Complainant

Respondent

Parties

Peter  Darcy

Verizon Services Ireland Limited

Representatives

Tiernan Lowey BL instructed by Aine Curran of O'Mara Geraghty McCourt

MP Guinness BL instructed by Linda Hynes of Lewis Silkin 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-00063125-001

28/04/2024

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00063125-002

28/04/2024

This matter is related to the decision in ADJ-00055574 concerning the same parties. The cases were heard together and both relate to an argument that certain payments were properly payable to the Complainant on the basis of his contract of employment.

The Complainant has been an employee of the Respondent since 2015. He is currently a Senior Director involved in the sourcing and contracting of construction services of the Respondent’s telecom network in the US.

From October 2023 the Complainant was subject to a disciplinary process which related to non-compliance of his wider department with certain Respondent policies. The Complainant was not the origin of this issue and he had followed the way that he understood his department to operate in arranging for staff gifts. The Respondent concluded this practice was a circumvention of their strict policy controls on such matters.

The Complainant took ill and was on certified sick leave until mid-January 2024. After he returned to work he attended a disciplinary hearing and was issued with a final written warning. He argues that this outcome was both entirely unreasonable and the produce of a flawed process.

The Complainant’s contract provided for a Short-term Incentive plan (STI) to be paid in February of each year for the proceeding year.  Arising from this sanction the Complainant’s STI was reduced by 50%.  

On the 10th of May 2023 the Supreme Court issued their decision in O’Sullivan v the HSE 2023 IESC 11 (“O’Sullivan”). In this judgement the Supreme Court determined that the HSE had suspended a hospital consultant in compliance with his contract. In interpreting the suspension clause of that contract the Supreme Court adopted the position set out by the UK Supreme Court in Braganza v. BP Shipping Limited [2015] 1 W.L.R. 1661 (“Braganza”). Braganza had established that where a clause in an employment contract gives the employer discretion to make certain decisions then this decision making function must be exercised in accordance with their implied obligation of trust and confidence and outlined criteria for considering these issues.  The Complainant has sought to rely on these cases in arguing that a short-term incentive payment (“STI”) was properly payable to him under the payment of wages act (“the act”).

The Complainant’s counsel made oral and written submissions on his behalf. The Complainant gave evidence under affirmation.

The Complainant was invited to an investigation meeting on the 30th of August. He thought it was a compliance investigation related to the use of a vendor (“Company A”) and associated record keeping. He was never told that a disciplinary sanction or reduction in his STI could be an outcome of the investigation. He thought it meeting related to a serious matter but he understood that he was being asked to attend as a witness and was not a potential subject.

Company A are a facilities management company he has never had direct dealings with them. They have been dealing with the Respondent for 15 or 20 years and in addition to the core services they provide the Respondent they support them in processing payments to other suppliers. Due to the Respondent’s use of Amax, which is not always accepted, they sometimes process purchases via Company A. He would always act with approval from his line manager when purchasing staff gifts. Any business expenses needed to be and were approved.

They had issued vouchers to employees after having purchased them from Company A on a number of occasions. This would be when someone got married or on the birth of a child. There were also some vouchers in lieu of cancelled staff events.

He was shocked in the investigation meeting to discover that the investigators had identified payments of bar tabs and other issues he was unaware of. Their report concerned Company A and made no findings that he breached the Respondent’s code of conduct. Shortly after the investigation meeting he went on paternity leave.

The Complainant returned from paternity leave in October and discovered that his line manager was no longer referenced on their internal systems. The Respondent was indicating that he was on leave but that was clearly not the case.

He knew from the verbal communications that this was a big issue and he might be affected by it. The Complainant had a panic attack on the 18th of October and was taken to hospital by ambulance.

The Complainant was released the following day and was sent an invite to a disciplinary meeting. He later got a text to say the emailer had not known he was in hospital. This email was the first time told there was an alleged breach of code of conduct and expenses policy. He did not know that the STI reduction was a potential outcome and it was not referenced in the letter.

He was off work until early January 2024. He was written to on the 25th of January and invited to a disciplinary hearing with Ms Courtney Mezinis on the 31st. He was put on notice that a sanction up to and including dismissal might result from this process. He was not allowed any input into the process to decide to refer the matter into a disciplinary hearing. He had generally been challenging the process as flawed but the Respondent pushed ahead with it.

On the 8th of February he received notice that he was being issued with a final written warning. While he never made any gain from the Company A purchases he did receive a €200 voucher from his team for the birth of his child which turned out to have been procured via Company A. He had no role in initiating the gift but it was pointed to as a reason for the final written warning. He thought this was an unfair conclusion and it was a particular focus of the outcome which concluded that he had gained personally from what had happened. Aside from that he had received a voucher for a cancelled staff event which came to the value of about €30.

He felt that Ms Mezinis jumped on something he had said in the original interview. He mentioned laziness in researching policies and this was misconstrued. He has a huge portfolio and referred these issues to his assistant to organise and run by his line manager.  While he had received code of conduct training it was focused on gifts from vendors.

The sanction letter outlined that his STI would be impacted. He does not even know how Ms Courtney could know the outcome of his STI and she has nothing to do with his performance.  He was really shocked at this outcome. He had always had the highest ratings up until 2023.

It was later confirmed that his STI was cut in half without any explanation. He doesn’t know how they got to that figure. He had to do this previously for a direct report of his and understands that HR calculate the reduction. They got 50% as well but he doesn’t know how HR came up with it

He appealed the outcome but was unsuccessful.

The Respondent’s counsel made written and oral submission on their behalf. 

Mr Stephen Helvin gave evidence under affirmation. He is an Attorney with Verizon working as Managing Associate General Counsel in Ethics and Compliance. 

His investigation began after revenue raised issues related to the Respondent’s use of Company A. The local tax department in Ireland made initial queries and based on their concerns referred the matter to him. He looked at recent transactions related to Company A which varied widely from what they would expect from that type of vendor. He then began looking at the people involved.

He reviewed old slack messages and could see a specific transaction related to the Complainant and corresponding slack to his line manager related to a charitable donation which was above Verizon limits.

He decided to conduct a fact-finding interview. He thinks that from any plain reading of the email inviting the Complainant it is clear that he has concerns about the Complainant’s involvement in these matters. He provided him with the documents he was going to ask him about. These were 14 attachments, some involved correspondence with the Complainant.

The meeting was calm and concerned gift vouchers being placed under general ledger as real estate services. There was a number of transactions which he found concerning as was the broader picture of non-compliance with Respondent policies.

The Complainant acknowledged some of this and accepted that a slack refers to him going around the policy. He acknowledged that some of these purchases were non-reimbursable expense. In Verizon it is a well-known practice to pay for and not be refunded for life event related gifts for colleagues.

He was of the view that the Complainant was aware that their policies were being circumvented. The higher a person’s role is the higher the expectation Verizon has of their conduct. There was an obvious failure on the Complainant’s part to spot the ethics issue. The rationale put forward that their department had been doing this for a long time is not acceptable.

The records of these transactions were inaccurate and the payments were listed as sundries. He decided that he gathered enough information to pass it on for consideration in the disciplinary process. He doesn’t see any difference between a compliance investigation and a disciplinary investigation. They investigate and if they identify an issue then its referred to HR.

It would have been difficult to spot this issue internally due to the amounts and the record keeping. There was a concern about collusion with the vendor as the records were being described improperly.

Ms Courtney Mezinis gave evidence under affirmation.  

She is VP for Corporate Real Estate and is solely based in the US. She was asked by two seniors executives to head up a disciplinary hearing following Mr Helvin’s report. She sent an invite to the Complainant unaware that he had a panic attack and went to hospital.

She was waiting to interview him for a while as he was unwell. The disciplinary hearing happened when he came back in January. The hearing mostly involved giving the Complainant the opportunity respond to  Mr Helvin’s report. At this point she was well versed in what had happened as she had been the disciplinary officer for the others who had been flagged in the course of the Respondent’s investigations into the use of Company A.

The Complainant was obviously anxious and upset and she decided the right thing to do was to reconvene shortly after the hearing concluded and give him that comfort that he would not be dismissed.

She decided on final written warning. Her reasoning was that the Complainant did take some accountability for his actions but this was limited. Ultimately his actions did not warrant termination.

She did not determine that the sanction would affect his STI. That language was inserted by someone else. She decided the sanction itself and not the STI reduction.

She did not know about Company A as it was a minor vendor. She terminated the contract from the Global Real Estate department’s use.

Ms Veronica Bradly gave evidence under affirmation. She is a HRBP for the Respondent.

The decisions related to STI payment reductions and sanctions were made in a meeting with the different HR EMEA and Labour Law Teams. The Respondent had decided that anyone in receipt of a first written warning would suffer a 0-50% deduction and a final written warning would result in a 50-100% reduction. They made the decision on the basis of culpability and seriousness. The Complainant was given the lowest reduction possible for his sanction.

It was accepted by the Complainant that the above complaints are identical and one is a duplicate of the other.

This claim relates to an alleged breach of Section 5 of the Payment of Wages Act which prohibits deductions from wages (which includes bonuses) unless certain specific criteria are met. Where a deduction from wages has occurred it will generally be for the Respondent to show that it was permitted. However, the Complainant must first establish that a deduction has happened, i.e. an amount was paid to them which was less than what was properly payable. 

The Complainant submits that his contract of employment provides for a non-discretionary entitlement to an STI of 20% his base salary and as such that sum was properly payable under Section 5 based on a plain reading of the contract.  

Clause 4 of the Complainant’s contract provides that Annually, you are eligible to participate in Verizon’s Short-Term Incentive Plan, which is part of our Total Rewards package. Your Short -Term Incentive (STI) target under the plan will be 20% of your base salary, prorated based on your date of hire. Actual STI awards will vary depending on our business performance and your individual performance. STI awards are determined at the end of the calendar year and paid in the first quarter of the following year.

The Respondent submits that the sum sought by the Complainant was never properly payable under the above wording. The actual award would be informed by his performance and the business performance as determined by the Respondent. The Complainant having had a final written warning active at that time affected their view of his performance. I agree with the Respondent on a plain reading of the terms of the contract the actual STI was to be calculated by the Respondent on the basis of their view of the Complainant’s performance. It is the sum that they calculated and proposed to pay that was properly payable and not 20% of base salary.

The Complainant also referred to Cleary and Ors v B and Q Ireland 2016 IEHC 119 however the Respondent has distinguished that case from this one with reference to my colleague’s decision in ADJ-00049622.

Without prejudice the above the Complainant has also argued that if the Respondent did have discretion to reduce the STI that that discretion had to be exercised reasonably. He seeks to rely on the position the UK Supreme Court adopted in Braganza v BP Shipping Limited [2015] UKSC 17 and endorsed in this jurisdiction by the Supreme Court in O’Sullivan v HSE [2023] IESC 11.

This case concerned a decision by BP Shipping not to pay out a death in service benefit to the widow of one of their employees who had gone overboard. A clause in the contract of employment provided that if, in the view of BP, the employee had taken their own life then the benefit would not be paid and this was the conclusion which BP had reached. Ms Braganza challenged this and argued that the investigation which determined that Mr Braganza had taken his own life was deficient. She submitted that BP had to exercise their discretion to determine cause of death reasonably and that the clause should be interpreted with that condition.

The basis for the Court’s review of the employer’s discretion is set out from Paragraph 18 pf Lady Hale’s Judgement.

“18. Contractual terms in which one party to the contract is given the power to exercise a discretion, or to form an opinion as to relevant facts, are extremely common. It is not for the courts to re-write the parties’ bargain for them, still less to substitute themselves for the contractually agreed decision-maker. Nevertheless, the party who is charged with making decisions which affect the rights of both parties to the contract has a clear conflict of interest. That conflict is heightened where there is a significant imbalance of power between the contracting parties as there often will be in an employment contract. The courts have therefore sought to ensure that such contractual powers are not abused. They have done so by implying a term as to the manner in which such powers may be exercised, a term which may vary according to the terms of the contract and the context in which the decision-making power is given.

19. There is an obvious parallel between cases where a contract assigns a decision making function to one of the parties and cases where a statute (or the royal prerogative) assigns a decision-making function to a public authority. In neither case is the court the primary decision-maker. The primary decision-maker is the contracting party or the public authority. It is right, therefore, that the standard of review generally adopted by the courts to the decisions of a contracting party should be no more demanding than the standard of review adopted in the judicial review of administrative action. The question is whether it should be any less demanding.

20. The decided cases reveal an understandable reluctance to adopt the fully developed rigour of the principles of judicial review of administrative action in a contractual context.”

From paragraph 24 of the judgement Lady Hale outlines the test as the Court would ultimately apply in considering whether BP had failed to follow the contract through unreasonable exercise of discretion:

“ …….the test of the reasonableness of an administrative decision which was adopted by Lord Greene MR in Associated Provincial Pictures Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, 233-234.

His test has two limbs: “The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it.”

The first limb focusses on the decision-making process – whether the right matters have been taken into account in reaching the decision. The second focusses upon its outcome – whether even though the right things have been taken into account, the result is so outrageous that no reasonable decisionmaker could have reached it. The latter is often used as a shorthand for the Wednesbury principle, but without necessarily excluding the former.

25. The parties in this case disagree as to whether the term to be implied into this contract includes both limbs. Mrs Braganza argues that the employer must “keep within the four corners of the matters which they ought to consider”, while the employer argues that its decision may only be impugned if it is a decision which no reasonable employer could have reached.

26. Mrs Braganza can pray in aid the approach of Mocatta J in The Vainqueur José. He held that the common law principles applicable to the exercise of a contractual discretion include fairness, reasonableness, bona fides and absence of misdirection in law (p 574). He later quoted (p 575), without Page 12 reservation, Lord Greene’s summary of the public law concept of reasonableness. There is nothing on Mocatta J’s judgment to suggest that only the second of those elements is applicable to the exercise of a contractual discretion. He did (at 574) contrast the contractual principles with the principles applicable to the exercise of a statutory discretion by Ministers of the Crown, but on the basis that, in addition, the Minister’s decision had to be consistent with the objects and other provisions of the statute in question, citing Laker Airways Ltd v Department of Trade [1977] QB 643.

……

29. If it is part of a rational decision-making process to exclude extraneous considerations, it is in my view also part of a rational decision-making process to take into account those considerations which are obviously relevant to the decision in question. It is of the essence of “Wednesbury reasonableness” (or “GCHQ rationality”) review to consider the rationality of the decision-making process rather than to concentrate upon the outcome. Concentrating on the outcome runs the risk that the court will substitute its own decision for that of the primary decision-maker.

30. It is clear, however, that unless the court can imply a term that the outcome be objectively reasonable – for example, a reasonable price or a reasonable term – the court will only imply a term that the decision-making process be lawful and rational in the public law sense, that the decision is made rationally (as well as in good faith) and consistently with its contractual purpose. For my part, I would include both limbs of the Wednesbury formulation in the rationality test. Indeed, I understand Lord Neuberger (at para 103 of his judgment) and I to be agreed as to the nature of the test.

31. But whatever term may be implied will depend upon the terms and the context of the particular contract involved. I would add to that Mocatta J’s observation in The Vainqueur José, that “it would be a mistake to expect [of a lay body] the same expert, professional and almost microscopic investigation of the problems, both factual and legal, that is demanded of a suit in a court of law” (577). Nor would “some slight misdirection” matter, at least if it were clear that, had the legal position been properly appreciated, the decision would have been the same. It may very well be that the same high standards of decision-making ought not to be expected of most contractual decision-makers as are expected of the modern state.”

The UK Courts in Braganza were considering the issue of whether BP had reasonably determined the cause of death of one of their employees before deciding his widow was not entitled to a death in service benefit. The Irish Courts in O’Sullivan were tasked with considering the reasonableness of the HSE’s conclusion that because of the conduct of a consultant that there might be an immediate and serious risk to the safety, health or welfare of patients. Both matters concerned clauses with quite specific wording that required that, as a matter of course, the employer should first established facts before making these crucial decisions. The Courts in deciding to review these decisions recognised that there was an implied term in the contract which required a rational decision-making process which would exclude extraneous considerations and which would take into account those considerations which are obviously relevant to the decision in question.

In applying the above considerations to the Complainant’s case the main issue to be considered is the Respondent’s determination that the Complainant’s performance should take into account the disciplinary sanction issued to him. This is obviously distinct to the employer deciding how someone died or whether they posed a risk to patients.

Employee performance is not an abstract concept, it is defined by the employer who is entitled to decide what good performance looks like in the context of their organisation. As such it will vary from employer to employer and my imposing the sort of “four corners” limitations applied in Braganza on to that determination is difficult and must recognise the employer’s inherent role. The Respondent was of course entirely entitled to decide that a final written warning affected their view of the Complainant’s performance.

While the Complainant points out that the sanction issued in 2024 and he met all of his targets in 2023 I do not think either of those issues particularly restricted the Respondent in assessing his performance.

On review of the Respondent’s policy, reduction of the STI is explicitly provided for if a sanction or PIP has been issued. The Complainant accepts he had applied that policy when his own direct reports were subject to disciplinary sanctions. The Respondent’s evidence was that they adopted an internal formula when deciding to reduce bonuses because of sanctions and they opted for the smallest reduction possible when it came to the Complainant. The Respondent has operated in a consistent manner.

The Complainant also argues that they should never have received a final written warning and has sought to review that outcome as it impacted on his STI payment. He submits that the Respondent failed to follow a fair process and that outcome was unreasonable.

The Complainant’s primary procedural concern relates to him having been invited to an investigation meeting without clear notice that it was a disciplinary investigation meeting or that a disciplinary outcome was a potential outcome from information obtained from the interview. On review of the letter sent to the Complainant on the 30th of August by Mr Helvin, an Associate General Counsel for Ethics and Compliance, I am satisfied that the Complainant was reasonably on notice of an investigation which potentially concerned his own conduct. In light of paragraph 31 in Braganza I do not think that this is enough to consider the process seriously flawed. The Complainant in interview confirmed that the Company A account had been used to purchase staff gifts and he was not appropriately mindful of the code of conduct issues or record keeping issues that arose from this. In one instance he accepted using Company A deliberately to circumvent policy limits on charitable donations associated with bereavements.

When the matter progressed to a disciplinary hearing he was given an opportunity to respond to the investigation findings and state his case as well as provide any evidence he wanted before any final decision was made.

In the course of the investigation and hearing Respondent did identify clear examples of the Complainant failing to follow their code of conduct as well as a general failure to keep up to date on and enforce policy. They were entitled to hold the Complainant accountable for his failure to adhere to policy even though his line manager approved all Company A purchases.  The Complainant is a senior member of staff with a large team reporting into him and is working in procurement. The Respondent points out he was not the only person disciplined, and a more senior figure was dismissed. I think compared to most employers the Respondent enforced quite strict discipline when they discovered their policies were being circumvented, however it was open to them to do so.

Moving to the second limb of the test, I do not think that the outcome of the Complainant receiving a lower STI bonus was so unreasonable that no reasonable employer would have reached that same outcome.

I do not conclude that the full STI was properly payable to the Complainant.

CA-00063125-001

I find that the complaint is not well founded

CA-00063125-002

I find that the complaint is not well founded