Complainant

Respondent

Parties

Connor  Bates

Tysers Ireland Limited

Representatives

  SELF.

Cian Beecher, Arthur Cox

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-00052841-001

15/09/2022

The Complainant was employed by the Respondent from 1st May 2012 until 25th June 2022. At the time of his resignation the Complainant was employed as an Insurance Underwriter.

This complaint submitted under Section 6 of the Payment of Wages Act, 1991 was received by the Workplace Relations Commission on 15th September 2022.

Evidence adduced at the hearing of the complaint was given under oath.

As an employee of Tysers Ireland (formerly Integro Insurance Brokers), the Complainant first received an annual bonus in 2019. At that time, his manager Stuart Taaffe informed him that the bonus was production bonus based on the performance of the Cavan office of Tysers (Ireland) for the year 2018.

The Complainant was informed by Stuart Taaffe of the amount he would be paid and when it was due to be paid, which would be as part of his March salary.

In 2020, he was again informed of his bonus based on the preceding year by Stuart Taaffe. This was again due to be paid as part of his March salary.

In 2021, due to the financial impact of the Covid-19 pandemic, Stuart Taaffe informed the Complainant that employees who earned a bonus of over €10,000 were being asked to split their bonus into two. The Complainant fell into this category and due to the uncertainty surrounding Covid-19 at the time, he was happy to agree to this as, even though part of the bonus would be delayed, he felt this would help the company during a time of financial uncertainty and he was worried that financial uncertainty may potentially result in him being laid off.

In 2022, he was informed by Stuart Taaffe of the amount he was due for his bonus and that it would be paid in full as part of his March salary. On the 15th of March, he also received an email from Tysers HR stating that bonuses recognising 2021 performance would be paid on 4 April ahead of the tax year end. Countries outside the UK will mirror this, dependent on payroll cut-offs. This fell into the March payroll cut-off in Ireland.

 The Complainant attached his monthly pay breakdown to show when the bonus was paid. He was not informed that his bonus was being split in 2022 and only realised after he was paid in the month of March. Upon realising that he did not receive his full bonus, he contacted Stuart Taaffe to ask why. As per Rubi Giddings (Tysers HR) email to him on 7th of October 2022, which states that his bonus is at the company’s discretion whether they paid you a bonus and when such a bonus would be paid, including whether it was in instalments, and as such consent is not required.

The Complainant accepts that his bonus was at the discretion of the Company however as per Cleary & Others v B&Q Ireland Limited (High Court, 8 January 2016) IEHC 119 which ‘noted the right of the employer to have discretion regarding bonus payments but also held that the discretion must be exercised reasonably.’

The Complainant does not feel that Tysers exercised their discretion reasonably as he was not informed that his performance based bonus for the year 2021 was going to be split. As per Finneganv J&E Davy [2007] 18 ELR 234 ‘expect as a matter of principle built up from a number of years of consistent conduct in the payment of bonuses.

All bonuses paid to the Complainant had been paid in full as part of his March salary in previous years (except for 2021 which was exceptional due to Covid-19 and where he was informed prior to payment that it was to be split), he expected that his bonus would be paid in full.

The Complainant feels this amounts to an unlawful deduction under the Payment of Wages Act.

The Company is an insurance broker headquartered in London. It employs over 1,000 people globally. Of that number, seven are employed in Ireland.

The Complainant commenced employment with Precision Underwriting (Ireland) Limited (“Precision”) as a Trainee Underwriter on 30 April 2012. On 1 June 2019, Integro Insurance Brokers Holdings Limited (“Integro”) acquired the business of Precision, such that the Complainant’s employment transferred from Precision to Integro by operation of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. In October 2020, Integro was acquired by the Company and, following an intra-group re-organisation, the Complainant’s employment transferred once again, this time from Integro to the Company.

A copy of the Complainant’s contract of employment was available at the hearing. By the time of the termination of his employment with the Company on 25 June 2022, which arose by reason of the Complainant’s resignation, the Complainant was employed as an Insurance Underwriter.

The Company’s remuneration model includes a discretionary annual bonus. The Company pays discretionary bonuses in the calendar year after the one to which the bonus relates.

The Complainant’s claim centres on the alleged failure by the Company to pay a portion of this discretionary bonus. For the avoidance of doubt, the Complainant’s claim is refuted entirely.

The third paragraph of Clause 7 of the Complainant’s contract of employment states as follows:

“On joining the Company, you will be eligible to join the Company’s bonus scheme. The Company may from time to time, and at its complete discretion, decide to pay you a bonus to reward your contribution to the business. Such payments are totally discretionary, are made without precedent, and do not form part of your contract of employment or imply any future obligation to make further bonus payments. Bonuses will not be paid to any employee under notice for the termination of his/her employment.”

A copy of the Annual Bonus Policy applicable to the Complainant’s employment (the “Policy”) was available at the hearing. The Policy was available to the Complainant via the Company’s intranet. It is important in the context of the Complainant’s claim to refer to certain provisions of the Policy, as follows:

(a)                Under the ‘Scope’ heading:

(i)                 “…an Employee will only be eligible for a bonus payment if he or she is employed within the PUI/Integro group of companies and has not served or received notice of termination of employment at the date the bonus is due for payment.” [Emphasis added]

(ii)               “There are no circumstances whether in reliance on express or implied terms or otherwise where an Employee can require (i) a pay out of a particular sum in respect of a bonus (ii) payment in a particular form or (iii) compensation for loss of a bonus.”

(b)                Under the ‘Annual Bonus Payment’ heading:

(i)                 “The actual amount of any bonus payable will be determined by Integro in its sole discretion. In determining whether a bonus is to be paid, and if so the size of that bonus, Integro may take into account such factors as it considers, in its sole discretion, to be appropriate.”

On 15 March 2022, the Company announced that discretionary bonuses in respect of 2021 would be paid on 4 April 2022.

On 24 March 2022, the Company instructed its Managing Director, Stuart Taaffe, to discuss the timing of bonuses and its terms to all employees eligible to receive discretionary bonus payments. The Company provided Mr Taaffe with talking points to communicate the change in the discretionary bonus payment structure. The talking points for employees receiving discretionary bonus payments included the following:

“Due to the magnitude of the top up bonus, anyone earning a bonus less than£10k (or equivalent currency) will receive their bonus on 4 April. Anyone earning a bonus equal or greater than £10k (or equivalent currency), will have their bonus split into 2 payments. The first payment will be 40% of the total bonus and paid on 4 April 2022, and the second payment will be 60% of the total bonus paid in September 2022.

Employees must be actively employed and have not resigned or given notice on the date of the payment to be eligible to receive the bonus payment.”

The Company was able to process the payment of discretionary bonuses to employees based in Ireland earlier than the due date for payment and did so on 24 March 2022 (to tie in with a scheduled payroll run).

On 30 March 2022, prior to the official due date for payment of any bonus, all employees received a video via email, from Clive Buesnel, the Chief Executive Officer of the Company. By way of the video message, Mr Buesnel acknowledged the significant impact of COVID-19 on the business and an added impact of exchange rates, which led had to low earnings. Mr Buesnel clarified that in order to be in a position to distribute bonuses that year, the Company had to secure additional funding from its shareholders. This extraordinary funding allowed the Company to increase discretionary bonuses by over 50%.

Mr Buesnel announced that the 2021 discretionary bonus was the “biggest ever discretionary pot paid” and further added that:

“In giving the size and magnitude of that bonus, we had to make a few changes to the way it is distributed. So, the first thing is that bonus, anyone earning less than €10,000 will get the full €9,999 or less paid out on the 4th of April – so in a week’s time. Those earning €10,000 or more that bonus will be split between 40% paid out on the 4th of April and the remainder paid out at the end of September. 60% paid out at the end of September.”

In the previous year, the Company’s employees in Ireland had received a 50:50 bonus split and as such, a decision was made to continue with same. As a result, the Complainant received half his bonus in March 2022.

As outlined above, the Complainant was duly notified of the payment structure of the discretionary bonuses and any terms attaching to same, including but not limited to, continuity of employment.

LEGAL SUBMISSIONS

The Complainant cannot establish any contractual right to a bonus, he was only entitled to such amount of a discretionary bonus as was specifically awarded to him and on such conditions as attached to that award.

The Complainant’s contract of employment further provides that any bonus would not be paid to an employee serving notice of termination of their employment.

The Annual Bonus Policy clearly sets out two conditions for an employee to be eligible for the discretionary annual bonus. The conditions are that:

(a)                he or she is employed within the PUI/Integro group of companies; and

(b)                has not served or received notice of termination of employment at the date the bonus is due for payment.

As the Complainant was not an employee of the Company at the date the second element of the bonus was due for payment, i.e., in September 2022, he was not eligible to receive a bonus and cannot establish any right to same.

The decision to pay two bonus payments for 2021 was legitimately made in March 2022 and communicated to all employees. The Complainant resigned in May 2022 knowing that he was doing so with the second element of the bonus not being payable to him at that time. His employment terminated on 25 June 2022. At all times, the Complainant was aware that a bonus payment was payable in September 2022 (subject to the Company’s discretion and conditions of any award made) and was therefore aware that if he handed in his notice in May 2022, he would not be eligible for any award or any subsequent bonus payments. It was always open to the Complainant to hold off on his resignation until after the bonus payment in September 2022.

Section 5 of the 1991 Act is contained at Appendix 6. Section 5(6) is set out below:

“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 therefrom that fall to be made and are in accordance with this Act), or

(B)               […] then,except in so far 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 the occasion”

The term “deduction” is not defined in the interpretation section of the 1991 Act. It is submitted therefore that this term should be given its ordinary and natural meaning i.e., “the action of deducting or taking away from a sum or amount; subtraction; abatement”1.

Similarly, section 5(6) of the Act does not provide a definition of the term “deduction” but rather provides that a deficiency in the amount of wages paid or non-payment of wages can amount to a “deduction”. It does so by providing that on “any occasion” an employee is paid either none of the wages or less than the total amount of wages “that is properly payable to him on that occasion”, the deficiency or non-payment is treated as a deduction.

In order to succeed in this complaint, it is respectfully submitted that the Complainant must establish that the bonus amount he claims, was properly payable to him. Even in the event he succeeds in establishing this, he must then establish that the non-payment of this bonus by the Respondent constitutes a “deduction” in wages. It is submitted that the Complainant cannot establish either proof.

Wages is defined under the 1991 Act as meaning:

“…any sums payable to the employee by the employer in connection with his employment…”

The Respondent respectfully submits that it has paid all sums “payable” to the Complainant in connection with his employment.

The term “deduction” refers to circumstances in which an employer pays an employee less than the amount to which the employee has an entitlement (i.e., less than the amount “payable”). That has not occurred in this case.

As outlined above, the “conditions” established by the Company in respect of payment of the bonus provides that it is not payable to employees serving notice of termination of employment. The Complainant was not an employee at the date of payment of the bonus in September 2022. The Complainant’s contract of employment and the Annual Bonus Policy are extraordinarily clear that an employee must not be on notice of termination at the time of payment of the bonus. As such, the Complainant’s claim is entirely misconceived.

In the Labour Court decision of Bord Gáis Energy Ltd v Thomas (PWD1729), the employee claimed an entitlement to a performance related bonus in circumstances where he had terminated his employment prior to the date of payment of the bonus. The Court placed considerable weight on the eligibility requirements contained in the Complainant’s contract of employment and held that as he did not meet the eligibility criteria, the bonus was not ‘properly payable’, and no contravention of the Act occurred.

Neither the Complainant’s contract of employment nor the Annual Bonus Policy provide for an entitlement to receive a bonus payment following termination of employment with the Company. The Complainant therefore cannot successfully argue that this bonus payment is properly payable to him.

In A Worker v A Communications Company (ADJ-00026589), in a similar fact pattern, the Complainant’s contract of employment in this case stated that “You will only benefit from the Incentive Bonus if you are a current employee at the time of payment”. The Adjudication Officer held that in circumstances where the Complainant left the company in January 2020 and the bonus was paid in February 2020, the bonus could not be deemed to be properly payable and on this basis, rejected the complaint.

It is respectfully submitted that the Complainant was well aware of the conditions applicable to the payment of bonus. Notwithstanding this, he chose to resign prior to the date when the bonus was paid. That decision was entirely a matter for the Complainant and the Respondent has no responsibility, in law, to the Complainant in respect of the potential consequences that flow from such a decision.

The Complainant was employed by the Respondent from

The Respondent has made no unlawful deductions from the Complainant’s wages, and it is submitted that the Respondent has paid all sums “payable” to the Complainant in connection with his employment. The Complainant does not have a contractual entitlement to the bonus claimed and, as such, it cannot form part of the wages “properly payable” to him.

For the reasons outlined herein, the Adjudication Officer is respectfully requested to reject the Complainant’s claim.

The Respondent reserves the right to make further oral and/or written submissions at the hearing.

The Payment of Wages Act 1991 (as amended) is an Act to provide further protection for employees in relation to the payment of wages, to facilitate the payment of wages otherwise than in cash, for that purpose to repeal the Truck Acts 1831 to 1896, and related enactments and to provide for connected matters [23rd July 1991].

The Complainant done well in summarising his complaint in an articulate and easily understood manner.

In relation to legal cases the Complainant has cited Finnegan v J & E Davy (2007) 18 ELR 234, the following is taken from Employment Law, General Editor Maeve Regan, Tottel Publishing (section 3.21; page 63).

In drafting any bonus scheme, regard should be had to the High Court decision in Finnegan v J & E Davy (2007) 18 ELR 234, a case involving Davy Stockbrokers and the payment of a deferred bonus to a former employee.

Mr Finnegan was an accountant with Davy Stockbrokers.  His contract of employment did not include reference to a bonus payment, but Mr Finnegan received a performance-related bonus at the end of each year.  A number of years into his employment, Mr Finnegan was told that thereafter, he would receive only a portion of his bonus in the year to which it was related, and that the balance would be deferred until the following year.  He was also told that if he left his employment before the balance fell due, he would not be paid that balance.  The terms and conditions of the bonus scheme were not reduced to writing.  Mr Finnegan left Davys to work for a competitor, he sued the company for the balance of his bonus entitlements.

The High Court held that, to the extent that deferring a portion of Mr Finnegan’s bonus was a condition of his contract of employment, it was a restraint of trade and the Court ordered that the deferred element of the bonus be paid to Mr Finnegan.

It should be noted that in this case, the High Court was influenced by the following facts:

(1)    The rules of the bonus scheme were not in writing and so had to be interpreted through the evidence of the parties.

(2)    The decision to defer part of the bonus was a unilateral change to the terms and conditions of Mr Finnegan’s employment and he had never accepted this change; and

(3)    Davys only refused to pay the deferred element because Mr Finnegan joined a competitor and therefore, it was clear that the refusal was a restraint of trade and had no other bona fide purpose.

In the instant case the contract of employment at clause 7 (third paragraph) reads as follows:

‘On joining the company, you will be eligible to join the Company’s bonus scheme. The Company may from time to time, and at its complete discretion, decide to pay you a bonus to reward your contribution to the business. Such payments are totally discretionary, are made without precedent and do not form part of your contract of employment or imply any future obligation to make further bonus payments. Bonuses will not be paid to any employee under notice for the termination of his /her employment’.

The Respondent refutes the Complainant’s claim in its entirety.

The Respondent has highlighted the contract of employment, clause 7 and also the Annual Bonus Policy. This Policy states the following:

Scope.

This policy applies to all employees of PUI (“The Employees”).

Unless Integro in its sole discretion decides otherwise, an Employee will only be eligible for a bonus payment if he or she is employed within the PUI/Integro group of companies and has not served or received notice of termination of employment as the date the bonus is due for payment.

This policy does not affect any other terms and conditions of the Employees’ employment or their current agreements with the Company.

Annual bonus eligibility is not a component of base salary and does not create any future entitlements.

There are no circumstances whether in reliance on express or implied terms or otherwise where an Employee can require (i) a pay out of a particular sum in respect of a bonus (ii) payment in a particular form or (iii) compensation or loss of a bonus.

Annual Bonus Payment.

Integro may, in its sole discretion, pay an annual bonus to an Employee in recognition of his or her work during the course of a calendar year ending 31st December.

The actual amount of any bonus payable will be determined by Integro in its sole discretion.  In determining whether a bonus is to be paid, and if so the size of that bonus, Integro may take into account such factors as it considers, in its sole discretion, to be appropriate.  These factors may include:

·         Anticipated future performance or service; and/or

·         Personal past performance; and/or

·         Performance of PUI and/or Integro and/or all group companies of PUI and Integro.

Integro shall have no obligation to take any of these factors into account.

The Respondent cites the case ofBord Gáis Energy Limited v Thomas (PWD 1729), the employee claimed an entitlement to a performance related bonus in circumstances where he had terminated his employment prior to the date of payment of the bonus. The Court placed considerable weight on the eligibility requirements contained in the Complainant’s contract of employment and held that as he did not meet the eligibility criteria, the bonus was not ‘properly payable’ and no contravention of the Act occurred.

I have considered all aspects of the instant case, the arguments presented by both the Complainant and the Respondent and the available case law. I must now decide the complaint as presented under the Payment of Wages Act, 1991 is not well-founded. This is my decision.

I have considered all aspects of the instant case and the arguments presented by both the Complainant and the Respondent. I must now decide the complaint as presented under the Payment of Wages Act, 1991 is not well-founded. This is my decision.

Payment of Wages Act, 1991. Payment of Bonus.