Adjudication Reference: ADJ-00045170
Parties:
| Complainant | Respondent |
Parties | Noel McCarthy | Thermo Fisher Scientific Cork Ltd |
| Complainant | Respondent |
Anonymised Parties | {text} | {text} |
Representatives | Deirdre Canty SIPTU | Niall Devitt Mason Hayes & Curran LLP |
Complaint:
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-00056001-001 | 11/04/2023 |
Date of Adjudication Hearing: 09/04/2024
Workplace Relations Commission Adjudication Officer: Thomas O'Driscoll
Procedure:
In accordance with Section 41 of the Workplace Relations Act, 2015 following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint. The hearing was extended to second day to enable the Respondent to produce a relevant witness.
Background:
The Complainant was employed as an In-Process Control Analyst with GlaxoSmithKline on 13 August before transferring under the TUPE Regulations to the Respondent in November 2019. The Complainant tendered his resignation on 4 February 2023 and his employment terminated on 5 March 2023. The Complainant has brought a claim for the non-payment of a bonus (hereinafter “the AIP) under the Payment of Wages Act 1991 (“the Act”). The Complainant submits that he worked the relevant period for calculation of the AIP and was not informed of his eligibility or otherwise , either by reference to the terms of his contract of employment nor after reasonable enquiry with the Respondent. The Complainant submits that the outstanding sum due to him is €8971.42, before deductions. The Respondent’s position is that there is no entitlement to a bonus paid under the AIP. The Respondent submits AIP is entirely discretionary and one of the conditions for eligibility for a payment under the AIP is the employees must be an employee on the date the AIP is payable (the “Pay-out Date”). The Pay-out Date for the 2022 AIP in Ireland was 20 March 2023. The Complainant’s last day of employment was 5 March 2023, therefore he was not eligible for the AIP. |
Summary of Complainant’s Case:
The Complainant gave evidence under oath. He understood that within the company, there is a bonus plan (AIP), which is an annual incentive bonus, calculated in January of every year based on the goals set at the beginning of the previous year covering the period January to December. The bonus is then paid out in March of the following year. The Complainant received the full bonus every year of his employment, but while he worked the relevant period for the 2023 bonus, he did not receive it. In early 2023 the Complainant had an offer of alternative employment and was considering handing in his notice to the Respondent to take up the new post elsewhere. He consulted the relevant paragraph in his contract which referred to his bonus. It stated: “ You will continue to be eligible to participate in The Company Bonus Plan in accordance with and subject to the rules of the plan. The Company Bonus Plan is entirely discretionary on the part of The Company and may be terminated or amended unilaterally, without notice or cause, by The Company at any time. The payment of a bonus and a once off or repeated basis shall not give rise to a contractual entitlement to same. In the event of notice of termination of your employment being received by The Company or issued by The Company, not including redundancy or retirement, prior to the date upon which a bonus is due to be paid, the date of leaving will impact payment of bonus. Please refer to the bonus policy for further details. The Complainant could not find a copy of the bonus policy online in the company policies and as he believed the wording above was unclear. The Complainant filed a pay inquiry case with the Colleague Services section within the company to get the information and a copy the bonus policy. The Response from Colleague Services on was as follows: “Theoretically, if you are still employed in March, you would be entitled to the annual bonus, however please note that the AIP is a discretionary, non-guaranteed bonus related to your work performance. Colleague services do not take part of the compensation process, therefore we are unable to advise you about the bonus eligibility and amount.” The Complainant gave notice of resignation to his employer on foot of the above response, with a termination date of 5 March 2023. In total, the Complainant made four requests to see a copy of the AIP, but no detail nor copy of the scheme was received by him. On 12 February 2023 the Complainant was requested to sign an exit document. One point on this document stated that by signing it the Complainant was agreeing that he would not receive the annual bonus, so he declined to sign this document. On 15 February 2023 the Complainant had a TEAMS meeting with his manager Mr Sean Walsh. The bonus policy was requested at this meeting again and Mr Walsh said he would get it the following day. On 16 February 2023 the Complainant received an email from Mr Walsh stating he was not eligible to receive the prior year bonus as the termination date is prior to the scheduled pay out date. The Complainant’s Argument: The period for the calculation of the bonus is January 2022 to December 2022, and during that time the Complainant was a full-time employee. The Complainant received the full bonus for every year on his employment with the company in the following March. The bonus decision letter for 2022 was handed out to employees on 1 March 2023, when the Complainant was still employed by the Respondent. Despite repeated requests by the Complainant, he was never issued with a copy of the AIP, as mentioned in his contract of employment. The Respondent’s email of 20 January 2023 communicated to him that that he would be entitled to the bonus if he was employed in March 2023, which he was. The payslip exhibited attached confirms the pay date as 20 March 2023. This is the date the annual bonus was always paid to the employees. The Complainant opened case law in support of his claim that the AIP was properly payable to the Complainant under section 5 of the Act. In direct response to the Respondents argument that payment of the AIP was discretionary, the Complainant referred to the remarks of McDermott J in Cleary v B and Q Ireland Ltd [2016] 1 I.R. 276; [2016] E.L.R. 121 McDermott J., made the following remark in relation to the exercise of a discretionary bonus under the Act. “I am satisfied that the bonus for August 2011 to January 2012 was properly payable in June, 2012 notwithstanding the withdrawal of the scheme in January 2012. I am satisfied that in the circumstances of this case the overall discretionary nature of the bonus scheme does not extend to a 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 Complainant contends that the employer did not apply any reasonableness to the current case by withholding the bonus payment from Mr McCarthy in March 2023 for the bonus period for the full year of 2022. The Complainant further referred to McDermott J. in Cleary, when the judge went on to say he was satisfied that the Tribunal erred in law, in interpreting the discretion invested in the employer to withdraw the bonus scheme at any time as being applicable or attaching to this period. The employer bore a contractual obligation to pay the bonus accrued to each employee during the relevant period and that the bonus was properly payable as “wages” under section 5(1) of the 1991 Act. |
Summary of Respondent’s Case:
Mr Sean Walsh, Shift Manager, gave evidence under affirmation. It was his experience that around February and March of every year the most topical item amongst the workforce was the payment of the AIP and how it might be utilised best by workers either in the purchase of shares, Additional Voluntary Contributions (AVCs) or otherwise. He also stated that when people choose to leave the company, they do so after the receipt of the AIP in the full knowledge that you have be a current employee. When pressed on an article relied upon by the Respondent in reference to the detail surrounding the requirement of an employee to be a current employee on the Pay-out date, the witness accepted that this document was not available to him when he met the Complainant before the Complainant exited the company, nor was he in a position to verify that the said document was easily accessible to every employee on the intranet. The Respondent’s Argument: The AIP is a global scheme and, as such, has an application throughout the wider Respondent organisation on the island of Ireland and around the world. The Respondent’s position is that there is no entitlementto a bonus paid under the AIP. The AIP is entirely discretionary and one of the conditions for eligibility for a payment under the AIP is the employees must be an employee on the Pay-out Date. The Pay-out Date for the 2022 AIP in Ireland was 20 March 2023. The Complainant’s last day of employment was 5 March 2023. The Respondent exhibited the bonus policy documents which it claims are available to employees on the Respondent’s intranet. In reference to potential queries in one of the documents, the Respondent exhibited the following Frequently Asked Questions (FAQ): “What if I give my notice or I have been given notice and my last day is before the bonus pay-out date? Will I still receive my bonus? No, you must be an active colleague on the day of pay-out in order to receive your bonus.” The Respondent argues that it clearly states at the top of the document that “AIP pay-outs are typically paid by the end of March, and you must be an active employee on the day of pay-out in order to receive your bonus.” Separately in the same document in the “Eligibility” section, the Respondent submits it clearly provides that, “In order to receive their bonus pay-out, the colleague must be an active employee on the day of pay-out.” The Respondent submits that the FAQs state that the AIP is typically payable in March, “depending on local payroll schedules.” The Respondent exhibited copies of the Complainant’s pay slips from April 2020, 2021, and 2022 respectively which show that an “AIP Bonus” was paid in each of those years in the April payroll run. The Respondent submits that the Complainant should have been on notice that, in choosing a final date of employment in early March 2023, that this may have made him ineligible for that year’s AIP pay-out. The Respondent also argues that by handing in his notice for the first week of March, the Complainant chose to accept a risk of ineligibility without fully interrogating his eligibility for the AIP. The Respondent submits that the Complainant should not have taken the response of the “Colleagues Services” email of 20 January 2023 as confirmation that he was entitled to the AIP. The email was suitably qualified and should not have been relied upon by the Complainant in determining whether or not he was eligible for the AIP. The Respondent argues that this email was not definitive regarding the Claimant’s entitlement to an AIP and a reasonable reading of this email confirms that further interrogation around eligibility for the year in question was required The Respondent cites Bord Gáis Energy Limited v Thomas (PWD1729) (Bórd Gáis) in relation to a bonus payment, the Labour Court was “satisfied that the Complainant did not meet the criteria to be eligible for a payment under the scheme.” Therefore, the bonus arising from the scheme was “not properly payable and no contravention” of the Payment of Wages Act 1991 occurred. One such criterion in that case was that the complainant was required to be in employment on the day of the payment of the bonus. The claimant in the Bórd Gáis case argued that he was entitled to be paid a bonus for 2016 as he had worked the full year. However, his employment had ended in January 2017 whereas the bonus payment fell due to be paid in February 2017. The Respondent argues it is noteworthy that Bórd Gáis postdates Cleary & Ors v B&Q Ireland Limited [2016] 27 ELR 121cited by the Complainant. In Cleary, the employer sought to rely on a general variation clause in relation to the scheme to exercise its discretion to withdraw it entirely. In Bórd Gáis, the bonus was only “properly payable” if the employee was still in employment at the time of payment of the bonus. The Respondent argues that the facts bear a striking resemblance to the Complainant’s case in the instant case. The Respondent further cites Cathal Cummins V Irish Branch of Hamilton UK Services Limited ADJ-00037308, which also postdates Cleary, and which the Respondent claims is analogous to the instant case . In Cummins, the fact that an employee was in their notice period at the time of the awarding of a bonus was fatal to the claimant’s claim. This was notwithstanding the fact that the claimant had claimed that they were unaware of the clause in their contract that stated he would not be paid the bonus if there was notice of termination in place on the date the payments were made. |
Findings and Conclusions:
The Applicable Law: The Payment of Wages Act 1991 provides S 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 any 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. It is well established that the payment of a bonus falls under the definition of wages as provided for under the Act. The issue to be adjudicated upon here is whether the non-payment of the AIP was allowed by contract, whereby the Respondent claims that according to the terms of the scheme, there was a requirement for a recipient to be a current employee on the Pay-Out Date which was 20 March 2023. The Complainant had exited the company on 5 March 2023. The Complainant claims he was unaware of the stipulation, and furthermore, that such contractual detail was not made apparent to him despite numerous enquiries. The Complainant signed a contract on 18 December 2014 where he read, understood and accepted the following term with regard to the bonus (later becoming the AIP): “ You will continue to be eligible to participate in The Company Bonus Plan in accordance with and subject to the rules of the plan. The Company Bonus Plan is entirely discretionary on the part of The Company and may be terminated or amended unilaterally, without notice or cause, by The Company at any time. The payment of a bonus and a once off or repeated basis shall not give rise to a contractual entitlement to same. In the event of notice of termination of your employment being received by The Company or issued by The Company, not including redundancy or retirement, prior to the date upon which a bonus is due to be paid, the date of leaving will impact payment of bonus. (my emphasis). Please refer to the bonus policy for further details. Uncontested evidence was given that the Complainant had in the past been in receipt of the AIP payment in late March in the years prior to his exit. Convincing evidence was also given by Mr. Walsh that leavers customarily left after receiving the bonus payment, in the knowledge that it was paid out in late March. This has to considered with the fact that there was no contrary evidence given by the Complainant suggesting that the requirement to be a current employee at the date of payout was a concocted fiction to deprive him of payment. Therefore, the only logical conclusion I can come to was that it was a contractual stipulation for eligibility for an employee to be a current employee at the date of payout. The Labour Court in Bord Gáis Energy Limited v Thomas (PWD1729) (Bórd Gáis), which was opened by the Respondent, was “satisfied that the Complainant did not meet the criteria to be eligible for a payment under the scheme.” This was stated by the Court when they were distinguishing a concrete contractual term from the general discretionary power as to whether to pay a bonus in the first instance, as in Cleary . The Complainant gave convincing evidence of his unawareness of the details of the AIP. Nonetheless, the Complainant signed a contract in 2014, which should have alerted him to the significance of the pay-out date. It is generally expected that an individual will carefully review a contract and seek clarification on any ambiguous terms before signing the document. Additionally, evidence was presented indicating that being a current employee on the pay-out day was a well-established prerequisite for AIP eligibility in the years leading up to the Complainant's departure from the Respondent company. After reviewing all the evidence and arguments presented in this case, I conclude that the Complainant did not meet the eligibility criteria for the AIP bonus due to the contractual stipulation requiring him to be an active employee on the pay-out date. I accept that the Complainant had considerable difficulty in establishing the contractual position, and I have a certain amount of sympathy for him in this regard, but the reasonableness or otherwise of an employer in facilitating accessibility to previously settled contractual terms is not a matter for adjudication under the Act. Consequently, I determine that the bonus payment was not properly payable, and, therefore, the complaint was not well founded. |
Decision:
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.
CA-00056001-001: Complaint under the Payment of Wages Act 1991. For the reasons outlined above, I find that the complaint was not well founded. |
Dated: 07/05/2024
Workplace Relations Commission Adjudication Officer: Thomas O'Driscoll
Key Words:
Payment of Wages Act 1991, Bonus Payment. |