Complainant

Respondent

Parties

Caitríona Gallagher

HA O'Neill Limited

Representatives

Vincent Nolan BL

Padraic Lyons BL

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-00058230-001

11/08/2023

Entitlement to a Bonus

The complainant joined HA O’Neill (“the respondent”) in September 2000 as a CAD designer.  In 2011, the company became part of the multinational Jones Engineering Group. 

In April 2010, the complainant transferred to London to a job as a contracts manager in the company’s Commercial Heating, Ventilation and Air Conditioning (HVAC) Division.  A copy of a letter issued on April 29th 2010 by a HR manager which was included in her documents for the hearing shows that she transferred on a salary of €57,000 plus an annual bonus of €10,000 “subject to the achievement of agreed targets.”

A document dated May 2014 with the title, “Commercial HVAC Division – Contracts Manager Bonus Scheme” sets out the conditions of a bonus of up to 40% of basic salary which was applicable to the complainant in 2014:

§  A “standing bonus” of 10% of basic salary;

§  An additional 10% of basic salary on the achievement of each of 60%, 80% and 100% of agreed profit (potential 30% of basic salary);

§  Bonus to be paid in May / June 2014 for achievements from January – December 2013.

Other conditions, such as the treatment of clients and the requirement to meet the full 60%, 80% and 100% of targets also applied but are not relevant to this complaint.

In June 2019, the complainant was promoted to the role of commercial division manager.  She consistently earned her annual bonus which was paid out between May and August every year up to May 2022.

2022 Bonus Agreement

From 2021 and into 2022, there was some upheaval in the respondent’s business.  In April 2022, at a review meeting with Mr Jim Curley, then the managing director of HA O’Neill, and Mr Eric Kinsella, the chairman of Jones Engineering Group, the complainant was presented with a bonus proposal.  The following revised terms were confirmed in a letter from Mr Curley on April 28th 2022:

a)      Annual salary of €120,000, back-dated to January 1st 2022;

b)     An annual bonus of €50,000;

c)      Company car;

d)     A bonus of €50,000 to recognise the complainant’s contribution to the Jones Engineering Group, to be paid in November 2022 and on an annual basis from then on.

On foot of this agreement, in May 2022, the complainant received the annual bonus of €50,000.  (The respondent’s submission states that she received €52,500 but no attention was paid to this at the hearing).  This was in return for meeting her targets up to December 31st 2021.  In November 2022, she received what was referred to as the “recognition bonus” of €50,000.  When she resigned in February 2023, she expected to be paid the annual bonus of €50,000, in return for her achievements up to the end of December 2022, but this bonus wasn’t paid.  This is the subject matter of her complaint under the Payment of Wages Act 1991.

Resignation and Subsequent Developments

On Sunday, February 12th 2023, the complainant sent an email to two managers and the HR manager, to inform them that she was resigning and that her last day of work would be March 1st.  In her email, she asked the HR manager for confirmation that “bonus entitlement will be included in my final payment.”

On March 2nd 2023, the HR manager wrote to the complainant acknowledging her resignation and confirming that her last day at work was February 28th 2023.  In relation to the bonus, the HR manager wrote:

“In relation to Bonus arrangements for employees, there are considered when Jones Engineering performance and financial position is known following completion of our audited accounts.  As it is only early March, the accounts have not been finalised or audited.  I expect that the timeframe for concluding those accounts, along with completion of annual staff reviews and for the Board of Directors to consider any discretionary bonuses, will be similar this year to previous years.  Once finalised, they will be paid to current employees working in the company at the date of payment.”

It is the complainant’s position that the annual bonus is not a discretionary bonus, that it is not based on the achievement of key performance targets and that it is not payable only to current employees.

The complainant consulted her solicitor in March 2023 and correspondence was exchanged between them and solicitors for the respondent, McCann Fitzgerald.  In a letter dated July 28th 2023, McCann Fitzgerald Solicitors stated that the respondent “was extremely surprised and disappointed” that the complainant resigned in February 2023, shortly after receiving the recognition bonus in November 2022 and they called upon her to return the €50,000 paid out.  The letter reiterated the company’s position that bonuses paid to contract managers “are entirely discretionary” and that decisions regarding whether they will be paid and the amount being paid are made in May or June each year when the company’s accounts are finalised.  The letter of July 28th 2023 also contained an allegation that the complainant had not performed her duties satisfactorily and that she had not in fact, earned her entitlement to a bonus. 

Entitlement to the Annual Bonus

It is the complainant’s case that the agreement of April 2022 is clear and that she is entitled to the annual bonus of €50,000.  Entitlement to this bonus is not subject to or dependent on the achievement of targets or on any other variables under the previous arrangement that applied from 2011.  Also, there is no reference in the April 2022 letter to the condition that the bonus is payable only to current employees.

The complainant submits that her annual bonus for 2022 has been earned and the refusal of the respondent to pay her the bonus constitutes an unlawful deduction from her wages.  She argues that, in accordance with her contract of employment and, in accordance with the letter of April 28th 2022 from Mr Curley, the respondent has a contractual obligation to pay the bonus, which, she claims, was earned by her up to the end of December 2022.

On behalf of the complainant, Mr Nolan submitted that, if the respondent can establish that it has discretion in relation to the payment of the annual bonus, then such discretion must be exercised fairly and reasonably.  In this regard, he quoted from the publication, “Working Within the Law” by Frances Meenan[1] (page number not given) where she stated,

“…if the employer has a discretion to decide, then he or she must treat the employee fairly by explaining the situation.”

Mr Nolan referred to the UK Supreme Court decision in Braganza v BP Shipping Limited[2], where, referring to bonuses that are not conditional on performance or any established criteria, Lord Hodge stated,

“In such cases, the employee is entitled to a bona fide and rational exercise by the employer of its discretion.” 

Mr Nolan submitted that, if I decide that the respondent has discretion regarding the payment of the annual bonus, then the respondent “has engaged in the very thing the law constrains it from doing; namely not engaging in a good faith and rational exercise of its discretion.”  He said that this is apparent from the respondent’s attempt to confine the bonus to current employees only and by belatedly advancing alleged performance issues which were never brought to the attention of the complainant during the calendar year 2022.

In this regard, Mr Nolan referred to the decision of the High Court in Finnegan v J&E Davy[3], where Mr Davy sought payment of part of his bonus that had been withheld.  Without informing him in advance, Mr Finnegan’s employer had attempted to split his bonus so that part of the payment would be withheld if he left his job before the end of the bonus period.  Mr Justice Smyth considered that this was ineffective as a matter of law and a restraint of trade.  To this end, he stated,

“To enforce a condition it must be fairly and reasonably brought to the other party’s attention.  This is especially so when in a contract the condition was particularly onerous or unusual…In this case, the Defendant sought to unilaterally retrospectively alter the Plaintiff’s terms of employment with …a provision that was onerous and even if not expressly designed to be a restraint was so in effect.  The Plaintiff had committed himself to some 6 years at least to the Defendant before he was informed even partially of the onerous condition and in my judgement that was unreasonable…

Whatever social cachet may have attached to his vocation, whatever good repute for sophisticates skills he may have had on the exchange or in the world of high finance, the Plaintiff’s terms of engagement were, in my judgement, in the facts, grievously marked by a form of engagement resident of the indentured employment of another age.” 

Bonus History

The timeline of events set out in the complainant’s submission were reflected in the document submitted by Mr Lyons on behalf of the respondent.  Mr Lyons also provided details of the complainant’s payment history from the date of her commencement in September 2000.  We are concerned here with the dispute over the complainant’s claim that she is entitled to a bonus for work carried out in 2022.  To that end, Mr Lyons provided a background to her bonus history from 2019:

On June 26th 2019, the complainant received a discretionary bonus of €50,000.  This was paid to her following a meeting with her line manager on June 11th that year and was in respect of her performance in 2018.

On August 26th 2020, she received a bonus of €52,500, which was paid out after a meeting with her line manager on July 20th and was in respect of her performance in 2019.

On July 26th 2021, she again received a bonus of €52,500.  This was paid following a meeting with her manager on June 16th 2021 and was in respect of her performance in 2020.

On May 26th 2022, she received the same amount of €52,500 as a bonus, paid following a meeting with her manager in April 2022.  This was in relation to her performance in 2021.

The established practice of the respondent in relation to bonuses was to hold a meeting with employees who were eligible for bonuses after the financial performance of the company had been ascertained.  These meetings were generally held in April or May of the subsequent year, by which time the financial accounts were known.

Towards the end of April 2022, following a review meeting for 2021, it was agreed that the complainant’s annual salary would be increased to €120,000 and that she would receive a discretionary bonus of €50,000 for 2021.  It was also agreed that she would be paid a retention and loyalty bonus of €50,000 which was paid to her in November 2022.  This was confirmed in a letter from Mr Curley dated April 28th 2022, a copy of which was included in the respondent’s book of documents and is the same letter referred to at page 3 above which was included in the complainant’s submission.

Relying on the April 2022 letter from Mr Curley, the chief executive officer of HA O’Neill, the complainant claims that she is entitled to the first bonus of €50,000 in addition to the recognition payment of €50,000 which was paid in November 2022.  Mr Lyons submitted that this claim is based on a “fundamental mischaracterisation of the purpose and effect of the agreement recorded in the April 2022 letter.”

April 2022 Letter

The purpose of the April 2022 meeting was to review and agree the complainant’s basic annual salary for that year and to agree her discretionary bonus for the preceding year, 2021.  The letter states that the complainant will receive a salary of €120,000 and a bonus of €50,000 which would be paid “in the next salary run” in May 2022.  The letter also states,

“In addition to the above, a €50K bonus to recognise your contribution to the Group will be paid in November 2022 and yearly going forward.”

This bonus was paid to the complainant in November 2022 when she was still employed by the respondent.  It is the respondent’s case that there is no factual basis for her claim that, in April 2022, a guaranteed bonus of €50,000 was agreed in respect of that calendar year.  Mr Lyons submitted that there is no evidence to support the existence of such an arrangement, which, if it had been entered into, would have been inconsistent with the company’s established practice in relation to bonuses.

Decisions on the payment of bonuses are made by management in April or May each year, in the course of the annual performance review process and following receipt of accounts for the preceding financial year.  The agreement that the complainant alleges was in place in 2022 would go against the company’s practice to pay a bonus to the complainant for 2022, when she resigned at the beginning of 2023, before any employee reviews were completed and before any bonuses were considered.

No Deduction from Wages

The respondent submitted that the complainant’s application must fail because she had left the employment of the respondent by February 28th 2023, before the payment of the 2022 bonus was even considered, for the complainant or indeed, for any employee.

The respondent has a longstanding policy that bonuses are paid only to existing staff members and only existing employees are eligible for bonuses.  This was expressly flagged to the complainant by the HR manager in an email on March 2nd 2023 in response to the complainant’s request for the bonus to be paid in her final wages.  The text of this email is recorded on page 3 above.

Included in the respondent’s submission are copies of payroll records for 419 employee who left the company between 2020 and 2023.  These show that if an employee left before the point of bonus payment eligibility, no bonus was paid for the preceding year.  This established practice is at odds with the claim advanced by the complainant. 

Mr Lyons referred to s.5 of the Payment of Wages Act 1991, and the provision that “an employer shall not make a deduction from the wages of an employee.”  At s.1 of the Act, wages are defined as,

“… 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…”

Mr Lyons argued that the complainant cannot maintain that there has been a deduction in her wages in circumstances where the wages never became payable before she left her job with the respondent.  The purpose of the legislation is to prevent an employer from making deductions from the wages properly payable to an employee.  In this circumstance, where the complainant resigned months before the bonus became determined to be payable, no logical or lawful claim for the payment of the bonus can be sustained.

Mr Lyons referred to the decision of the High Court in 2006 in Histon v Shannon Foynes Port Company[4] where it was held that a complainant claiming a breach of s.5 of the Payment of Wages Act 1991 must demonstrate that the payment was “properly payable.”  In a decision of the High Court 10 years later, in Cleary and Others v B & Q Ireland Limited[5], it was held that bonuses are only properly payable when the conditions for eligibility have been fulfilled.

In a decision of the Labour Court in 2017 in Bord Gáis Energy Limited v Niall Thomas[6], the Court placed considerable weight on the company’s criteria for eligibility for a performance-related award.  The complainant had confirmed in evidence that he knew that one of the criteria was that he had to be employment on the date of payment.  The Labour Court accepted the respondent’s argument and stated that the bonus “only became properly payable if you were still in employment at the time of payment or were covered by one of the exemptions in the scheme.”

In the case at the UK Court of Appeal, Commerzbank AG v Keen[7], the plaintiff failed in his argument that the decision of his employer not to pay him any bonus for work performed in the previous year was an “irrational exercise as to the timing of the bonus award” and therefore a breach of contract on the part of the employer.  The Court held that the employer was under no obligation to pay a bonus for the previous year, and, at paragraph 74, stated,

“The serious difficulty in the way of this argument is that, as a matter of construction, it is clear that Mr Keen is not entitled to a bonus, if on the day of payment, he is not employed by the Bank.  He was not employed by the Bank in March 2006 when the bonuses were paid.  There was nothing unusual in the bonus payment being made in the March of the following year.  In the case of the 2003 and 2004 bonus, payments were made in March in respect of the past year.”

Lord Justice Mummery went on to conclude as follows,

“I agree that, for these reasons, the Bank was under no obligation to pay Mr Keen a bonus for the year 2005 or for part of the year.  There is no real prospect of success in establishing a breach of contract by the Bank in respect of the decision not to pay him a bonus for the year 2005.”

Mr Lyons submitted that the same reasoning applies to the case under consideration here.  In Commerzbank, Mr Keen’s contract had been terminated due to redundancy and he had no control over his date of termination.  Notwithstanding this, the bonus he claimed for the preceding year was considered not to be due.  In the instant case, the complainant made the decision to resign with effect from February 28th 2023, before any bonus was due for 2022.  Adopting the reasoning in Commerzbank, Mr Lyons submitted that the complainant’s claim for the payment of the 2022 bonus is unsustainable.

Irrationality

Without prejudice to these arguments, Mr Lyons submitted that the complainant has not demonstrated that, as a matter of law, the respondent was required to pay her a bonus of €50,000.  The courts have held that the discretion to withhold the payment of a bonus must be exercised “reasonably.”  Mr Lyons submitted that “reasonableness” is not the subjective view of the decision-maker reviewing the exercise of discretion, but the objective question of whether the employer exercised their discretion in a manner that no reasonable employer could have done.  In this regard, Mr Lyons referred to the decision of the English High Court in Clark v Nomura International Plc[8], where it was stated at paragraph 40:

“My conclusion is that the right test is one of irrationality or perversity (of which caprice or capriciousness could be a good example) i.e. that no reasonable employer would have exercised his discretion in this way … In reaching its conclusion, what the court does is thus not to substitute its own view, but to ask the question whether any reasonable employer would have come to such a conclusion.  Of course, if and when the court concludes that the employer was in breach of contract, then it will be necessary to reach a conclusion, on the balance of probabilities, as to what would have occurred had the employer complied with its contractual obligations, or, as Timothy Walker J put it in Clark v BET plc, assess, without unrealistic assumptions, what position the employee would have been in had the employer performed its obligations.  That will involve the court in assessing the employee’s bonus, on the basis of the evidence before it, and thus to that extent, putting itself in the position of the employer; but it will only do so if it is first satisfied, on the higher test, not that the employer acted unreasonably, but that no reasonable employer would have reached the conclusion it did acting in accordance with its contractual obligations, and the assessment of the bonus then of course is by way of an award of damages.”

This outcome was approved by the Irish High Court in 2022 in Keating v Shannon Foynes Port Company[9] (paragraph 127). 

Mr Lyons submitted that there is no conceivable basis for a contention that the non-payment of a bonus to a former employee was an irrational conclusion.  In this case, he asserted that it was clearly open to the respondent to determine that the bonus was not payable – a rational and legitimate conclusion where the employee was no longer employed in the company at the time when no decision had been made with regard to the payment of bonuses.  He argued that there are no grounds for maintaining that the non-payment of the bonus in those circumstances was irrational or lacking in good faith, as the complainant has suggested.  Mr Lyons submitted that the complainant falls far short of demonstrating that a legal threshold requiring proof of irrationality or lack of good faith has been met in this case.

Other Issues

Referring to the complainant’s reliance on the decision of the High Court in Finnegan v J&E Davy, Mr Lyons said that this judgement provides no answer to the statutory question of whether there has been a deduction in wages for the purpose of s.5 of the Payment of Wages Act.  This case involved the question of Mr Finnegan’s entitlement to a bonus while he was an employee of J&E Davy, and the deferral of part of his bonus, with non-payment if he left to join a competitor.  Without prejudice to this position, Mr Lyons submitted that the respondent’s bonus policy, which is to award bonuses to employees in employment at the time that bonuses are being paid out, is a common policy among employers and, unlike the findings in Finnegan v J&E Davy, is not a restraint of trade.  Mr Lyons noted the important fact that the complainant resigned before any bonus decision was made.

Conclusion

Mr Lyons concluded his submission for the respondent by asserting that no deduction has been made from the complainant’s wages, in contravention of s.5(1) of the Payment of Wages Act 1991.  He said that the complainant was paid the wages to which she was entitled and she has no claim under the Act.    

Evidence of the Complainant, Ms Caitríona Gallagher

Commencing her direct evidence, the complainant said that she commenced with HA O’Neill Limited in September 2000.  When she resigned in February 2023, she was a commercial division manager.  She said that HA O’Neill was one of five companies in the Jones Engineering Group.  For most of her career, the complainant said that she managed mechanical projects in the residential, commercial and office sector.  In the last five years, she worked on data centres.

In the 22.5 years that she worked with the respondent, the complainant said that she didn’t get a staff handbook.  There is no mention of a bonus in her contract of employment.  When she commenced with the business in 2000, on a salary of €18,000, she said that she received a bonus of around €1,000.  She relocated to London in 2010 to work on a project related to the 2012 Olympics.  She referred to a letter from the HR manager dated April 29th 2010, a copy of which was provided at the hearing.  The letter shows that the complainant agreed to move to London on a salary of €57,000 and a bonus of €10,000, subject to agreed targets.  The complainant said that “there were no formalised, agreed targets” and the review “was a look back at the previous year.”    The bonus was paid “at review time.”  She said that she returned to Ireland in 2012, when there wasn’t much work in the company.  She said that she “supported the guys who went to Saudi” and she was paid a bonus every year.

Mr Nolan asked the complainant to consider the document dated May 2014 with the title, “Commercial HVAC Division – Contracts Manager Bonus Scheme.”  This is referred to in page 2 above.  The complainant said that this project was in Dublin city and that she was clearly informed about the company’s expectations regarding turnover and profit.  She agreed with Mr Nolan that the purpose of the document was to outline how she could achieve her bonus.  She referred to clause 3 of the document which states:

“2013’s bonus (measurable year) is paid in approx. May / June of 2014 and so on, but deemed earned as of 31st Dec of measurable year.”

The document is signed by the division manager as he was then, Mr Paul Nicholls. The complainant said that, every year, she had a meeting with Mr Nicholls and she was told if she achieved the targets.  They then looked at the following year’s figures.  She agreed with Mr Nolan that targets were set in May or June even though this was part-way through the year.  The complainant said that she always over-achieved her targets and was paid her bonus every year.  She said that she went to Europe to work on data centres and was awarded for her work there.  The complainant said that she now works for Mr Nicholls in a different company.

The complainant said that there was a lot of upset in the Jones Group in 2021 and 2022, when a potential buy-out didn’t proceed.  She mentioned the key players at the time, the main shareholder, Mr Eric Kinsella, the managing director of HA O’Neill, Mr Jim Curley, Mr Stephen McCabe and the operations director, Mr Ray Murphy.  She said that a group of directors made an offer to Mr Kinsella and, when the buy-out failed, some handed in their notice.  Ultimately, Jones Engineering was bought by a Texas firm, Cathexis.  The complainant said that most of the board members remained with Cathexis, but her line manager, Paul Nicholls, left.

In April 2022, the complainant said that she was requested to attend a meeting with Mr Kinsella.  Mr Curley was also in attendance, as well as Mr Nicholls.  The complainant said that she had never met Mr Kinsella previously and Mr Nicholls told her that he wanted to speak to her.  At the meeting, the complainant said that Mr Kinsella gave an overview of the effect on the company of the recent turmoil and he explained that they needed people to stay with the business.  She said that he put an offer to her of an overall package of €220,000, comprised of a salary of €120,00 a bonus of €50,000 and a second bonus of €50,000 to be paid in November 2022.  The complainant said that she regarded the meeting as a review, to lay out her future bonus earnings and a commitment to pay a bonus of €50,000 every November.

The complainant referred to the letter dated April 28th 2022 from Mr Curley in which this remuneration package was confirmed (see page 3 above).  The complainant referred to the last line of the letter,

“In addition to the above, a €50K bonus to recognise your contribution to the Group will be paid in November 2022 and yearly going forward.” 

She said that the first version of the letter did not contain “and yearly going forward” and this was included following her request for clarification.  She said that there was no discussion at the meeting about key performance indicators (KPIs) or targets.  She said that the first €50,000 was paid in her wages in May 2022 and she said that it wasn’t based on any figures or financial accounts.

The complainant said that she resigned on February 1st 2023 and she confirmed this in writing to the HR department on February 12th.  She was placed on garden leave after a week and a half.

Mr Nolan asked the complainant for her position on the email from the HR manager on March 2nd 2023, in response to her query about her bonus.  The HR manger replied, “Once finalised, they will be paid to current employees working with the company at the date of payment.”  The complainant said that she understood that she was entitled to the bonus, as set out in the letter of April 28th 2022.  She said that it was already earned and that there was no mention in the letter of KPIs.  She said that the bonus was part of her agreed package and was not discretionary.  Nowhere in the letter does it state that she had to be an employee to be paid the bonus.

The complainant said that she got advice from her solicitor, and correspondence culminated in a letter from the respondent’s solicitors, McCann Fitzgerald, on July 28th 2023.  Mr Nolan referred to the argument put forward in this letter that the complainant’s bonus was contingent on her achieving certain targets.  The complainant replied that the letter of April 28th 2022 does not refer to KPIs or targets.  She said that she wasn’t on notice of any issues with her work in 2022 and she felt that the reference in the July 2023 letter from Mc Cann Fitzgerald to snags on projects she worked on was a personal attack.  She said that she felt that HA O’Neill was unhappy that some employees had left to work in the Design Group.  She said also that there is nothing in the letter of April 28th 2022 that states that she had to be in employment to earn the bonus.  She said that she sought the payment in February, having earned it by December the previous year.

Cross-examining of the Complainant

Mr Lyons asked the complainant if she agreed with the respondent’s submission that, on June 26th 2019, she was paid a bonus of €50,000 following a meeting with her line manager, Mr Nicholls on June 11th 2019 and that the bonus related to the year to December 2018.  The complainant agreed that this was correct and she said that she had to achieve targets in 2018 to be paid the bonus.  The complainant agreed that meetings regarding bonuses take place in the summer months so that the financial accounts of the business were known and the company could review the performance of the employee for the previous year.

Mr Lyons put it to the complainant that the “untypical” bonus of €50,000 offered at the meeting on April 28th 2022 was in return for loyalty to the company.  The complainant said that she disputed that suggestion, but she agreed that the payment of that bonus was contingent on being in employment on the date it was to be paid out.  Mr Lyons said that this bonus was “triggered by being in employment” and “that’s all that was needed.”  There was no account of contribution by the employee and she was paid this bonus essentially “because she was there.”  It was an incentive to employees to remain with the company during a turbulent time.  The complainant agreed that the company wanted to incentivise people to stay.

With regard to the other €50,000, Mr Lyons reminded the complainant that her evidence was that it was “laying out what her future bonus would be.”  The complainant said that it was to be paid every year going forward.  Mr Lyons put it to the complainant that, at no stage, was it ever suggested that she would be paid €50,000 “going forward.”  The complainant replied that she was told that her package was €220,000 per annum.  Mr Lyons countered that this was “not the reality” of the situation.  He asked the complainant if she was ever informed that she was entitled to €50,000 going forward.  She replied that her package of €220,000 included a bonus of €50,000.

Mr Lyons repeated this question twice more and the complainant said that her interpretation of what was discussed at the meeting on April 28th 2022 is that she would be paid a bonus of €50,000 every year from then on.  She repeated that her overall package was €220,000 including a bonus of €50,000.

Mr Lyons asked the complainant about “previous times,” when, he said, she was never given this fixed bonus arrangement.  He suggested to the complainant that she was contending that the April 2022 arrangement was a completely different type of bonus, and that she was entitled to this bonus “regardless of any reality.”  The complainant agreed that this was her position, to which Mr Lyons remarked that this was “commercially incredible.”  The complainant said that this was the offer presented to her, and that it wasn’t one that she negotiated, but she accepted it.

Mr Lyons referred to the clause, “and yearly going forward” which is appended to the penultimate sentence of the letter of April 28th 2022:

“In addition to the above,, a €50K bonus to recognise your contribution to the Group will be paid in November 2022 and yearly going forward.”

Mr Lyons said that the purpose of this bonus was to reward the complainant for her loyalty to the company.  The complainant said that she had no targets for 2022.  She said that she asked for the clause “and yearly going forward” to be inserted, to recognise that this bonus was “recurring into the future.”

Mr Lyons pointed out that the first bonus of €50,000 which is referred to higher up in the letter is not described as “yearly going forward.”  The complainant replied that she read this as her salary going forward.

Asked by Mr Lyons on what the date the bonus should have been paid, the complainant said that she couldn’t give a date.  Mr Lyons referred to a letter sent to the complainant’s solicitor by the WRC after she submitted this complaint on August 11th 2023, in which she was asked on what date she should have received the payment.  The complainant’s solicitor replied on August 29th and stated,

“Please note that the date was not fixed but same was generally paid in April/May.”

Mr Lyons referred to the complainant’s evidence that it is not written anywhere that only employees are entitled to a bonus.  The complainant agreed that this was her evidence.  When Mr Lyons put it to the complainant that it is well established over many years that bonuses were only paid to serving employees, she replied that not many people at her level left and didn’t get their bonuses.  Mr Lyons remarked that “it is notoriously well known that bonuses are only paid to employees.”  The complainant said that she wouldn’t agree.  She said that no one who left was entitled to a defined bonus.  She said that she was unaware of anyone who left between January and April.

Included in the respondent’s submission was a schedule of employees who left the company between September 18th 2020 and October 31st 2023.  The names of the employees and other identifying information was removed from the data sheet.  Mr Lyons referred to an employee who left on February 28th 2021 and who received their last bonus on August 26th 2020.  Another employee left on March 23rd 2021 and also received their last bonus on August 26th 2020.  The schedule showed several other employees in the same circumstances, who left in the first quarter of a calendar year and who received their last bonus in the second or third quarters of the previous year.

In response to this information, the complainant asked, “Were they on the same scale as me?”

Mr Lyons reiterated that it was a well-known practice that only serving employees were paid bonuses.  The complainant replied that she was not aware what scheme or requirements were in place.  She suggested that none of the employees referred to in the schedule were on the same scheme as her.  She said that she would say, “if it’s earned, it should be paid.”  Mr Lyons agreed that employees should be paid a bonus if they have earned it and that bonuses apply to employees.  The complainant replied that no one told her this and that she never got a full breakdown of her earnings on her final payslip.  Her position is that there was a deduction from her wages because she wasn’t paid her bonus in 2023.

Mr Lyons referred to the letter of March 2nd 2023 from the HR manager to the complainant, in response to her email of February 12th in which she asked for confirmation that her bonus would be included in her final salary.  The HR manager stated that the complainant would not receive a bonus in her final wages, and that bonuses are paid out when the financial accounts are finalised and that they are paid to current employees.  Mr Lyons asked the complainant why she didn’t reply and say, “I’m entitled to the bonus.”  The complainant said that she felt she was in “a David and Goliath situation” and that it wouldn’t have been natural for her to write back.  Mr Lyons referred to the complainant’s job as a commercial contracts manager and suggested that she is a capable negotiator.  She replied that, when she was placed on garden leave, she requested the bonus.  When she got no response, she then requested it in writing and then she got advice. 

Mr Lyons asked the complainant why she didn’t call Mr Nicholls to give evidence at this hearing, as, having a 360° view of what was discussed at the meeting on April 28th 2022, he would have been a natural person to give evidence.  The complainant replied that she didn’t want to involve other people in her complaint.

In response to questions about her current position with Designer Group, the complainant said that she didn’t ask her new employer to pay any part of the bonus that she is currently claiming.  She said that she received a job offer from that company days before she handed in her notice to HA O’Neill.

Mr Lyons asked the complainant if the bonus was fixed, and her wages were increased and her performance was excellent, was she not stuck on a lower bonus?  The complainant agreed that, potentially, this could have happened.  She said that if she was exceeding expectations, she would have asked for more money.  Mr Lyons noted that the letter of April 28th 2022 doesn’t say that the €50,000 was a fixed bonus going forward.  The complainant replied that the letter doesn’t indicate that her salary is fixed either.  She said that there is no mention in the letter of what she was required to achieve.  Every year, she said that she exceeded expectations.

Evidence of the Complainant’s Former Colleague, Mr Adrian O’Leary

Mr O’Leary said that he joined HA O’Neill in 2000, although he left in September 2003 and returned in January 2005.  When he resigned in February 2023, he was a commercial contracts manager.  Like the complainant, he reported to Mr Paul Nicholls.  Mr O’Leary referred to his contract of employment, a copy of which was included in the respondent’s book of documents for the hearing.  The contract is silent on the subject of a bonus.  In the early years, Mr O’Leary said that he got a bonus of around €2,000 every year.  In 2008, he relocated to Dublin, and he was paid a living allowance.  In 2011, when work was scarce in Ireland, he went to Saudi Arabia.

Mr O’Leary referred to a letter dated January 13th 2011 sent to him by the HR manager to confirm the terms of his assignment in Saudi Arabia.  The terms provided that he would earn a bonus of €200 per week which was to be “held back until end of job.”  Mr O’Leary said that he received this bonus in full.  In January 2012, he went on an assignment to Jeddah.  His bonus for that assignment was €15,000 per annum.  He said that this bonus was paid in full.

In early 2014, Mr O’Leary said that he returned to Ireland.  A letter included in the respondent’s documents shows that his salary from March 31st 2014 was €55,000 plus a car allowance of €5,000 and an annual bonus, the amount of which was not specified.  The letter states that the bonus is paid “subject to the achievement of agreed targets.”  Mr O’Leary said that he moved onto the contracts managers’ bonus scheme and he was entitled to be paid the bonus in 2015.  If the company performed poorly, he said that he was entitled to a minimum of 10% of his salary as a bonus.

Mr O’Leary referred to a document headed “Commercial HVAC Division – Contracts Manager Bonus Scheme” which provides the same details of a bonus scheme that was offered to the complainant in 2014 and which is described at page 2 above.  Mr O’Leary said that he was happy to agree with this proposal.  He said that discussions took place in May or June every year to look back at the figures to the end of December the previous year and to plan targets for the current year.  The reason that the meeting was held in May or June is because year-end figures had to be finalised.

Mr O’Leary said that he over-achieved every year.  During Covid-19, he said that projects ground to a halt.  He said that he was aware of “flux” in the company in late 2021 and early 2022and that the situation was quite unsettling.

Mr O’Leary said that he reported to Mr Nicholls, who, in turn, reported to the group managing director, Mr Curley.  He said that he had contracts managers, project engineers and CAD technicians reporting to him.  He said that some senior people resigned and clients were seeking reassurance from the company.

Mr O’Leary said that he had a meeting around the middle of April 2022 with the chairman of the board of directors, Mr Eric Kinsella and Mr Curley and Mr Nicholls.  He didn’t know Mr Kinsella well.  Mr Kinsella had a paper to speak from and there were no negotiations.  Mr O’Leary said that they spoke about the upheaval in the company and he was offered an overall salary package of €200,000.  This was to comprise an annual salary of €120,000, a bonus of €40,000 and a second “recognition” bonus of €50,0000 to be paid in November.  Mr O’Leary said that there was no discussion about KPIs and his understanding was that this was his new package going forward.  He said that he had a discussion with the complainant about how the package was comprised. 

When he asked for a breakdown of his package, Mr O’Leary said that he got a letter dated April 28th 2022, similar to the letter given to the complainant which is referred to on page 3 above.  The clause “yearly going forward” was not included at the end of the penultimate sentence of the letter and Mr O’Leary said that he spoke to the HR manager and asked her to add that in.  He said that he spoke to the complainant about this also.  He said that he disagrees that it was “commercially incredible” to pay this bonus every year into the future.  He said that his bonus was in line with the bonus he received in the previous year.  When he worked in Saudi Arabia, he said that he was paid a fixed bonus.  He said that his understanding is that the €40,000 for the previous year established the bonus going forward.  He said that the revised package made no reference to KPIs and that his bonus was guaranteed.

Mr Nolan asked Mr O’Leary what would have happened if he hadn’t resigned on February 28th 2023.  Mr O’Leary replied that his letter sets out his minimum package.  He said that he received a bonus of €50,000 in November 2022 and he resigned in February 2023.

Mr Nolan referred to an email that Mr O’Leary sent to the HR manager on February 13th 2023.  In his email, he confirmed that he would leave the company on February 28th.  He asked for his 2022 bonus to be included in the February salary run.  Mr O’Leary received a similar reply to that sent to the complainant which is referred to at page 3 above: 

“In relation to Bonus arrangements for employees, there are considered when Jones Engineering performance and financial position is known following completion of our audited accounts.  As it is only early March, the accounts have not been finalised or audited.  I expect that the timeframe for concluding those accounts, along with completion of annual staff reviews and for the Board of Directors to consider any discretionary bonuses, will be similar this year to previous years.  Once finalised, they will be paid to current employees working in the company at the date of payment.”

Mr O’Leary said that the bonus that he was claiming was for work done in the previous year.  He did not accept that it was subject to review, as the HR manager suggested in her email.  Mr O’Leary said that the company now had new owners and the €40,000 due to him was a guaranteed bonus for his role as a contracts manager.  He said that it wasn’t a discretionary bonus.  He said that he agreed his targets with Mr Nicholls.

Mr O’Leary said that he doesn’t agree that payment of the bonus was contingent on him being an employee.  He said that not many people in the company were entitled to this contracts manager bonus scheme.

Mr Nolan referred to a letter dated July 28th 2023 from the respondent’s solicitors, McCann Fitzgerald.  In the letter, it is suggested that Mr O’Leary under-performed in 2022, and that the company incurred costs of €128,000 to address snags and defects.  Mr O’Leary replied that these snags and defects were never brought to his attention and that issues with contracts were dealt with on an ongoing basis.  He said that he was very disappointed to receive this letter and that there were never any issues with his performance.  He said that if he had had a review in April 2023, it would have been positive.

Mr Nolan asked Mr O’Leary why he thinks the respondent is refusing to pay the bonus to him and the complainant.  Mr O’Leary replied that he appreciates that he is working for a competitor, but he said that the failure to pay the bonus seems in poor taste.  He agreed with Mr Nolan that he now works for Mr Nicholls in Designer Group.

Concluding his direct evidence, Mr O’Leary said that he never saw anything in writing that stated that he had to be in employment to be paid the bonus.  He said that “people didn’t leave” and he is not aware of anyone not being paid the bonus.

Cross-examining of Mr O’Leary

Mr Lyons referred to Mr O’Leary’s evidence that the non-payment of the bonus shows poor taste on the part of his former employer.  He agreed with Mr Lyons that he did well in the company, but said that this was a result of the work he did.  He agreed that his salary quadrupled between 2005 and 2021 and his bonus was five or six times a multiple of what it was when he started.  Mr O’Leary agreed that he had a significant career trajectory and that he was well paid.

Referring to the letter of April 28th 2022, and the phrase, “and yearly going forward,” Mr O’Leary said that his concern was that, after November 2022 (in the sentence), there was a full stop.  He said that he and the complainant noted that the wording “didn’t capture the conversation.”

Referring to the separate bonus of €40,000, Mr O’Leary referred to this as his “yearly set bonus.”  He received the same bonus the previous year.  His understanding was that the €40,000 bonus referred to in the letter of April 28th was in return for his contribution in 2021.  Mr Lyons said that the letter doesn’t refer to a “yearly set bonus.”  Mr O’Leary replied that the letter says “€40K per annum.”  He said this means “yearly.” 

Bearing in mind that there appeared to be an ambiguity in relation to the other bonus of €50,000 and that he was concerned to clear up the ambiguity, Mr Lyons asked Mr O’Leary if he wasn’t concerned to clarify the ambiguity related to the €40,000 bonus.  Mr O’Leary replied that he didn’t see an ambiguity in relation to the €40,000 bonus, and that this was a precedent from the contracts manager bonus scheme.  The €40,000 bonus replaced the 10% agreed bonus plus 30% for the achievement of agreed targets.

Mr Lyons suggested to Mr O’Leary that there is a difference between a set bonus and a performance bonus.  In circumstances in which the ambiguity around the €50,000 bonus was clarified, he asked Mr O’Leary why he didn’t do anything about the €40,000 bonus.  Mr O’Leary replied that he inferred that his revised package was €210,000, although he agreed that the word “guaranteed” wasn’t in the letter.

Mr Lyons noted that the letter referred to Mr O’Leary’s “salary package” and he put it to him that this was “a package for one year.”  Mr O’Leary said that it was obvious that this replaced the previous package, but Mr Lyons said that the letter does not state this.  He suggested that Mr O’Leary’s interpretation meant that the word “package” was “doing a lot of heavy lifting here.”  Mr O’Leary replied that, in the context of the turmoil in the company, with key people leaving and clients being concerned, in light of this, this was his new package.

Mr O’Leary said that he is arguing that the €40,000 is his bonus for work done in 2022.  He agreed with Mr Lyons that he received an annual bonus for many years, after the annual accounts were published.   He said that there was no discussion about KPIs in the April 2022 meeting.

Mr Lyons put it to Mr O’Leary that, “all this letter (of April 28th 2022) is doing is confirming his salary and bonus and the only new component is the bonus of €50,000 to be paid in November.  Mr O’Leary replied that his clear understanding is that the letter was to confirm a guaranteed package of €210,000 going forward.  He said that he was moving from a contracts managers’ bonus scheme to a revised scheme.  He said that the bonus was due for payment in April or May 2023.

Mr Lyons referred to the fact that the letter states that the €50,000 “loyalty bonus” is to be paid in November 2022.  He suggested that, if the €40,000 was a guaranteed bonus to be paid in April or May 2023, the letter would have stated that.

Mr O’Leary agreed that he was not an employee in April or May when the bonus was payable.  He said that the contracts managers’ scheme states that the bonus is payable for the previous year.

My Lyons referred to the schedule in the respondent’s book of papers that shows a list of employees who left the company in the early part of 2020, 2021, 2022 and 2023 and who were not paid a bonus.  Mr O’Leary said that many on the list are junior engineers and he said that he wouldn’t expect them to be paid a bonus.  He said that he wasn’t aware of anyone at his level who left and he said that no one told him that they didn’t get their bonus when they left early in the year.  He said that, of the contracts managers that reported to him, he wasn’t aware of any who left between January and March.

Mr Lyons asked if it wouldn’t have made sense, where a review normally takes place, for an employee to stay for the review.  Mr O’Leary replied that he didn’t think he should have had to wait for a review.

Re-direction by Mr Nolan

In response to a further question from Mr Nolan, Mr O’Leary said that he thinks the bonus of €40,000 is due to him for the work he did.  He said that the letter of April 28th 2022 states that his salary and bonus are payable “per annum.”  He said that it was due for payment every year. 

Mr Nolan referred to the fact that the letter does not state that the contracts managers’ bonus scheme is replaced; however, Mr O’Leary said that that was his understanding.  Mr Nolan then referred to the letter of July 28th 2023 from McCann Fitzgerald Solicitors to Mr O’Leary’s solicitors in which the contracts managers’ bonus scheme is described as “a historic document dated May 2014 and has not applied for many years.”

Evidence of the Group Payroll Manager, Mr Paul McKenzie

Mr McKenzie said that he has been the group payroll manager since 2012.  He runs a monthly payroll for five companies in Ireland, one in northern Europe and one in the Middle East.  The company has around 2,500 employees on the payroll, 1,000 of whom are weekly paid.  He said that between 50% and 75% of the employees are in receipt of bonuses.

After the publication of the company’s annual report in March or April each year, Mr McKenzie said that the directors decide on wage increases.  They meet each employee and confirm their salary increases and bonuses. 

Mr Lyons referred to the schedule in the respondent’s book of documents that lists the employees who left between September 2020 and October 2023.  Mr McKenzie said that this schedule lists the employees who were entitled to a bonus and who had left the company during that period.  He said that no employee was paid a bonus after they left.  Mr McKenzie said that the payment of a bonus follows an annual review.  He said that “it never occurred that someone got a bonus after they left.”  Mr Lyons selected one employee on the schedule who left on March 23rd 2021.  This employee received a bonus in August 2020 for work done in 2019 and did not receive any bonus for work done in 2020.  

Mr McKenzie said that he thought that the practice of paying bonuses in May or June was well-known.  He said that they often had an increase in the numbers leaving after the bonus was paid.  He said that people were aware of the condition attached to the bonus, that they had to wait for a review meeting.

Cross-examining of Mr McKenzie

Mr Nolan drew Mr McKenzie’s attention to the schedule of leavers from September 18th 2020 and he asked him to explain why the schedule started on that date.  Mr McKenzie couldn’t explain why that date was selected.  He said that the schedule contains details of 419 employees who left between that date and October 31st 2023 who were not paid a bonus.

In response to Mr Nolan’s question, “what’s the rule?” Mr McKenzie said, “if you leave before the review, you don’t get a bonus.”  He agreed with Mr Nolan that the “trigger” for payment is the review.  He said that this isn’t documented anywhere, but that it is common knowledge.

Mr Nolan asked if the complainant and her colleague have to rely on word of mouth regarding this rule, and Mr McKenzie replied “yes.”  He said that a number of other employees could be in the same situation as the complainant and her colleague, but he is unsure if any challenged or objected to how they were treated.

Evidence of Mr Jim Curley

Mr Curley said that he joined HA O’Neill in February 1978.  When Jones Engineering Group was sold in May 2022, he was the chief executive officer and the second largest shareholder.  For regulatory reasons, he remained on until September 2022, when he resigned.  Mr Curley said that he knew the complainant and her colleague well.

Mr Curley referred to two separate meetings in April 2022 that he, Eric Kinsella and the complainant’s line manager, Paul Nicholls had with the complainant and her colleague.  He said that these were unusual meetings and that Mr Nicholls usually did the review meetings on his own, normally after the annual accounts are audited.

Mr Curley said that, over a period of time, the performance of the company had increased from a couple of million annually to €1bn and that the turnover is now in excess of €1bn annually.  He said that the directors rejected an offer of a buy-out.

Mr Curley referred to the complainant and her colleague, Mr O’Leary as “very good operators” who were potential directors of the company.  He said that the purpose of the meeting in April 2022 was for Mr Kinsella to meet them.  He and Mr Kinsella attended the meetings to introduce the loyalty bonus.  He said that meetings took place with around 80 or 90 senior employees, with the objective of thanking them for their loyalty while others were trying to poach them.  The purpose of the meeting therefore was to sign off on salary and bonuses for the year ahead and to introduce the loyalty bonus.  Mr Curley said that he has no recollection of scrapping the old bonus scheme.

Mr Lyons referred to Mr O’Leary’s description of the annual bonus as part of his “package.”  Mr Curley said that Eric Kinsella would have used the term “package.”

Mr Lyons referred to the first bonus component of €50,000 per annum, which, the complainant suggested, was paid every year.  Mr Curley replied that it was paid every year, but that it had to be earned.  It was a discretionary bonus.  If the firm ran out of cash, or, if there was a problem on a job, it wouldn’t have been paid.

Mr Lyons asked Mr Curley about the stipulation that, to be paid this bonus, you had to be employed at the time.  Mr Curley said that he was responsible for ensuring that the directors who carried out reviews gave people that message.  He said that very few people left before the annual reviews were done and that there was always a concern that they would leave as soon as the bonuses were paid.  He said that some firms offered “bounties” to match the bonus that would be paid if they had remained with the respondent.

Cross-examining of Mr Curley

In response to a question from Mr Nolan, Mr Curley said that Paul Nicholls would set out a plan for the turnover for the year ahead in his division.  He said that he accepts that, at the meeting in April 2022, there was no discussion about targets.  He said that Eric Kinsella, the chairman of the company, wasn’t interested in getting involved in such details.

Mr Nolan referred to the salary of €120,000 for the complainant, with two bonuses, both of €50,000. 

Mr Curley said that the reference to a “package” in the letter of April 28th 2022 was a reference to the complainant’s salary and bonus for that year.  He said “there were rules around it.”  When Mr Nolan said that the complainant didn’t know what the rules were, Mr Curley said that “The first thing they know is that they have to be in employment to get the bonus.”  He said that there was an expectation that Paul Nicholls would sit down with the complainant after the April 28th meeting and discuss targets.  He said that it is very unusual that that meeting didn’t take place.

Mr Nolan referred to a guaranteed bonus that Mr O’Leary received when he returned from his assignment in the Middle East.  Mr Curley said that that was a specific assignment.  In 2023, he said that the complainant and Mr O’Leary could have received more than what was stated in the April 28th letter.  He said that they were among around 150 to 200 top earners in the company and that he had similar conversations with 100 plus others.  He said that the bonus was conditional on two things, that it had to be earned and that the recipient had to be in employment.  In response to Mr Nolan’s question, “Where’s that rule?” Mr Curley said that it was directed by the board every year and it was the practice.

The Relevant Law

This complaint was submitted under the Payment of Wages Act 1991 (“the Act.”)  Section 1 of the Act sets out a definition of Wages:

[W]ages 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 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.

It is apparent therefore, that a bonus is included in the definition of “wages” and the failure to pay a bonus may be considered to a breach of section 5(6) of the Act:

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 therefore 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 deductions as aforesaid) are paid to the employee,

then, except insofar 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 that occasion.

Documents that Refer to a Bonus

Unlike most organisations of the size and calibre of the respondent, there was no written bonus policy and, unsurprisingly, as it was issued in September 2000, there is no mention of a bonus in the complainant’s contract of employment.  Although, in her evidence, the complainant said that she was paid a bonus from when she started working with the respondent, the earliest document that refers to a bonus is a letter dated April 29th 2010 from the HR manager.  This was issued when the complainant transferred temporarily to London and provided for a “bonus of €10,000 subject to achievement of agreed targets.”  Like the absence of any document on the bonus policy, there is no evidence of a formal performance review document with information about achievements in the previous year or goals for the coming year and the performance review process seems to be somewhat informal and related to the overall financial position of the company in any year.

The next document that refers to a bonus is one dated May 2014 with the title, “Commercial HVAC Division – Contracts Manager Bonus Scheme.”  There are nine brief one-sentence clauses in this document which provides that the complainant received a guaranteed bonus of 10% of salary plus an additional 30%, subject to the achievement of certain targets.  Clause 2 provides that the bonus is payable based on “Ray’s final end of year figures only.”  I understand that the “Ray” referred to was the commercial director in 2014, Mr Ray Murphy.  Clause 3 states that,

“2013’s Bonus (measurable year) is paid in approx. May / June of 2014 and so on, but deemed earned as of 31st Dec of measurable year.”

Clause 4 states,

“Salary % is based on the measurable year’s salary, i.e. The 2013 bonus, paid in summer 2014 is based on 2013’s salary.”

Informal as this document appears, it provides some guidance about the practice in the company.  It is apparent that bonuses were always paid in or after the month of May and were conditional on the achievement of targets for the previous calendar year.  This is also apparent from the fact that, in 2019, 2020, 2021 and 2022, the complainant was paid a bonus in June, August, July and May respectively. 

The document relied upon by the complainant in her claim that she was entitled to a bonus of €50,000 with no conditions attached is the letter of April 28th 2022 from Mr Jim Curley.  The complainant asks me to interpret the phrase “€50K per annum” as an entitlement to an annual bonus of €50,000.  It is important, in my view, to note the fact that letter states “The bonus will be paid in the next salary run” and we know that it was paid in May 2022.  The respondent’s submission states that the amount paid in May 2022 was €52,500, although this discrepancy wasn’t raised as an issue by either side.  This correlates with Mr Curley’s evidence that the amount paid in any year could have been more than €50,000, depending on performance. 

I find it difficult to accept that the first bonus referred to in the letter of April 28th 2022 was a new bonus that superseded a previous arrangement.  There is no logic for the respondent in moving away from a performance-related bonus, while at the same time, introducing a new, unconditional “recognition bonus.”  It is my view that the reference in the letter to the first bonus of €50,000 was a reiteration of the performance-related bonus paid to the complainant for several years previously.  If it was an unconditional bonus, then it was in the same category as the “recognition bonus” and the letter would have stated that she was entitled to a bonus of €100,000.  The fact that two bonuses were referred to separately, leads me to believe that the first was confirmation of the bonus that had been in place since 2014, and the second was to incentivise the complainant to remain in the employment of the respondent.

Consideration of the Case Law

I have considered the case of Finnegan v J&E Davy cited by Mr Nolan for the complainant.  Mr Finnegan’s circumstances were considerably different from the complainant’s because his former employer proposed deferring 40% of his bonus which amounted to €40,000, whereas, in the case under consideration, the respondent didn’t pay any part of the complainant’s bonus of €50,000.  In Finnegan, the issue between the parties was the use by J&E Davy of the bonus as a performance and retention tool, whereas, in the complainant’s case, two separate bonuses were on offer.

Circumstances more closely approximating that of the complainant were considered by the Labour Court in 2017 in the case of Bord Gáis Energy Limited and Niall Thomas.  Mr Thomas left the employment of Bord Gáis on January 6th 2017.  If he had remained in employment, he was due to be paid a bonus in February 2017, contingent on certain performance criteria.  Finding that he was not entitled to the bonus, the Labour Court Chairman, Ms O’Donnell said,

“…the Courtplaced considerable weight on the fact that the complainant’s contract sets out the eligibility requirements for payment of the PRA (performance-related allowance) and that the Complainant confirmed in evidence that he was aware that one of the criteria of the scheme required that he be in employment on the date of payment.”

Unlike the Bord Gáis case, we have no contractual terms on which to rely, and the issue I have to consider is the complainant’s contention that the letter of April 28th 2022 was a departure from the practice of paying a bonus in May, June, July or August each year, contingent on performance.  In that regard, I note that the letter refers to the “recent meeting to discuss your annual review plus your salary package.”  The new salary of €120,000 was back-dated to January 1st 2022 and the letter states that the bonus will be paid in the next salary run, which was May 2022.  It is clear from this that the salary is for the year 2022 and the bonus is for 2021 and that the review process would be repeated the following year.  I do not believe that the salary and bonus were fixed “per annum” as the complainant has argued.

I accept that, in the Bord Gáis case, the Labour Court held that the withholding of a bonus to a departed employee is not unlawful; however, I am conscious that, in its decision-making on this case, the Court had the benefit of a contractual term on which it placed considerable weight.

Mr Lyons referred to the UK case of Commerzbank v Keen and the finding that it was not irrational for the employer to pay a bonus related to performance in a previous calendar year in the following year.  Relying on this argument, on behalf of the complainant, Mr Nolan argued that the respondent did not engage in a rational and good faith exercise of its discretion.  I disagree on this point, because the respondent’s policy of paying a bonus to current employees seems to me to be entirely rational and to do otherwise makes no commercial sense.  It is my view also that the connection of the bonus to performance is also rational, and I am satisfied that the complainant understood this and that the respondent acted in good faith in that regard.

Wages Properly Payable    

In the absence of a documented bonus scheme, or any reference in the complainant’s contract of employment to the terms that apply to the payment of a bonus, I must rely on the letter of April 28th 2022 and the custom and practice in the company to determine if the decision of the respondent not to pay the complainant the first bonus of €50,000 which is referred to in the letter, was a failure to pay “wages properly payable” as set out at s.5(6) of the Act.

I am satisfied that the first bonus referred to in the letter of April 28th 2022 was a reference to the bonus that was paid to the complainant in May that year.  I am further satisfied that this reference was a reiteration of the practice of paying an annual performance-related bonus in the month of May or later every year.  I accept that targets were not set, but there is no evidence that formal targets were set in any year.  The fact that a review meeting may not have taken place with Mr Nicholls may have been related to the turmoil in the company at the time and that fact that he departed shortly afterwards.  The meeting with Mr Kinsella, Mr Curley and Mr Nicholls could have usurped the need for a formal review meeting. 

The letter of April 28th also confirmed that the complainant would receive a new and unconditional bonus of €50,000, in recognition of the fact that she remained working with the company at a time of upheaval.  It is clear from this that the separation of the two bonuses was intentional.

Considering “the reasonable employer test” set out in Clark v Nomura International Limited, which was cited by Mr Lyons, it is my view that no reasonable employer would have paid a bonus to the complainant when she resigned in February 2023.  I have reached this conclusion based on the schedule submitted by the respondent that demonstrates that, between September 18th 2020 and October 31st 2023, no employee received a bonus who left in the first quarter of a calendar year. 

I am satisfied that it was well known in the company that the performance-related bonus was paid out only after the company’s annual accounts were published and when the figures for each division were available.  I am satisfied also that this practice was accepted by employees, who, in general, did not resign in the first quarter of the year.  This custom and practice in the company and the acquiescence of employees who were eligible for a bonus, leads me to conclude that the bonus claimed by the complainant in February 2023 was not properly payable.

Conclusion

Of significance in my attempt to reach a conclusion on this matter was the complainant’s evidence that there were never any formal targets documented, and that the review was “a look back at the previous year.”  This is evidenced by the lack of any performance review documents and the reliance by the business on the overall financial results to decide on salary increases and bonuses.

Also of significance is the general trend in the company (and in many businesses that pay bonuses) for employees to defer a decision to depart until bonuses are paid out.  Apart from a reward for performance, the bonus acts to some degree as a retention tool, although the risk changes to one where a glut of employees all leave around the same time.

If the complainant had been convinced that she was entitled to the bonus for work done in 2022, and, if she had been similarly convinced that the April 2022 offering superseded the previous bonus regime, it seems to me that she would have asked for this to be clarified in the letter, in the same way that she sought clarification about the November 2022 payment and for an additional clause to be inserted to reflect its payment “yearly going forward.”  As someone with insight into the respondent’s practices, all that would have been required was a request to amend the letter to reflect her understanding that the bonus of “€50K per annum” was not conditional on performance or on the company’s financial results.  The fact that she did not seek this clarification leads me to conclude that she understood the terms attached to this bonus and that any clarification would have simply confirmed what she already knew.

It is of no assistance to the complainant’s case that, on the form she submitted to the WRC in August 2023, she declined to state the date on which the bonus was due for payment.  Her solicitor’s clarification that it was due to be paid in April / May 2023 is fatal to her claim that it was a properly payable bonus, because, in April / May 2023, the complainant was no longer an employee, and, unless there was a specific contractual provision in place, no reasonable employer would pay a bonus to a departed employee.

The managing director of HA O’Neill, and the author of the April 2022 letter, gave evidence about the intention of the company and the meaning of the letter and I am satisfied that his evidence carries considerable weight.    

In his cross-examining of the complainant, Mr Lyons remarked that “it is notoriously well known that bonuses are only paid to employees.”  This remark is somewhat reminiscent of the comment of the President of the High Court in the 1937 decision of Patrick J O’Reilly v Irish Press Limited[10], where, considering Mr O’Reilly’s claim that he was entitled to six months’ notice of his dismissal Mr Justice Maguire stated,

“I have to be satisfied that it is so notorious, well known and acquiesced in that in the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties.”

I am satisfied that the policy of the company to pay bonuses to current employees after the publication of the financial results was similarly notorious, well known and acquiesced in.  Having reached this conclusion, I am further satisfied that there is no legal basis for the complainant’s claim that she was entitled to the bonus.

As I have concluded that the bonus claimed by the complainant was not properly payable, it follows that there was no illegal deduction from her wages.  I decide therefore, that her complaint under the Payment of Wages Act 1991 is not well founded.

Bonus, wages properly payable, leaving date