Complainant

Respondent

Parties

David  Collis-Lee

A.T. Cross

Representatives

  Self

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 7 of the Terms of Employment (Information) Act, 1994

CA-00054720-001

26/01/2023

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

CA-00054720-002

26/01/2023

The complainant submitted that his contract of employment provided for the payment of a flat monthly bonus depending on sales achievements, but that he had not received bonus payments due to him for 2021 and 2022. The respondent contended that a management decision was made around May 2020 not to pay bonuses and that the complainant did not make a formal complaint in relation to the non-payment of his bonuses at the time.

Evidence of the Complainant (under oath)

The complainant outlined that he was re-hired by the respondent in 2006. He was issued with a contract of employment dated 9 June 2006. This contract provided inter alia for the payment of salary and a flat bonus if regional sales targets were achieved. From 2006 until 2020 the complainant received his bonus payments in line with sales achievements. Bonus payments were always paid quarterly if targets were achieved. There may be a delay in receiving the payment for a couple of weeks after the end of each quarter until invoices were paid. The complainant outlined that he received no bonus payments for 2021 and 2022, despite querying this on numerous occasions with his line manager. The unpaid bonuses for 2021 amounted to €22,506.36 and €2,433.12 for 2022. There was talk of the CEO changing the payment of bonuses, but this was never discussed with staff and no formal notification was ever issued in relation to this. At no time was the complainant told that there was a change to his contract of employment in relation to the payment of a bonus. The complainant’s position was made redundant on 30 January 2023. The complainant stated that he repeatedly sought the payment of €24,939.48 owing to him in unpaid bonuses without success until his departure from the company in January 2023. The complainant opened an excel spreadsheet at the hearing. This spreadsheet set out sales achievements and the bonuses due for 2021 and 2022. The complainant outlined that at no time did the complainant’s manager or anyone in the company dispute these figures.

The complainant outlined that he was aware of challenges for the business at the time and that staff were nervous about the viability of their jobs. The complainant stated that he took a salary cut during Covid-19 for 3 months but that his full salary was then restored. Pension contributions ceased for 18 months but this was also rectified. The complainant trusted that the matter of the non-payment of bonuses would also be rectified in due course. The complainant outlined that he worked for many years for the respondent and that there were never any issues.

The complainant opened various written communications he sent to management and HR and minutes of meetings between him and management (dated 11 February 2022; 06 October 2022; 10 November 2022; 2 December 2022; and 17 January 2023) in which he requested the matter of the non-payment of his bonuses to be resolved. In one of those communications (an email dated 2 December 2022) the complainant emailed HR stating: “I am concerned that the matter regarding bonus payments that are due to me is going on far to [sic] long, could you please let me know when the leadership team are going to revert back on this issue . . . .”

The complainant was asked by Mr Thompson what formal efforts did he make to complain about the non-payment of his bonuses, to which the complainant responded that he had repeatedly emailed his line manager from May 2020 requesting payment of his bonuses, but that his line manager was unable to give him an answer, and that he also communicated with HR on the issue. The complainant added that staff were nervous about their jobs at the time. The complainant added that he repeatedly raised the issue in the redundancy consultation meetings also to no avail.

Evidence of Mr Thompson (under affirmation)

Mr Thompson outlined that he was new to the business and that much of the matters as outlined by the complainant pre-dated him joining the company. The complainant’s correspondence to the HR Department was addressed to a member of the HR team who is no longer in the employment of the respondent. Mr Thompson outlined to the hearing the considerable transformation the business has gone through in recent years, which included significant headcount reductions and structural changes. Mr Thompson’s understanding was that there was a communication across management in 2020 that no bonuses were to be paid. All sales staff were affected in the same way. Mr Thompson acknowledged that he could not give evidence as to how this decision had been communicated to staff. Sales targets are normally agreed with the sales team and signed off and validated by senior management, however, this process has not happened since May 2020. Mr Thompson expressed his surprise that the complainant made no formal complaint in relation to the non-payment of €24,939.48 given the amount involved, and that no other employee complained about the non-payment of bonuses.

The complainant put to Mr Thompson that it was not true that he did not complain about the non-payment of his bonuses, and that there was no communication to staff regarding a change to bonus payments. Mr Thompson responded that he could not speak to what communication, if any, that had taken place at the time.

Law

CA-00054720-001

Section 5(1) of the Terms of Employment (Information) Act 1994 provides:

“Subject to subsection (2), whenever a change is made or occurs in any of the particulars of the statement furnished by an employer under section 3, 4 or 6, the employer shall notify the employee in writing of the nature and date of the change as soon as may be thereafter, but not later than—(a) 1 month after the change takes effect . . . . ”

CA-00054720-002

Section 1 of the Payment of Wages Act 1991 (“the 1991 Act”) defines wages as:

“. . . any sums payable to the employee by the employer in connection with his employment, including— (a) any fee, bonus or commission . . . referable to his employment, whether payable under his contract of employment or otherwise . . . .”

Section 5(1) of the 1991 Act provides that an employer shall not make a deduction from the wages of an employee unless such a deduction is authorised or consented to.

Section 5(6) of the 1991 Act provides:

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

Section 6(1) of the 1991 Act provides:

“A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 4C or 5 as respects a deduction made by an employer from the wages or tips or gratuities of an employee or the receipt from an employee by an employer of a payment, that the complaint is, in whole or in part, well founded as respects the deduction or payment shall include a direction to the employer to pay to the employee compensation of such amount (if any) as he considers reasonable in the circumstances not exceeding—(a) the net amount of the wages, or tip or gratuity as the case may be (after the making of any lawful deduction therefrom) that— (i) in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or (ii) in case the complaint related to a payment, were paid to the employee in respect of the week immediately preceding the date of payment, or (b) if the amount of the deduction or payment is greater than the amount referred to in paragraph (a), twice the former amount.”

The High Court in Marek Balans v Tesco Ireland Limited [2020] IEHC 55,outlined that when considering a complaint under the 1991 Act, it must first be established the wages which were properly payable before considering whether a deduction had been made. 

Section 41(6) of the Workplace Relations Act 2015 provides:

“Subject to subsection (8), an adjudication officer shall not entertain a complaint referred to him or her under this section if it has been presented to the Director General after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates”.

Findings

CA-00054720-001

The complainant stated that he did not receive a written notification of a change to the bonus clause of his contract of employment. Mr Thompson submitted that he could not comment on this complaint as he was not in the employment of the respondent at the time management decided to cease paying bonuses to staff.

Section 5(1) of the Terms of Employment (Information) Act 1994 provides that when a change is made or occurs in any of the particulars of the statement furnished by an employer under section 3, 4 or 6, the employer shall notify the employee in writing of the nature and date of the change as soon as may be thereafter, but not later than 1 month after the change takes effect.

Based on my findings under complaint CA-00054720-002 set out below, I find that there was no change to the particulars of the statement issued to the complainant and that this complaint is not well-founded.

CA-00054720-002

A failure to pay a bonus properly payable constitutes an unlawful deduction under the 1991 Act. This complaint concerns the non-payment of bonuses totalling €24,939.48 and covers a period commencing Q1 2021 (Q1 commences in April of each year within the respondent business) up to and including Q3 2022. The complainant confirmed that a bonus fell due for payment based on achievement of sales targets at the end of Q1 (June 2021); Q2 (September 2021); Q4 (Mar 2022); and Q3 (December 2022).

The following matters are not in dispute:

(i)                  the contract of employment dated 9 June 2006 provided for a flat bonus payment per month to be paid when sales for the region achieved their monthly target.

(ii)                the monthly bonus payments were paid at the end of each quarter.

(iii)               there was no written amendment to the contract of employment in relation to the payment of these bonuses;

(iv)               the complainant received a bonus payment in line with sales achieved every year from 2006 until 2020;

(v)                 the complainant did not receive bonus payments for 2021 and 2022;

(vi)               the figures presented by the complainant of the amounts due in bonus payments based on sales achieved for 2021 and 2022.

(vii)             the business faced challenges from 2020 that resulted in significant restructuring and job losses.

Mr Thompson explained that he was not in the employment of the respondent for much of the time relevant to this complaint. His understanding was that a communication was made to management that bonuses would not be paid, but he could not say whether or how this decision was communicated to staff. The complainant acknowledged that there was talk about bonuses not being paid, but that no formal communication was made to staff. The complainant stated that he accepted a pay cut for a period and pension contributions were not paid for some time, however, his full pay was restored, and all pension contributions paid, and he assumed that his bonus payments would be paid in due course too. Mr Thompson found it incredulous that the complainant did not make a formal complaint about the non-payment of his bonuses, however, the complainant stated that he repeatedly emailed his line manager requesting the payment of same. Mr Thompson confirmed for me that the complainant’s line manager was still in the employment of the respondent. I note that the respondent did not call the line manager to give evidence.

To succeed in this complaint the complainant must show that the bonus payments were properly payable to him. I am satisfied that the complainant had a contractual right to monthly bonus payments which fell due for payment at the end of every quarter if sales for the region had been achieved. Bonus payments were not discretionary. If targets were met, the bonus was paid. No evidence was presented to me of a provision within the contract entitling the respondent to amend or terminate the bonus scheme. I accept the evidence of the complainant that there was no formal communication to staff in 2020 or anytime thereafter regarding the non-payment of bonuses. I accept the evidence of the complainant that he repeatedly emailed his line manager requesting payment of bonuses due for 2021 and 2022 and that he contacted HR in relation to the matter also. The complainant received no confirmation of the discontinuation of the bonus scheme, I find therefore that the employee had a legitimate expectation that bonuses were accruing and would be paid (especially given pension contributions which had temporarily ceased were resumed and full salary payments were restored). The excel spreadsheet submitted by the complainant and copied to the respondent in advance of the hearing clearly show for 2021 and 2022 the quarters in which targets were achieved and the corresponding bonus payment due. The respondent did not challenge these figures set out by the complainant. The complainant met the necessary criteria for payment i.e., achievement of sales targets. I am therefore satisfied that bonus payments were properly payable to the complainant.  

It is common case that these bonuses were not paid to the complainant. The respondent is not permitted to make these deductions from the complainant’s pay as the deduction was not authorised under the contract, required by statute, nor made with the prior written consent of the complainant. I am satisfied therefore that the failure to pay the bonuses due constitute unlawful deductions for the purposes of the 1991 Act.

As provided for under s 41(6) of the Workplace Relations Act 2015, an Adjudication Officer cannot entertain a complaint if it has been presented after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates. In Health Service Executive v McDermott [2014] IEHC 331, the High Court considered the proper interpretation of s 6(4) of the 1991 Act (which was substituted by s 41(6) of the Workplace Relations Act 2015) which prescribed the time limit for claims before a Rights Commissioner (now an Adjudication Officer). The Court held that, having considered the construction of s 6(4) of the 1991 Act, every non-payment or deduction from wages is a distinct and separate breach of the Act amounting to a contravention. This complaint was presented to the WRC on 26 January 2023. Applying the time limits provided for in s 41(6) of the Workplace Relations Act 2015, the cognisable period for the purpose of this complaint is 27 July 2022 to 26 January 2023. Two possible contraventions of the Act fall within this cognisable period: Q2 (September 2022) and Q3 (December 2022). A bonus payment of €2,433.12 was due to the complainant for Q3 (December 2022). According to the uncontroverted figures presented by the complainant, no bonus was due for Q2 (September 2022). I cannot entertain any contraventions of the 1991 Act before 27 July 2022 (namely the 3 contraventions occurring in March 2022; September 2021 and June 2021) as they are outside the time limit provided for in s 41(6) of the Workplace Relations Act 2015.

I find that a bonus payment for €2,433.12 was properly payable to the complainant in unpaid bonus pay within the cognisable period for the purposes of this complaint and the non-payment of this bonus is a contravention of the Payment of Wages Act 1991. I decide that the complaint is well-founded in part, and the respondent shall pay to the complainant the sum of €2,433.12.

CA-00054720-001

I decide that the complaint made under the Terms of Employment (Information) Act 1994 is not well-founded.

CA-00054720-002

I decide that the complaint made under the Payment of Wages Act 1991 is well-founded in part and I direct that the respondent pay the complainant redress of €2,433.12.

Unpaid bonuses. Unlawful deductions.