Complainant

Respondent

Parties

Shane  Beere

Cognito HRM ltd

(amended on consent) 

Representatives

  Appeared In Person

 Denis Coleman

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-00058079-002

03/08/2023

On 3 August 2023, the Worker a former Sales Manager with a Tech Company submitted a complaint in accordance with the Payment of Wages Act, 1991, that he had not been paid what was owed to him on cessation of his employment in May 2023

The Respondent was advised of the complaint 14 August 2023 and has rejected the claim.

On 16 January 2024, in preparation for hearing, I wrote to the Parties   seeking outline submissions in the case.

On 18 January 2024, the Respondent submitted a written submission. The Complainant did likewise.

Both parties attended the hearing in this case on 22 January 2024. Both appeared in their own case and were welcomed.

Both affirmed their evidence at hearing.

At the conclusion of the hearing, I requested some supplementary documents surrounding details of the bonus scheme and how it applied to the Complainant. I also sought a record of the complainant’s application for the bonus payment which grounds this claim.

These documents were received and prompted a response from the Complainant.

The latest correspondence in this case is dated February 6, 2024, when the complainant responded to the post hearing documentation.

The Complainant outlined that he had commenced work with the Employer on 25 July 2022 and felt compelled to leave the employment on 5 May 2023.

He was employed on a full-time basis as a sales Manager in receipt of an annual salary of € 80,000 plus commission.

The Complainant submitted that he was owed.

€1800 in unpaid commission

€1120 in annual leave owed on cessation .

€640 in monetary value of notice not received.

The Complainant has affirmed that he interviewed for this position in 2022 and was appointed to a 6-person sales team with a commensurate plan to expand this team, to twenty.

He faced a rocky tenure, where colleagues left and the trajectory of the company in which he had been keen to join did not deliver for him. He maintained that he had been presented with a misrepresentation of the true trading status of the company and was disappointed as a result. By October 2022, he felt constrained there and things did not improve for him.

By April 2023, his efforts to positively influence this company had gone unheeded. He observed a disconnect at the business and contended that he was being requested to hand in his notice.

He gave his notice to leave the employment on April 4, 2023, formalising it one day later.

“I am writing to inform you that I am resigning my position as Sales Manager at Work Compass. since my notice period is 4 weeks. I believe my last day will be May 4, 2023, please confirm …. “

The Complainant submitted that he had completed two deals from which commission arose in Quarter 1, 2023. He did not have access to the spread sheet on which they were returned. The claim for commission arose from the contractual clause on bonus. He had not received the anticipated payment, habitually due at the end of each quarter.

The complainant acknowledged receipt of the final pay slip dated 26 May , 2023 but it was not discernible what the payment referred to .

He had previously received bonus without incident. The Complainant argued that he had earned the bonus payment and did not accept that the payment of bonus to staff was linked to completed payment from clients/ customers. He stated that in the case of both customers, the deal had closed on April 17, 2023, which placed a liability on the respondent to pay him.

The Complainant had not retained the copy of the internal claim for bonus.

He had sought payment of the bonus when he left the employment. There was no response, and he did not activate the grievance procedure in pursuit.

The claim for notice arose from the complainants notice period being cut short by his availing of annual leave on his last working day of Friday, May 5, 2023

During cross examination,

The Complainant did not accept the Respondent summary on the parameters of the bonus scheme. He disputed that payment of bonus to staff habitually postdated receipt of monies from the customer/ client.

He gave an account of one worker who had benefitted from payment of a bonus payment outside of the parameters of the scheme relied on by the respondent.

He disputed the Respondent reliance on the May 17 conclusion of transaction as the date reconcilable with a bonus payment.

In closing, the complainant repeated that he had achieved the sales and should have received the commission linked to those sales.

In commenting on the respondent post hearing documentation, he remarked that the transactions had been permitted an extended payment terms of 90 days contrary to the typical 60 days to close the deal. This was insufficient grounds for him to be denied payment, given the precedent he had shared.

He availed of annual leave for the last 1.5 days of his employment, where it ought to have been categorised as notice.

The Respondent is a Software Company and has disputed the claims made.

It was common case that the Complainant was employed as Sales Manager from July 25, 2022, to May 4, 2023. The contract of employment was exhibited.

Mr Coleman, Chief Operating Officer, outlined that the Complainant was paid up to and including his final day of May 4, 2023. He was not owed pay for his notice period.

The Respondent was unaware of the complainant’s unease in his employment, and he had not anticipated his departure when he left. He had, however accepted his resignation.

The Respondent gave evidence and outlined the parameters of the bonus payment scheme. It was a sales commission linked to a % of sales payable quarterly on completion of payments.

He referred to the contractual reference.

“Your annual on target commission is €80,000 which is uncapped and paid quarterly in arrears, where applicable. Commission is calculated based on sales achieved. Your quarterly sales target will be advised to you at the start of each quarter. The on-target commission for 2022 will be prorated based on your start date. The commission structure is subject to adjustment at the discretion of the company.

If the employment relationship is terminated either by the company through dismissal or by the employee through resignation, then special rules apply in relation to commission that might otherwise have been payable. Such commission payments are only paid if the employee is in the employment of the Company on the date when the commission payment would normally become payable.

It concludes that non “payment of commission after the date of termination is an express contractual term and therefore are not sums “properly payable “under the terms and conditions of employment, and therefore are not unauthorised deductions from pay within the meaning of Section 5 of the Payment of Wages Act, 1991 “

The Respondent gave evidence that the complainant was mistaken in his interpretation on the rules of the bonus scheme. This was a contractual sales commission payable once the customer/ client had paid the account. It was not paid at the close of the business. It did not survive the termination of employment.

During his evidence, Mr Coleman placed the settlement of account on both claims for commission as May 16 and May 17, 2023. He later amended this by submission of his bank records as May 9 and May 13, 2023, both postdated the complainant’s tenure.

He exhibited the final pay slip dated 26 May 2023 which recorded payment of three days of outstanding annual leave .

During cross examination, he re-affirmed his interpretation of the rules for payment of the sales commission/bonus. He confirmed that holidays had been recorded for the complainant during the last 1.5 days of his employment.

He apologised for the delay in responding to the complainants’ emails.

The Respondent followed up with further details on the parameters of the bonus scheme. I did not receive the original copy of the claim made for the bonus by the complainant, which he approved.

The March 9, 2022, Document on Commission linked payment of bonus to date of payment. It described that it was paid in arrears after the end of the Quarter.

This was not incorporated into the staff handbook.

I have been requested to reach a decision in the matter of this claim for payments anticipated at the conclusion of the Complainants employment on May 4, 2023.

In reaching my decisions, I have listened carefully to both party’s evidence at hearing. I have also had regard for the submitted documentation from both parties.

I had cause to inquire further into the bonus / commission system in the respondent employment.

I received some redacted bank statements which reflected payment from clients/ customers on May 9 and May 15, 2023, which contrasted with the Respondents evidence at hearing, when he detailed payment on May 16 and May 17, 2023.

The Complainant has submitted that he is owed €2, 440 in unpaid commission and notice pay on leaving his employment on May 5, 2023.

The Respondent has disputed the claim. He has argued that the complainant was paid in full and exempted from receiving a bonus payment by reason of his not being in employment when the bonus was deemed payable.

The Law on deductions of deficiency in wages is set out in Section 5 of the Payment of Wages Act, 1991.

 Regulation of certain deductions made, and payments received by employers.

5.— (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.

The Complainant has argued that he experienced a deficiency in wages by the nonpayment of commission and by the nonpayment of his full notice.

This is addressed in Section 5(6) of the Act

(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.

At the very beginning of my analysis of the facts of this case, I wish to remark that the ceremonial ending of the employment fell short of best practice.

The Complainant gave his notice verbally on Tuesday, April 4, 2023, and formalised it in writing one day later on April 5, 2023. He ended this notification with a request to engage on the ceremonial ending of his employment. There was no engagement.

The current dispute arose by way of email dated July 14, 2023, when the Complainant queried his commission and holiday pay. He indicated that he had not found holiday pay in his last pay slip. He then referred to a May 5 email, where he had submitted that he was owed for 3.5 days holidays and commission totalling €1,800.

The parties did not resolve the matter at that point and the Respondent replied that the company was going through a radical change process. The matter then crystallised into the August 3, 2023, complaint to the WRC.

I found a distinct lack of clarity in the details of finalisation of employment in this case.

The High Court case of Marek Balans v Tesco Ireland ltd [2020] IEHC 55, is authority for what constitutes “properly payable “under the Act. It is the first hurdle in this case.

Annual Leave

I can accept that the Complainant was paid 3 days annual leave on the cessation of his employment, but it would have assisted everyone if this were delineated on the pay slip.

I have not found that outstanding annual leave is properly payable to the complainant.

Notice

I can accept that the complainant identified his last working day as May 4, 2023, on his notice of termination dated Wednesday, April 5, 2023.

It is regrettable that the Respondent did not reply to this.

The Complainant has claimed that he was left short 1.5 days of his notice period as they clashed with pre booked annual leave.

The Respondent has disputed this in stating that the complainant was paid up to his final day of May 4, 2023.

The contract of employment set down a 4 week notice requirement for the Complainant.

On successful completion of your probationary period - 4 weeks.

Four weeks from 5 April 2023 rested on May 3, 2023.

I find that the Complainant worked his notice and was paid for those 4 weeks. He worked a half day on May 4, 2025, and had a subsequent 1.5 annual leave days.

I have not been able to identify, on the evidence before me, that the complainant experienced a deficiency in wages for notice pay.

I cannot find that notice pay was properly payable to the Complainant.

The bonus / commission.

This aspect of the claim has proved the most problematic for me to assess. While the contractual term regarding on target commission distances payment of commission “after the date of termination “I have found some ambiguity in how the bonus / commission operated at this business.

The Complainant was of a view that he had earned his bonus prior to leaving and he retained the email dated May 5, 2023, his last day of work as proof of that claim.

When he did not receive a response to his calculations of the bonus, he queried its omission. Once more, there was a regrettable delay in the respondent management of this matter.

Payment of bonus is incorporated into the definition of wages in Section 1 of the Payment of Wages Act, 1991

"wages", 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 of employment 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:

The Complainant has argued that he had earned his bonus prior to the conclusion of employment and this €1,800 was owed to him.

The Respondent took an opposing view that the bonus was not payable as the transaction was not fully completed until May 9 and 15 respectively, which allowed the Respondent to activate the “nonpayment of commission on termination “clause of the contract.

The Complainant argued that this black and white account of payment did not match reality where he had seen a departure from the set rule previously. As I did not hear evidence from the recipient of that distinction, I have to accept the Respondent evidence which placed that award within the approved rules.

The Complainant also contended that the May closure dates relied on by the respondent resulted from an extension of time permitted outside of the ordinary closure period.

I have identified a lack of clarity in the management of the bonus payment. That is why I asked to see the application for bonus that grounded the claim. I accept that the sole document on this is the May 5, 2023, email.

For me, this was a very casual system and did not reflect the weighting placed on the optimal €80,000 payable in bonus per year. It is clearly open to misinterpretation.

My unease did not lessen on examining the document purporting to be the Commission Policy dated March 2022. Its separate to the handbook status alarmed me and I could not rely on it as a definitive guide to the payment of bonus in this employment.

The concept of earning a bonus was very comprehensively addressed in.

Sandra Cleary et al v B and Q Ireland ltd [2016] 27 ELR 121,

This was a High Court case which addressed a climate of challenging trading, where the Company removed prospective bonus and sought to cancel a bonus which fell for payment for the workers. The High Court held that the bonus had already been earned and as such was properly payable.

Mc Dermott J in drawing from a UK case of small v Boots Co PLC [2009] IRLR 328 on the contractual weighting applied to discretion in a bonus payment.

Slade J , ( UK ) concluded that the employment judge had not engaged with the question of whether the employers discretion had any contractual content and if so what it was , and by regarding the use of the word discretionary in relation to the bonus scheme as determinative , I consider that the Tribunal , in this case , made a similar error

Mc Dermott J held that the bonus for August 2011 to January 2012 was properly payable in June 2012 despite the withdrawal of the scheme in January 2012.

Crucially, he made the following incisive remarks.

I am satisfied that in the circumstances of this case the overall discretionary nature of the bonus scheme does not extend to withholding of the bonus due, in respect of that period, in respect of which the bonus was quantified and payable under the scheme, subject to compliance with the eligibility provisions. I am satisfied that the contract of employment and bonus scheme must be interpreted reasonably.

……. The payment of the bonus crystallised as a contractual obligation once it was earned in accordance with the terms of the scheme as operated ….

He found that the Respondent “bore a contractual obligation to pay the 3% bonus accrued to each employee during the relevant 6-month period as properly payable wages.

In the instant case, I have identified an overly casual approach to declaration of the bonus.

The Complainant told me that he declared the bonus himself in his application of an agreed formula for completed sales in his May 5 email.

The Respondent told me that the bonus did not arise and was not declared as he applied the bonus scheme criteria of March 2022 and the contractual term of no payment of bonus for leavers.

In Jim Devlin v ESB at the Employment Appeals Tribunal [2015] 26 ELR 278, the complainant applied for a voluntary severance against a backdrop of a deferred bonus for the year 2010.

The EAT determined that the bonus was discretionary and not a contractual entitlement. It lost its discretionary character once it was declared. The respondent faced with trading challenges had not been unreasonable in exercising that discretion. The contract placed an onus on consult rather than consult and agree and consultation had occurred.

The nonpayment of bonus was not a contravention of Section 5 of the Act.

In the instant case, the contract provided a two-paragraph component on the “on target “commission. The respondent reserved a discretion on its adjustment in live employment.

It is important to reflect that the complainant was untroubled by any problems of receiving bonus during his employment tenure.

The problems came to light as a result of his resignation which propels the facts of this case into thee second paragraph of the contractual terms which provides.

“……if the employment relationship is terminated either by the company through dismissal or by the employee through resignation, then special rules apply in relation to commission that might otherwise have been payable. Such commission payments are only paid if the employee is in the employment of the company on the date when the commission payment would normally become payable. The nonpayment of commission after the date of termination is an express contractual term and therefore not sums “properly payable “under the terms and conditions of employment … “

Once more I must be guided by Mc Dermott J in Cleary in advising a reasonable interpretation of the contract and the bonus scheme.

The bonus scheme of March 2022 is not incorporated in the staff handbook or delineated in the contract. It is silent on leavers and focusses on live employment, when it states that.

1 date of payment is identified with or without credit terms.

2 paid in arrears, one month in arrears.

3 An instruction to return calculations after the end of the quarter.

The contract is clear on disenfranchising an employee who leaves from claiming commission.

I can appreciate that the complainant was somewhat confused by the obstacles he faced in seeking to secure the bonus that he honestly believed that he had earned.

I have found that the lack of real time explanation on a 1:1 basis between the parties militated against an earlier resolution.

The Complainant is clear that he has seen deviations from that leaver policy. However, I would have needed to have heard directly from that person in evidence.

For my part, I find that the topic of bonus should have been discussed prior to leaving and not placed in an email on the last day.

I find that the bonus was not declared during the complainant’s employment and therefore he cannot secure it from his termination zone.

I find this an unfortunate outcome, but one I find I am fixed with on a reasonable interpretation of the employment contact and the bonus scheme.

I have also taken some guidance from the Labour Court case of

Bord Gais Energy ltd and Niall Thomas PWD 1729 in relation to the nonpayment of a 2016 bonus.

“One of the requirements of the scheme is that in order to receive an award you must be still in employment on the date that payment is to be made. The date of payment can vary because the scheme includes a number of factors such as corporate performance and business unit performance”.

The Complainant left employment in January 2017 and argued that “excluding people who have resigned from receiving a payment is unfair and discriminatory, particularly as pro rata payments are made to people who retire or commence work during the review period “

In finding against the complainant case, on appeal, the Labour Court placed considerable weight on the contractual terms of eligibility “be in employment on the date of payment “

The Court found that the bonus was not properly payable.

In the instant case, the complainant does not accept that he had to be in active employment when the commission “would normally become payable “

However, I must find that he signed acceptance for those terms on 23 June 2022 prior to commencement of employment and he is bound by those terms.

I would advise the Respondent to place clarity on the operation of the bonus scheme and to engage with all leavers as they leave employment to resolve all end of work issues for both parties.

I must find that the bonus payment claimed is defeated by the contractual clause governing leavers and is not properly payment in accordance with section 5 of the Payment of Wages Act, 1991.

The claim is not well founded.

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.

Section 6 of the Payment of Wages Act, 1991 requires that I make a decision in relation to the complaint in accordance with Section 5 of that Act.

I have found the claim is not well founded.

Payment of Commission and Notice on cessation of employment