INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969
MALLINCKRODT MEDICAL IMAGING IRELAND
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
Chairman: Mr Duffy
Employer Member: Mr McHenry
Worker Member: Ms Ni Mhurchu
1. Claim by the worker relating to 1. Alleged non-payment of the Company Bonus for 1998/1999. 2. Entitlement to Company Pension Contributions paid during the period of employment. 3. Alleged non-payment of salary in full for employee's last two weeks of service.
2. The claim concerns a worker who commenced employment with the Company as an Information Systems Administrator in March, 1995. The worker resigned from his position on the 28th of May, 1999. He claimed that he was entitled to (i) Annual Company bonus for 1998/1999, (ii) Company Pension entitlements and (iii) monies owed to him for his last two weeks of service were not paid in full. The Company rejected the claims. The worker sought to refer the issues to a Rights Commissioner for investigation. The Company objected to such a referral. On the 28th of September, 1999, the worker referred the dispute to the Labour Court under Section 20(1) of the Industrial Relations Act, 1969, and agreed to be bound by the Court's recommendation. A Court hearing was held on the 15th of December, 1999. At the hearing the Company conceded the worker's claim in relation to the "non-payment of salary in full" (3).
CLAIM I - ANNUAL COMPANY BONUS
3. 1. In each year that the scheme operated to date, the worker received the maximum bonus. When the worker requested the bonus payment, he was informed that "payments can only be made to employees in service on June 30th each fiscal year". The worker was not aware of such a rule. While he accepts that details of the bonus scheme were discussed at off site forums in March, 1995 and September, 1996 he has no recollection or record of any 'eligibility' clause. There was never any printed document or booklet distributed to workers outlining the operation of the scheme. No mention of forfeiture of bonus was made by Management at anytime over the period of the worker's departure.
2. The scheme has been promoted since its inception as a productivity bonus scheme not a loyalty bonus scheme. If productivity targets were met, the bonus programme would be funded. The worker played a very full part in the achievement of these productivity goals, consequently he should receive the bonus.
3. The events surrounding the worker's departure (following a period of ill-health largely due to work-related physical and mental exhaustion), have a direct bearing on the worker not being in service with the Company on the 30th of June, 1999 (details supplied to the Court).
4. 1. The key elements of the Company's Employee Bonus Programme are as follows:-
- The bonus programme is self-funded from positive variances against budget. This means that in order to make a payout to employees, the cost of the bonus must be saved from positive variances to current years fiscal budget. It also means that the Company cannot calculate actual employee payout until after the financial results for each fiscal year are calculated.
- The Bonus programme is not guaranteed and is at Management's discretion and is totally dependent on the successful achievement of predetermined goals.
- To be eligible to receive a payout from the Bonus Programme,a worker must be an employee of the Company at the end of the Bonus year.
- Monthly updates are communicated to all employees via notice board to give current status against goals.
3. During the 1996-1997 fiscal year the Company made a number of enhancements to the bonus programme. Again these enhancements were communicated to all employees, as part of its off site communication forums held on the 5th and 12th of September, 1996. The claimant attended the forum on the 12th of September, 1996.
Under the Eligibility Clause of the Mallinckrodt Medical Imaging 1998-1999 Employee Bonus Programme, it clearly states:
- "All full-time, temporary and permanent employees of MMI-I are eligible to participate in and benefit from this programme."
"If an employee resigns or is terminated before the end of the programme term, eligibility is cancelled and any potential earnings contingent upon a periods performance are automatically forfeited."
This is the 5th year the Company has had such a programme, in that time 53 employees have left the employment forfeiting potential bonus entitlement, as per the rules of the programme, but accepting same.
4. It is clear, and the Company has communicated this to the claimant, in letters dated the 3rd of August, 1999 and the 13th of August, 1999, that as he was not an employee of the Company on the 30th of June of this year and that under the rules of its bonus programme, communicated to employees, he has no entitlement to any bonus payout from same.
CLAIM 2 - COMPANY PENSION ENTITLEMENTS
5. 1. The Company promotes "a contributory pension" as one of the benefits of employment with them. However, only after a worker has joined (i.e., signed the contract of employment), does he/she receive the booklet outlining the details of the pension scheme. In this booklet, he/she is informed that if they leave within five years they are not entitled to the Company's contributions. In such instances the Company receive a refund of payments from the pension broker. In the period January, 1998 to December, 1998, almost 20% of the Company's staff of 85 employees resigned. Just two had reached five years service. Given a conservative estimate of two years service per employee, this represents over 30 years of employee contributions with no employer contributions. Nowhere in the Company's Contract of Employment does it draw attention to the detail of the employee's pension terms and conditions. The only reference to pensions is under a section entitled "Pension Scheme" in which it states only the following:-
- The Company provides a defined contribution pension scheme which is specifically designed for employees of Mallinckrodt Medical Imaging Ireland. You will be eligible for participation in this scheme from your first day of employment."
2. The worker's pension has been compromised for the following reasons:-
He was not made aware of the five year rule prior to joining.
Whilst he appreciates that a Company is not obliged to operate a pension scheme at all, where a scheme is provided and promoted during the interview process, the benefits as well as the restrictions should be clearly presented. This is particularly important where a period of five years must elapse before an employee can gain the benefit of employer contributions.
Few employees are pension experts, and it is not an obvious question for an employee to ask at interview stage. Employees are lulled into a false sense of security by the Annual Benefits Statements which are based on the assumption of at least five years service, and are meaningless if your service ends within that period.
At a time when workers are warned that State pensions may be under-funded in future years, employees are heavily reliant on contributory pensions. Four years and three months of lost employer contributions at this point in a working career will have a very significant impact at retirement age.
3. The worker offered to continue his personal contributions as well as the Company's contributions to fulfil the five year period, but was informed by management that this was not possible. If the worker is allowed to continue the contributions, then the Company pension scheme could be construed as a loyalty bonus, rather than protection for the retirement years of an employee.
6. 1. The Company operates a defined contribution pension plan where employees contribute at a rate between 5% and 15% of their salary and the Company contributes at the rate of 5% on their behalf. This pension plan has been in operation since the 1st of December, 1992, and is clearly outlined to all employees via the Company pension booklet entitled 'Guide to the Mallinckrodt Medical Imaging Ireland Retirement and Death Benefit Plan and Disablement Benefit Plans'.
2. During new employee plant induction training all employees are taken through the key features of the pension plan and given a personal copy of the booklet referred to. The claimant was taken through this induction piece on the 10th of April, 1995, and given his copy of the pension booklet. He subsequently joined the pension plan on the 10th of April, 1995, completing the necessary application form in the back of the booklet.
Page 13 of the Pension Booklet relates to Benefits on leaving service. It clearly states that if you leave the Company with less than five years service, your entitlements relate only to your own contributions. This 5 Year Pension Fund Vesting Rule is industry standard and again has been fully communicated to all the employees.
It is also worth noting that the Company had refresher pension plan presentations, facilitated by Mercer Ltd., its Pension Plan consultants, on the 12th and 15th of August, 1996 and on the 22nd of October, 1996 All employees were invited to attend. The claimant did not attend.
3. The Company's pension plan has been in existence since 1992. It has been clearly communicated to all employees and is clearly outlined in the Guidance booklet. To date 52 employees have left the Company, knowing and accepting the pre-defined rules of the pension plan. Based on the clearly communicated rules of the Pension Plan, as the claimant did not have greater than five years MMI-I service when he left the Company, he has no entitlement to the Company paid contributions.
The Court has considered the submissions of the parties and recommends as follows:
CLAIM I - ANNUAL COMPANY BONUS
The Court fully accepts that eligibility for the Annual Company Bonus is dependant on the employee being in the employment of the Company at the end of the bonus year.
The Court notes, however, that at the time of his resignation the claimant was suffering from illness and was receiving medical attention. His medical condition may have led to his decision to resign from employment without appreciating the implications of the timing of his resignation.
In the exceptional circumstances of this case the Court recommends that the Company agree to deem the claimant's resignation as being effective from the end of the bonus year. This should be strictly for the purpose of eligibility for the bonus only. On that basis an ex-gratia payment should be made to the claimant, equal to the bonus which he would otherwise have received for the period of the year for which he was employed.
CLAIM 2 - COMPANY PENSION ENTITLEMENTS
The Court does not recommend concession of this claim.
CLAIM 3 - ALLEGED UNDERPAYMENT OF SALARY
It emerged in the course of the hearing that this issue arose as a result of a misunderstanding which has now been resolved.
Signed on behalf of the Labour Court
26th January, 2000.______________________
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.