Complainant

Respondent

Parties

Raquel Gamallo Reguera

Dilosk DAC

[amended on consent at hearing]

Complainant

Respondent

Anonymised Parties

Representatives

Self-Represented

Roberta Urbon Peninsula Business Services Ireland

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-00068339-001

24/12/2024

This matter came before the Workplace Relations Commission dated 24/12/2024.  The Complainant alleges contravention by the Respondent of provisions of the above listed statute in relation to her employment with the Respondent.  The aforesaid complaint was referred to me for investigation.  A hearing for that purpose was scheduled to take place on 28/04/2025. 

The Complainant is a former employee of the Respondent.  The Complainant was employed by the Respondent as an Operations Executive at all material times.  The Complainant was paid €3084.00 gross per month.  The Complainant commenced her employment with the Respondent on 06/11/2024 and the employment ended on 31/12/2024.  The Respondent is a Financial Services company. 

The within claim relates to the non-payment to the Complainant of a Christmas bonus by way of a voucher. 

Both parties provided helpful written submissions in advance of hearing for which I am grateful. 

CA-00068339-001

The Complainant submits a Christmas voucher of €1,000.00 was paid to all employees as a token of appreciation for their loyalty and service during the year.   The Complainant submits that despite having worked for the company from 06 November 2023 to 31 October 2024 she received only €100 voucher because she had resigned in 2024.  The Complainant submits that her performance and dedication throughout 2024 was on par with that of her colleagues and yet her voucher was reduced by €900 due to her decision to resign. 

The Complainant submits she was a committed employee throughout 2024 contributing to the company as much as her colleagues.  The Complainant submits that reducing her voucher payment by €900 solely because she chose a different career path is unfair and punitive.

The Complainant submits there was a lack of prior notification and that at no point was she informed that resigning would result in a reduced payment.  The Complainant submits the policy regarding this payment was only introduced in December 2024 after her resignation and after her work for the year was completed.  The Complainant submits that applying a new policy retrospectively disadvantaged her unfairly as she had no opportunity to understand or accept the terms before their introduction. 

The Complainant submits at hearing that had she been aware that this would happen she would have waited until January to resign but she was not aware and she had not been told that she would not receive the Christmas bonus when she resigned. 

CA-00068339-001

The Respondent submits the Christmas bonus is based on the status of the employee on the day it is given.  Therefore, it is submitted the Complainant was serving her notice at that time and fell into Category A of the Year-end Discretionary Loyalty Payment for 2024 which states that an employee would receive €100.00 if they have less than 12 months service or have resigned and serving their notice. 

It is submitted the Year-end Discretionary Loyalty Payment does not form part of the remuneration contract.

The Respondent submits that within their Employee Handbook it states that “Dilosk may, at its discretion, pay a bonus to staff each year. The payment of a bonus will depend on the growth and profit performance of Dilosk and the individual’s work performance.  Any such bonus is payable pro rata to the actual period of employment in the calendar year (including probationary period.) Any bonus payment to you shall be purely discretionary and shall not form part of your contractual remuneration.” 

In addition, it states that “If Dilosk make a bonus payment to you in respect of a particular financial year, it shall not be obliged to make bonus payments to you in respect of subsequent financial years”.

Moreover, outlined in the Employee Handbook it states that “In the event an employee leaves Dilosk before the due date for payment of a bonus that has been awarded, the employee will not be eligible for payment.” 

Therefore, there has been no reduction in pay in relation to the bonus described, as itis discretionary in nature. In addition to this, the Complainant was also serving her notice period. It is submitted by the Respondent that the Complainant has no entitlement to claim the monies in question as the monies in question are not “wages that are properly payable” by virtue of the fact that the criteria for payment of the Christmas loyalty bonus is determined based on the employee’s status on the day of payment.

The Complainant at that time was serving her notice from 8 November 2024 to 9 January 2025 and therefore was not entitled to the €1,000 bonus as it is based on the current employment status of the employee.  The Respondent submits that the Complainant was serving her notice at that time and fell into Category A of the Year-end Discretionary Loyalty Payment for 2024 which states that an employee would receive €100.00 if they have less than 12 months service or have resigned and serving their notice. 

The Company applied a classification criteria fairly and without discrimination to all employees. Approximately one third of employees were classified as Category A employees and two thirds were classified as Category B employees. The Complainant was classified as Category A and did receive a Category A bonus.   It is submitted the Respondent does not seek to recover bonuses from employees who resign after payment has been paid.  It is submitted the performance related discretionary bonus, for the 2023 payment, the Complainant was not eligible as she only started working at the end of 2023 and for the 2024 payment, the Complainant resigned before the payment was made.  Had the Complainant remained an employee she would be receiving her 2024 bonus shortly.

Law relied upon by the Respondent

Peninsula Business Services Ltd. -v- Sweeney [2004] IRLR 49

Commerzbank Ag -v- Keen [2006] EWCA Civ 1536

CA-00068339-001

The Relevant Law

The Payment of Wages Act 1991 as amended (the “PWA”) regulates deductions to an employee’s wages and prohibits unlawful deductions.

Under the PWA, “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”.

It is well established that the payment of a bonus falls under the definition of wages as defined by the PWA. 

Section 5 of the PWA deals with the regulation of certain deductions made by employers.

Section 5(6)(b) of the PWA states that failure to pay amounts due on the occasion when due “…shall be treated as a deduction made by the employer from the wages of the employee on the occasion.”

In the case of Marek Balans v. Tesco Ireland Limited [2020] IEHC 55 the High Court made it clear that the WRC, when considering a complaint under the 1991 Act, must first establish the wages which were properly payable to the employee on the occasion before considering whether a deduction had been made.  If it is established that a deduction within the meaning of the Act had been made, the WRC would then consider if that deduction was lawful.      

Therefore, the question to be decided is whether the wages (bonus) claimed by the Complainant was properly payable. 

As regards discretionary bonus payments, in Cleary & Others v. B&Q Ireland Limited [2016] IEHC 119, McDermott J accepted that while an employer has a wide discretion under the terms of the contract and scheme, it must act reasonably.  Moreover, he found that “[t]he discretion to withdraw the bonus scheme at any time, in my view, was always intended to apply in futuro and attached to the conferring of bonuses, as yet un-accrued, under the terms of the scheme.”

The interpretation of this decision is that once a bonus has been earned it cannot be revoked.

However, it is important to note that this is in the context of a written contractual obligation.  In this case, the employees had been provided with written details of the bonus calculation and the bonus scheme eligibility criteria. 

Conversely, in the within case the employee had not been provided with any written details whatsoever on the matter of the bonus at issue. 

The Relevant Facts

In conducting my investigation and in reaching my decision, I have carefully reviewed all relevant documents provided to me.  I have carefully considered the oral evidence adduced at hearing.  I deemed it necessary to make my own inquiries into the complaint during hearing to establish and understand the facts and to seek clarification on certain matters. 

To this end the first matter on which I sought clarification was the number of bonuses at play in the Respondent company.

It has been established and it is not in dispute there were, in fact, two bonuses.  The bonus referred to in the Employee handbook under the heading Bonus Scheme and referred to in the Respondent written submission is not the bonus which is the subject of the within hearing as clarified at the outset.  [emphasis added] 

The bonus in dispute and the subject of this hearing is what the Respondent referred to in written submissions as the Discretionary Loyalty Bonus (Christmas Bonus). 

I note the Employee Handbook provides as follows:

Other Benefits

A)      BONUS SCHEME

Dilosk may, at its discretion, pay a bonus to staff each year.  The payment of a bonus will depend on the growth and profit performance of Dilosk and the individual’s work performance  [emphasis added].   Any such bonus is payable pro rata to the actual period of employment in the calendar year (including probationary period).  In the event that an employee leaves Dilosk before the due date for payment of a bonus that has been awarded, the employee will not be eligible for payment [emphasis added].  Dilosk reserves the right in its absolute discretion to terminate or amend any bonus.

Any bonus payment to you shall be purely discretionary and shall not form part of your contractual remuneration.  If Dilosk make a bonus payment to you in respect of a particular financial year, it shall not be obliged to make bonus payments to you in respect of subsequent financial years.  Bonuses are typically paid in the first half of the year for the previous year’s performance.  Employees may choose to make an AVC from their bonuses, or part off, into their pension.  If you wish to consider this, please contact HR as soon as possible so that it can be coordinated with payroll.  [SIC]

The bonus scheme details set out in the employee handbook clearly refer to performance related bonus “typically paid in the first half of the year”. 

I am satisfied the bonus which is the subject of this complaint is separate and distinct from the performance related bonus typically paid in the first half of the year for the pervious year’s performance. 

Notwithstanding, I note the Respondent seeks to conflate both bonuses in terms of the eligibility criteria as set out in the employee handbook under Bonus Scheme.   Even if I were to accept this proposition, I note the eligibility criteria set out above provides as follows: “In the event that an employee leaves Dilosk before the due date for payment of a bonus that has been awarded,the employee will not be eligible for payment.” 

I note there is nothing whatsoever set out about the non-receipt of a bonus if the employee is under notice at the due date of payment.  In the within case the Complainant worked in the Respondent company until 31/12/2024.  The Complainant was working her notice at the due date of the bonus and this is a fact not in dispute. 

I am satisfied there is nothing set out in writing anywhere in the employee handbook that pertains to the Discretionary Loyalty Bonus (Christmas Bonus).  I am satisfied there is nothing set out in the offer letter to the Complainant.  The Complainant’s contract of employment provides as follows:

BENEFITS

Your position has the benefit of life insurance and a performance related bonus, details of which are provided separately.

I am satisfied the contract of employment is silent on the matter of the Discretionary Loyalty Bonus (Christmas Bonus).  The employee handbook and the offer letter are equally silent.

I am of the view this Discretionary Loyalty Bonus (Christmas Bonus) existed but it appeared to have defied description in any document until such time as the Complainant emailed the Respondent as follows on 20/12/2024:

“…I noticed my Christmas bonus voucher is €900 lower that my colleagues. While I completely understand not receiving the full amount in 2023 as I hadn’t worked the entire year, I have worked throughout 2024 and wanted to understand the reasoning behind the difference this year.”

By way of a response by email on 21/12/2024 the Respondent sets out “the policy for the discretionary year-end loyalty payment was agreed at Exco in December 2024.  The 2024 policy is as follows:

I note “2024 policy” set out above is the only documentation provided by the Respondent in respect of the Discretionary Loyalty Bonus (Christmas Bonus) albeit it is now referred to as a “year-end discretionary loyalty payment.”

I am satisfied there were no express conditions of the scheme in operation in regard to this Discretionary Loyalty Bonus (Christmas Bonus) set down anywhere until such time as the “2024 policy” set out above was provided to the Complainant after she had received €100 and not the €1000 she had expected to receive and she raised a query on same set out above.  [emphasis added]

I am satisfied there were no details set down from which employees would ascertain any information at all in relation to this Discretionary Loyalty Bonus (Christmas Bonus).   The Respondent fully accepted that there is nothing set down in regard to the rules in relation to the bonus at issue.   

In my consideration of this matter I have carefully examined the wording of the contact of employment and the wording of the employee handbook. 

I accept this is a discretionary bonus.  However, in the absence of any persuasive argument put forward and in the complete absence of any guidelines or any details or any eligibility criteria set down anywhere in writing I am satisfied that it would be fair and reasonable that the Complainant would have had a legitimate expectation that she would be rewarded for her loyalty throughout 2024 during which time she was in the employment of the Respondent up to 31/12/2024 and during which time she had earned this loyalty bonus. 

This legitimate expectation would have been strengthened by the fact it was never indicated to the Complainant in advance that the circumstances of working her notice period would result in non-payment.  I note in Cleary & Others v. B&Q it was accepted that while an employer has a wide discretion in the context of discretionary bonus payments the employer must act reasonably. 

It is common case that the Discretionary Loyalty Bonus (Christmas Bonus) was not paid to the Complainant.   I am satisfied the Respondent is not permitted to make a deduction from the Complainant’s pay as the deduction was not authorised under the contract, required by statute, nor made with the prior written consent of the Complainant.

I find, therefore, that the failure to pay the bonus due constitutes an unlawful deduction for the purposes of the 1991 Act. 

CA-00068339-001 complaint under section 6 of the Payment of Wages Act, 1991

For the reasons set out above I decide this complaint is well-founded.  I direct the Respondent to pay to the Complainant the Discretionary Loyalty Bonus (Christmas Bonus) balance of €900. 

No eligibility criteria; loyalty bonus; two bonuses;