Complainant

Respondent

Parties

Eoin  Gillespie

Gairmeidi Caomhnaithe Dhun Na Ngall Teoranta Sioen Ireland

Representatives

SIPTU

Ibec

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-00069281-001

14/02/2025

The complainant Mr Eoin Gillespie, is an employee of the Respondent company and alleges that a part payment of a bonus is in contravention of the Payment of Wages Act.  Evidence was given under oath/by affirmation by the complainant and by Mr Matthew Wilmot for the respondent.  All evidence given was subject to cross examination.

All submissions received were considered by me in reaching my decision.

The Respondents are supplying-distributors of Protective Clothing and Equipment based in Gweedore. The Claimant is employed as Warehouse Manager and has been in the employment from 1986.

Though it has never been formalised in writing, an annual bonus payment to staff has been in effect in the employment from at least 2015, payable in the following calendar year. Though Mr. Gillespie’s annual bonus rate was over €1,000 in earlier periods it was reduced to €1,000, by agreement, some years ago and no agreement was ever reached for it to fall below that. In 2022 the annual bonus payment for Mr. Gillespie was €1,000, the rate at which it had stayed for some years.

In April 2024 Mr. Gillespie received notification that the bonus for 2023 would be €800. He questioned this and, by mid-October 2024 the Respondent was still confirming their intention to apply the €200 reduction.  As the matter could not be resolved through internal processes (and having checked with the Respondent’s representatives as to whether any such possibility had been exhausted), the complaints were referred to the WRC for Adjudication on 14 February 2025

Section 1(1) of the Act sets out the following definition of ‘wages’ - 

“wages”, 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…

Section 5(1) states that:

5.—(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

(c) in the case of a deduction, the employee has given his prior consent in writing to it.

Section 5(6), provides that:

(6) 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.

Then 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

We submit that it is clear with reference to Section 5(1) and section 5(6) of the Payment of Wages Act 1991, that the employer is precluded from making the deduction from wages which they made in respect of reducing Mr. Gillespie’s annual bonus for his 2023 employment. 

The deduction was not required or authorised by statute; the deduction was not required or authorised with reference to any terms, express or implied, in the contract of employment of the claimant (there is no variation clause specifically applicable to ‘pay’ or ‘wages’ as would be required for such a contractual authority); the claimant never gave consent to the deductions in writing.

The unilateral reduction by the employer of the annual bonus rate below that which is ‘properly payable’ for the assigned work, duty and service performed – the rate agreed between the parties – constitutes an unlawful deduction under the Act, being without authority of statute, contractual term or consent of the employee affected.

We submit that Mr. Gillespie be awarded €200 – the sum unlawfully deducted.

The Claimant, Mr. Eoin Gillespie alleges that an annual bonus was not paid to him in full given that there was a reduction in his bonus from €1 ,OOO to €800 for the 2023 working year.  The Respondent disputes that the Claimant is entitled to the €200 which the Claimant alleges was unlawfully deducted from his annual bonus entitlement.

The complainant has been working for the Respondent company since 1986. The Claimants Contract of Employment is silent in regard to any entitlement to an annual bonus.

The Respondent operates within a Unionised environment and negotiates pay for employees on an annual basis. The Claim herein relates to the 2023 pay period where agreement was reached with the Claimants Union for this period. The said Agreement provides as follows;

As per previous agreement, a voucher, to the maximum value of €500, will be paid if sales targets for 2022 and 2023 are reached — payable in March 2023 for 2022 and March 2024 for 2023.

The parties reaffirm that, for the duration of this agreement: -

•            There will be full cooperation with normal ongoing change, adaptation, and flexibility. This is necessary to maintain and improve competitiveness and to increase productivity.

•            There will be no cost increasing claims for the duration of this agreement.

•            This agreement will expire in December 2023.

The said pay Agreement is clear on this issue of bonus and sets our defined criteria in terms of how the annual bonus for employees is calculated.

The Respondent company may in any given year take the decision to enhance people's bonus above the agreed €500. In 2023 the extent of the payment was not at the level of previous years by virtue of the fact that the company did not make enough money to do so. Utilities, building and raw material prices all rose significantly in 2023 and continue to do so. The provision of any bonus above the agreed €500 has a profitability metric applied by the company and is discretionary in that regard.

In calculating the bonus for employees for 2023 the Claimant was not treated any differently to other members of staff who also had their annual bonus reduced accordingly.

Furthermore, Section 5 of the Payment of Wages, Act applies to "deductions" in wages. The Act provides as follows;

"An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

(a)         the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b)         the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

(c)         in the case of a deduction, the employee has given his prior consent in writing to it. "

The Claimant is claiming entitlement to an alleged deduction to his annual bonus of €200. The Claimant was paid €800 but alleges that he should have received €1,OOO.

In accordance with the above Section 5 the Respondent contends that no deduction in wages was applied to the appellant in circumstances where the alleged bonus payment to which he is seeking was never applied to the appellant. The annual bonus is calculated by the Respondent on an annual basis based on the overall performance of the business.

There was no unlawful deduction from the appellant's wages during the above period but rather he was paid the wages that were "properly payable" to him in accordance with the said pay agreement during this period.

In relation to the claim that the Respondent made an unlawful deduction by paying an €800 bonus as opposed to a €1000 bonus the Respondent has outlined its position above that this is not an "unlawful deduction" but rather a "reduction" in payment in circumstances where the parameters for determining the bonus for employees was agreed in advance as per the Company Union Agreement. The Payment of Wages Act has no application in this regard and cannot be construed as a deduction under the Act.

The Respondent relies on the Employment Appeals Tribunal Case of Green Isle Foods Limited -v Workers PW47/2013 which applies the same principle to a 5% pay cut which had not been agreed with employees in advance of its implementation. The Tribunal ruled that the Payment of Wages Act has no application to "reductions" as distinct from "deductions".

The respondent has argued, citing the Employment Appeals Tribunal Case of Green Isle Foods Limited -v Workers PW47/2013, that the Payment of Wages Act has no application to "reductions" as distinct from "deductions".  However, the subsequent case of Earagail Eisc Teoranta -v- Doherty & ors [2015] IEHC 347 is an important, recent decision concerning the Payment of Wages Act, 1991. It makes two important findings:

The Payment of Wages Act, 1991 applies to wage reductions as well as deductions. It made the important distinction that the McKenzie v The Minister for Finance & Others [2010] IEHC 462 case, referred to in the case cited by the respondent, concerned travel expenses and subsistence, and not pay.

Section 5 of the Payment of Wages, Act 1991 allows the employer to reduce wages in the following circumstances: (b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee’s contract of employment included in the contract before, and in force at the time of, the deduction or payment, or (c) in the case of a deduction, the employee has given his prior consent in writing to it. So, if the reduction in wages is allowed in accordance with the contract there is no further requirement to get the written consent of the employee.

There is no specific entitlement to a bonus in the complainant’s contract and he relies on the fact that he was paid €1,000 for a number of years, following an agreed reduction from €1,500 to €1,000.  No evidence was presented by the complainant that the criteria underpinning payment of a bonus was altered or waived in respect of him. If a bonus has to have any meaning it must relate to some criteria. There was a condition to be fulfilled before any bonus was paid, namely the profitability of the company.  The evidence of the respondent was that the company was not as profitable in the year in question and this evidence was not refuted by the complainant.

In these circumstances I conclude that part payment of the bonus was not in breach of the Act and the complaint is not well-founded.

The complaint is not well-founded

Reduction in bonus, payment of wages