaged for the bonus and the contract.  I find this unusual in the context of the very detailed documents provided to me at the hearing, and the excellent staff handbook which was included in the respondent’s book of papers.  Although the IPPS contract commenced on December 2nd 2021, the first document provided which contains a reference to the bonus was on January 28th 2022, when the employees were informed that the contract had been extended until June 30th 2022.

The complainant left his employment with the respondent on June 17th 2022, and he must have done so in the knowledge that he would not receive his bonus.  He said that he had delayed his resignation once and that, to take up his new job, he had to resign.

The circumstances in which the complainant found himself were similar to the circumstances of Mr Niall Thomas which were considered by the Labour Court in his complaint against Bord Gáis Energy Limited in 2017[1].  Mr Thomas left his job with Bord Gáis on January 6th 2017.  If he had remained in employment, he was due to be paid a bonus in February 2017, contingent on certain performance criteria.  Finding that he was not entitled to the bonus, the Labour Court Chairman, Ms O’Donnell said,

“…the Courtplaced considerable weight on the fact that the complainant’s contract sets out the eligibility requirements for payment of the PRA (performance-related allowance) and that the Complainant confirmed in evidence that he was aware that one of the criteria of the scheme required that he be in employment on the date of payment.”

Findings

The bonus developed by the respondent in November 2021 was not subject to an agreement with the employees who were being encouraged to remain in employment to service the IPPS contract.  It is apparent that the end date of the bonus was unclear at the time of its inception, and that the respondent may not have anticipated that the contract would last for more than a year.  It seems to me that it was also somewhat unclear in November 2021 what the pay-out date of the bonus would be.  This remained the situation at the end of January 2022, when the general manager wrote to the employees to tell them that the contract had been extended until the end of June, but he continuously referred to the provision to pay the 10% element of the bonus at the end of the contract.  In March, the pay-out date was solidified and the company agreed to pay 10% of the bonus to employees who were still in employment on June 30th.  It is my view that, from March 25th 2022, the complainant was aware that a condition of payment of 10% of the bonus was that he must be in employment on June 30th.  He did not ask to take the nine days holidays he had left to take on June 17th to bring him up to June 30th, and he was instead paid in lieu of those days.

Conclusion

As a retention bonus, it was necessary to a specify an end date and for employees to know they were required to remain in employment until that date.  It is my view that, on March 25th 2022, the complainant was informed that he must be in employment on June 30th 2022 to be eligible for 10% of the 15% bonus.  When he left his job on June 17th 2019, he knew that he was putting his bonus at risk.  The purpose of the bonus introduced in November 2021 was to retain employees in employment and the employer decided that June 30th was a cut-off point for payment.  While I have some sympathy for the predicament in which he found himself, and the pressure to take up a new job, I am required to adjudicate on this complaint under the provisions of the Payment of Wages Act.  I find that, in failing to pay the bonus to the complainant on June 17th 2022, the employer did not make an illegal deduction from his wages and the bonus was not properly payable.

I have decided that this complaint under the Payment of Wages Act is not well founded.

Bonus, wages properly payable