1.Payment Of Annual Bonus and Communications
2. The Company did not consult the Union as per the collective agreement
3. The Union is seeking the full restoration of the payments due to members and a penalty payment
2. There is no obligation, under the collective agreement to obtain consent from unions on decisions regarding levels of performance pay
3. The company has engaged with the Union to try and resolve the matter including offering additional staff benefits
The Union submits that the Company breached that agreement by failing to adequately communicate to staff about the status of key company objectives. The agreement further states that “...if in any year there are indicators that the key company objectives may not be achieved then the overall bonus budget may be adjusted following consultation with the GOU”. The Union submits that the Company did not consult the Union about the bonus budget until November 2020, when a decision had already been taken to reduce the budget by 50%. It submits that communications were inconsistent and did not give members any expectation of the likelihood of a reduction in performance related pay.
The Union did not accept that decision. It was subsequently provided with a detailed response, addressing both the extent of communications from the Company and the substantive reasons for the bonus reduction.
There is no obligation under the collective agreement or otherwise to obtain consent in advance of a decision to pay a bonus in any given year. The decision to pay (or not to pay) a performance related bonus lies solely with the company and is subject to normal governance arrangements, including Executive recommendation and approval by the Board Remuneration Committee and Board of Directors. It submits that the Union was well aware of the challenges throughout the year and the potential impact that this could have on the discretionary bonus payment.
The core issue in dispute is the level of consultation by the Company with the Union about a 50% reduction in the annual performance related bonus for employees in 2020.
The Union fully accepts that the Company has discretion over setting the annual bonus budget. Furthermore, the Union acknowledged to the Court that certain key company objectives were not met and that, in those circumstances, the Company was not necessarily obliged to pay out a 100% bonus payment. However, it submits that the Company’s failure to adequately consult meant that the Union was denied an opportunity to influence the outcome or submit a counter proposal, as a decision was already made.
Its members had no expectation that bonus earnings would be reduced, as payments had been made in the past when objectives were not met.
The Company refutes that it breached the collective agreement and submits that it fully consulted with the Union in November. The Union objected to the decision to reduce the bonus pay out but did not submit any counter proposal.
The Company subsequently responded to the Union in December 2020 addressing the issues raised about the extent of communications and the substantive reasons for the bonus reduction.
It is clear to the Court that the dispute before it arose as a result of the level of consultation between the parties regarding the implications of failing to meet key company objectives on the level of pay-out under the annual performance related bonus. Having listened carefully to the parties, the Court cannot say that the engagement that took place between the parties could be considered to be a breach of the Company/Union Agreement, as consultation did take place between the parties.
Furthermore, an obligation to consult does not provide the party to be consulted with a right of veto. However, it does require that the Company consult with the Union in good time so as to provide the union with an opportunity to put forward its views on what is proposed in order to allow real and constructive input into any decision-making process.
During the course of the hearing, the Court was made aware of disagreement between the parties about the operation of the normal dispute resolution procedures in the Company. The Court is of the view that the parties may benefit from engagement to clarify and ensure that those procedures operate as intended by both parties.
The Court so recommends.