PWD2219

FULL RECOMMENDATION

SECTION 7(1), PAYMENT OF WAGES ACT, 1991

PARTIES :

ACCENT SOLUTIONS

- AND -

MR ALAN O'CONNOR
(REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION)

DIVISION :

SUBJECT:

1. Appeal Of Adjudication Officer Decision No. ADJ-00028530 CA-00036644-004

BACKGROUND:

2. This is an appeal of an Adjudication Officer’s Decision made pursuant to Section 7(1) of the Payment of Wages Act, 1991. The appeal was heard by the Labour Court on 25 February 2022 in accordance with Section 44 of the Workplace Relations Act, 2015. The following is the Court's Determination:

DETERMINATION:

This is an appeal by Mr Alan O’Connor (the Complainant) against a Decision of an Adjudication Officer (ADJ-00028530 CA-00036644-004) under the Payment of Wages Act 1991 (the 1991 Act), dated 26 July 2021, against his former employer Accent Solutions. It is linked with PWD2217, PWD2218 and TU221.

The Adjudication Officer found that Mr O’Connor’s complaint was not well founded. Mr O’Connor lodged an appeal to the Labour Court on 02 September 2021 and a hearing of the Labour Court was held on 25 February 2022.

In this Determination the parties are referred to as they were at first instance. Hence, Mr Alan O’Connor is referred to as the Complainant and Accent Solutions is referred to as the Respondent.

Background

The Complainant commenced work as a plumber/handyman in October 2006 with Dalkia. In 2009 the facilities management unit of Dalkia transferred to another company Mitie, and in line with the Transfer of Undertakings Regulations, the Complainant’s terms and conditions of employment transferred to Mitie with the sale. In 2015, the Complainants terms and conditions of employment transferred to Aramark, and subsequently to the Respondent in February 2019. His employment was terminated by reason of redundancy on 31 March 2020.

Complainant’s case

SIPTU, on behalf of the Complainant, submits that the Respondent breached the Act when it did not pay a bonus payment to the Complainant when his employment was terminated by reason of redundancy on 31 March 2020. It submits that the amount that is properly payable to him is €800.

SIPTU submits that the Complainant was entitled to an annual performance bonus paid to staff at the end of each year. The Complainant should have been paid this bonus on a pro-rata basis when his employment terminated by reason of redundancy on 31 March 2020. SIPTU submits that there is precedence for bonus payments being paid on pro-rata basis previously. It relies on a letter dated April 2008 to demonstrate that payments were made on a pro-rata basis in the past.

Respondent’s case

The Respondent rejects the claim and submits that the Complainant had no entitlement to receive a pro-rata bonus payment when his employment was terminated in March 2020. The Complainant was entitled to an automatic annual bonus of 10% of his salary.

The annual bonus scheme applied to eligible staff who were in employment when bonuses were assessed in December each year. The Respondent does not pay pro-rata bonuses.

An employee must be in employment when the bonus is paid. It submits that there is nothing in the Complainant’s contract of employment to indicate that a pro-rata payment is an entitlement.

The Respondent accepts that the Complainant received a bonus payment in April 2008, when in the employment of his previous employer, Dalkia. This payment related to his transfer to a different position where changes to terms and conditions of employment included a salary increase and an entitlement to a 10% performance-related bonus. The Respondent submits that this is not evidence of a precedent in the context of an employee who is leaving the company before a bonus is paid.

The applicable law

Section 5 (6) of the Payment of Wage Act 1991 states:
“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”.

Determination

To ground a claim under the Act of 1991, the wages concerned must be properly payable. The matter for the Court to decide is whether or not an annual bonus paid to the Complainant was properly payable to him on a pro-rata basis when his employment terminated in March 2020.

It is not disputed that the Complainant was entitled to payment of an annual bonus of 10% of his salary, which formed part of his terms and conditions of employment that transferred to the Respondent, when he transferred employment in February 2020, in line with the Transfer of Undertakings Regulations.

It is accepted by both parties that the bonus was initially structured as a performance-related bonus, which subsequently became an automatic payment made to the Complainant each year. It was also accepted that the pay-out date changed from April to December each year.

The Respondent submits that the Complainant has no entitlement to receive a bonus on a pro-rata basis and that an employee must be in employment at the time of the bonus pay out in December to be eligible for the annual payment.

The Court was referred to a letter dated 23 October 2007 which notified the Complainant that he was “eligible for a 10% performance related bonus which will be paid out annually in April”. The Court was also referred a letter issued to the Complainant in April 2008, the following year, advising him that he was to receive “a performance bonus of 9% pro-rata amounting to €675”.

While SIPTU relies on this second letter issued to the Complainant in April 2008 to demonstrate that payments could be awarded on a pro-rata basis during the year, the Court is unclear how that letter substantiates the payment of a bonus on a pro-rata basis during a year, in circumstances where the 23 October 2007 letter specifies that any bonus payment would be paid annually in April.

In the view of the Court, the Complainant has failed to demonstrate to the Court’s satisfaction that he was entitled to be paid his annual bonus on a pro-rata basis when his employment was terminated in March 2020. In the absence of any persuasive documents to support his claim, the Court is not satisfied that a pro-rata bonus payment of €800 was properly payable to the Complainant during the cognisable period for the within complaint.

For the reasons set out above, the Court determines that the within complaint is not well founded.

The Decision of the Adjudication Officer is upheld.

The Court so determines.

NOTE

Enquiries concerning this Determination should be addressed to Orla Collender, Court Secretary.