PWD2447

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00049853 (CA-00053573-001).

BACKGROUND:

This is an appeal of an Adjudication Officer’s Decision made pursuant to the Payment of Wages Act, 1991. The appeal was heard by the Labour Court in accordance with Section 44 of the Workplace Relations Act, 2015. 

The following is the Court's Decision:

DECISION:

This is an appeal by Natus Manufacturing Limited against an Adjudication Officer’s Decision ADJ-000049853 given under the Payment of Wages Act 1991 (the Act) in a claim by Niamh Callanan that she suffered an unlawful deduction from her wages when she was not paid a bonus in 2022.

The company did not attend the hearing at first instance and the Adjudication Officer upheld Ms Callanan’s complaint.

In this Determination the parties are referred to as they were at first instance. Hence, Niamh Callanan is referred to as ‘the Complainant’ and Natus Manufacturing Limited as ‘the Respondent.

Background

The Complainant is a former employee of the Respondent company. Her employment ceased on 4 August 2022 and her final salary payments were processed through payroll on 19 August 2022. She submits that the Respondent breached the Act as she did not receive a bonus payment that she was entitled to receive for the six-month period that she worked from January to July 2022.

The Respondent refutes the complaint. It submits that the company operates a global bonus plan which is entirely discretionary and one of the conditions for eligibility is that “A participant must be employed on the date any award is paid”.

Summary of the Complainant’s Position

The Complainant worked for the Respondent from August 2017 until August 2022 as part of the Accounts Receivable/Payables team. She worked well and gained a vast amount of knowledge during her employment. She often worked outside of her normal working hours and took on extra tasks.

The Complainant tendered her resignation on 5 July 2022 and understood from a meeting with her supervisors that she was in line to receive her bonus payment the next month. The bonus payment was not included in her last salary payment on 19 August 2022 

The Complainant contacted HR about the matter and received a reply stating that, as per the Natus Global Procedure, she was not eligible to receive the bonus payment as she left prior to the bonus payment date. HR claimed that the matter of her bonus payment was discussed with her during her exit interview. That is incorrect. Had the matter been discussed during that interview she would have resolved the issue at that time.

The Complainant was never made aware of the policy for the Natus Bonus Plan and never signed for such a policy during her employment. She requested a copy of the procedure on bonus payments, and a copy of all e-Leap courses she had completed from August 2017 to August 2022. E-Leap is the policy compliance system used to ensure all employees sign, understand, and adhere to Natus Policies, which would have included the Bonus Policy. She never read or signed for the Natus Bonus Plan.

The Complainant submits that she was treated unfairly as she worked from January to June 2022 and so earned an entitlement to a bonus payment for the work undertaken by her in that period.

Summary of the Respondent’s position

The Respondent submits that the Complainant received all payments properly payable to her and no unlawful deduction was made contrary to the provisions of the Act. She was not entitled to a bonus payment on 19 August 2022 as she was no longer an employee of the company at the time.

The Natus Bonus Plan is a global scheme and applies across the wider organisation. There is no entitlement to a bonus payment under the Scheme, as the plan is entirely discretionary. One of the conditions for eligibility for a payment under the scheme is that employees must be an employee on the pay-out date. The pay-out date for the 2022 Bonus in Ireland was 19 August 2022. The Complainant’s last day of employment was 4 August 2022. The Complainant was no longer employed on the payout date.

The Respondent submits that the Complainant should have been on notice that in resigning on a date in early August 2022 this may have made her ineligible for that year's bonus pay-out. By handing in her notice for the first week of July, she chose to accept a risk of ineligibility without fully interrogating their eligibility for the Bonus payment. The company’s position was explained to the Complainant during their exit interview which took place on 25 July 2022.

The Applicable Law

Section 5 of the Payment of Wages Act 1991 provides in part as follows:

(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless–

(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

(c) in the case of a deduction, the employee has given his prior consent in writing to it.

(6) 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.

Deliberation and Findings

The Complainant’s case is that she is entitled to a bonus payment of €640 for the six-month period that she worked from January to July 2022. The Respondent submits that no wages were properly payable to the Complainant during this period, as the bonus scheme was discretionary, and the Complainant had no entitlement to such a payment.

Section 5(6)(a) of the 1991 Act provides that where the total amount of wages properly payable to an employee is not paid, the deficiency or non-payment is to be regarded as a deduction.  Consequently, the first matter for the Court to establish is the amount that was properly payable to the Complainant during the relevant period for her complaint.

In reply to questions from the Court, the Complainant acknowledged that she had no entitlement to participate in the bonus plan by virtue of a term set out in her contract of employment, or the accompanying staff handbook. She asserts that her entitlement arises by virtue of the fact that she worked the six-month period between January and July 2022, so should receive the bonus applicable for that period. The Complainant referred to the fact that she received bonus payments in the past, apart from 2018, when she did not have sufficient service to participate in the plan, and 2021 when no bonus payment was made due to Covid-19.

For its part, the Respondent submits that the bonus plan is a discretionary global policy and the rules state that a participant must be employed on the date any award is paid. The Respondent advised that it had no issue with the work performance of the Complainant. It confirmed that had she been in employment on the payout date, she would have received the bonus. However, it submits that any request to apply discretion regarding the operation of the plan must be assessed on an objective basis, having regard to the fact that the plan it is a global one, rather than on a subjective basis.

The Complainant in this case accepts that she has no contractual entitlement to participate in the global bonus plan. It is clear from the bonus policy, which was opened to the Court, that the plan operates as a discretionary scheme based on company performance. A rule of the plan is that a participant must be in employment on the bonus pay out date.

Having regard to the above, the Court finds that no bonus payment was properly payable to the Complainant during the relevant period.

The parties disputed what information was shared with the Complainant about the operation of the bonus plan. In the view of the Court, it is unfortunate that the Complainant was not provided with full information around the operation of the global bonus plan at an earlier date. Had she been aware of the eligibility criteria to participate in the scheme, she may not have had to lodge a complaint relating to an alleged contravention of the Act. It is also unfortunate that the Respondent did not attend the WRC hearing at first instance, as the Complainant was further deprived of an opportunity of understanding the company position at that point.

In all the circumstances of this case the Court is satisfied that the Complainant did not meet the criteria to be eligible for a payment under the scheme. Therefore, the bonus arising from the Natus Bonus Plan was not “properly payable” to the Complainant and no contravention of the Act occurred.

Finding

The Complaint is not well founded.

The appeal is allowed, and the decision of the Adjudicator is set aside.

The Court so determines.

	Signed on behalf of the Labour Court
	Katie Connolly
TH	______________________
23 July 2024	Deputy Chairman

NOTE

Enquiries concerning this Decision should be addressed to Therese Hickey, Court Secretary.