Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REFS: 04094/99 WO

372/02

04373/99 WO

364/02

CLAIMANTS: David Thacker

Malcolm Spurgeon McClean

RESPONDENT: Department of Regional Development

DECISION

The unanimous decision of the tribunal is that the claimants suffered a deduction from wages due to them by the respondents in breach of Article 45(1) of the Employment Rights (Northern Ireland) Order 1996 (hereinafter called "the 1996 Order"). Furthermore the deductions from wages were not authorised by the claimants under Article 45(1)(a) or (b) of the 1996 Order.

Constitution of Tribunal:

Chairman: Mr P Cross

Members: Mr J Boyd

Mr O Fields

Appearances:

The claimants were represented by Mr F O'Donoghue, Queen's Counsel, instructed by Francis Hanna & Company, Solicitors.

The respondents were represented by Mr J O'Hara, Queen's Counsel, instructed by The Departmental Solicitor's Office.

The issues

1. The claimants were both employed as Road Workers by the respondents working for a basic wage and for a bonus scheme based on output per worker in terms of planning units, known as the 'PU Scheme' which was introduced by the respondent in September 1994. It was agreed between the parties that the working week of the claimants and all others working in the Roads Division was reduced from 39 hours per week to 37 hours per week under the terms of the 1997 Single Status Agreement ("the Single Status Agreement") which applied to the whole of the United Kingdom. This agreement stated that:-

"From April 1^st 1999 the standard weekly hours of all full-time employees will be 37."

This was a reduction from 39 hours.

2. The claimants claimed that the weekly bonus calculation under the PU Scheme should be calculated with reference to a 37 hour week rather than a 39 hour week.
3. The respondents argued that the claimants and other workers in the Roads Service had consented to the working week changing from 39 to 37 hours and had also consented to the bonus scheme remaining in existence as relating to a 39 hour week not a 37 hour week. In other words, the employees would be expected to do as much work to gain their bonus in 37 hours as they would have done if they had 39 hours to gain the bonus.
4. The respondents argued that they had set up the amending scheme following the Single Status Agreement and that calculations made under this amended scheme which included an increase in the bonus of 10% on each PU earned, adequately compensated the workers for the slight loss that the claimants were making as a result of the re-organisation of the bonus system.

Applicable law

5. Under Article 45 of the 1996 Order:-

"(1) An employer shall not make a deduction from wages of a worker employed by him unless –

(a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract; or

(b) the worker has previously signified in writing his agreement or consent to the making of the deduction."

This particular case deals with bonus payments. Article 59(1)(a) defines wages as:-

"any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise."

Article 55 of the said Order allows a worker to present a complaint to an Industrial Tribunal to claim that his employer has made a deduction from his wages in contravention of Article 45.

The evidence

6. The tribunal had witness statements and heard oral evidence from the claimants and Mr Ken Hutton on behalf of the respondents. The tribunal also had a bundle of documentation concerning the negotiation of the amended PU bonus system and other background information including a copy of the Incentive Bonus Scheme Works Specification Part I under which the original scheme was set up and the Employers Commentary on the Single Status Agreement dated July 1997 which was the basis of the amended scheme which became the subject of this dispute.

Findings of fact

7. The tribunal found the following facts:-

(1) Under the Single Status Agreement the term in the contract of employment relating to the hours to be worked each week, was reduced from 39 hours to 37 hours per week. This was a non-negotiable matter and the starting date for the arrangement was to be 1 April 1999.

(2) The Single Status Agreement under which the reduction of hours came into effect attracted the following comment in the Employer's Commentary which was referred to the tribunal:-

"The new national agreement in effect acknowledges that there will be cost and that in most cases it will not be possible to make the move entirely self-financing."

The commentary stated that one way of offsetting the increase in hourly rates because of the reduced hours could include:-

"Revised or deleted bonus arrangements."

(3) The Road Service in Northern Ireland took no action to change the working week from 39 weeks to 37 hours by April 1999. During September and October 1999 many Road Service employees took industrial tribunal action claiming that they were still expected to work 39 hours per week and that the respondents were refusing to pay them the additional two hours overtime at the appropriate overtime rates.

(4) After taking legal advice the respondents on 5 October 2000 changed the working hours for the claimants from 39 to 37 hours per week.

(5) When the workforce, including the claimants, worked 39 hours per week their bonus was activated on the employee working more than 390 productivity units (PUs) of output per week. One PU of output is the same as 4.8 minutes of output. Thus each employee was expected to do 10 PUs per hour, ie 48 minutes of output. There are various allowances built into the scheme to cover travel, courses, annual leave and such matters which are called non-qualifying hours.

(6) When the respondents reduced the working week to 37 hours on 5 October 2000 they informed the claimants and the workforce in general that the number PUs to be achieved before activating the bonus would remain at 390 and not reduced to 370. Any necessary adjustments to the calculation were immediately built into the employee's wage calculations to reflect this adjustment.

(7) The respondents had three unions with which they had to discuss the new scheme. The claimants are members of the AEEU .

(8) On 8 March 2000 the respondents increased the bonus payable on PUs by 10%, from 50 pence per PU to 55 pence. Mr Drew, the Head of Roads Services at that time, wrote to all industrial workers in the Roads Service on 13 March 2000. After stating that the management side and trade union side had not been able to reach full agreement for 1999/2000, he went on to state that a previous rise in basic pay on 1 April 1999 should be paid to industrial staff pending agreement on other issues. He went on in the letter to state:-

"But the claim for a reduction of hours from 39 to 37 per week has not been resolved."

(9) This letter also stated:-

"The value of the Productivity Unit (PU) is not related to basic pay and is not changed annually but I have decided that the time is now right to increase its value by 10% from 50 pence to 55 pence for work carried out from 2 March 2000. This increase is a matter of commercial judgment having regard to market forces, available funding, and the need to preserve the incentive of the PU productivity scheme."

The increase in the PU payment to 55 pence was reflected in pay statements on 8 March 2000.

(10) On 16 March 2000 the respondents put their final offer to the claimants union. This final offer included six numbered points concerning basic pay, the reduction of hours, overtime rates and other matters. Point No 6 confirmed that the bonus would still be activated at 390 PUs per week in respect of the revised 37 hour basic week. Although the letter went onto refer to the 10% increase in payment for bonus PUs this was not one of the matters mentioned in the six points of the final offer.

(11) On 23 January 2001 the union representing the claimants unanimously rejected the offer of the respondents.

Conclusions of the tribunal

8. The question for the tribunal to decide is:-

"Whether the respondents were entitled to unilaterally increase the PUs per hour required to earn bonus, from 10 to 10.5 PUs per hour. This was the consequence of the reduction of the hours of work from 39 to 37 hours per week."

The tribunal find that the answer to that question, if it was not linked with other matters, would be no.

9. However the situation is complicated by the fact that the respondents, six months before the change of the working week to 37 hours had increased the payment for the PUs from 50 pence to 55 pence per PU. The tribunal is of the view that if this increase in the payment for PUs was part of the overall settlement between the union and the employer then this additional payment would have to be taken into account in calculating whether the employees had lost out as a result of the fact that the threshold for bonus had not reduced from 390 to 370 PUs per week.
10. Mr Drew, on behalf of the Roads Service, in his letter of offer to the union of 16 March 2000 could clearly have incorporated the increased payment per PU which had been instigated on 2 March 2000, as a condition of the overall settlement. However he did not attempt to do this and this is consistent with his memo of 13 March 2000 to all workers in the Roads Service where Mr Drew states that the value of the PU is not related to basic pay. Further as set out in 7.9 above, he "has decided that the time is now right to increase its value by 10% from 50 pence to 55 pence for work carried out from 2 March 2000". Thus the employees were from 1 March 2000 to 5 October 2000 being paid an increased value for their PUs over and above the 390 per week.
11. When the decision was subsequently made that the threshold for bonus would remain at 390 and not be reduced to 370, when the working week was reduced, the employees were in effect told they had to work 10.5 PUs per hour instead of 10 PUs per hour. This was a unilateral change in their contract of employment which had the effect of reducing the bonus paid to them.
12. The tribunal considered the argument that various components of the employer's offer were produced at different times but pooled together in the final offer. For instance, the increase in basic pay was put into place on 1 April 1999 and the working week was actually reduced from 39 to 37 hours from March 2000. The tribunal having considered this argument rejected it as the respondent's negotiator made no attempt to link the 10% increase in payment for PUs to the negotiation, in fact he did the opposite as can be seen from Mr Drew's statement set out in 7.9 above
13. The tribunal are reinforced in this view by the fact that the respondents paid additional overtime to the employees for the period from May to October 2000 in respect of the 38^th and 39^th hours worked each week over and above the 37 hours laid down by the Single Status Agreement. On 2^nd March 2000 the employees also got the additional 10% for each bonus PU. Consequently, the employees were being paid overtime and increased PU bonus. This would appear to have been a response to the industrial tribunal claims that were being made from September 1999 onwards. In the final offer of the respondents to the employees this double-payment which had been made for approximately six months was to be written off and the employees were allowed to keep this as part of the overall deal.
14. The tribunal is satisfied that so far as the bonus scheme is concerned the employees were being asked to do 390 PUs in a reduced working week which meant that each man was required to do 10.5 PUs per hour of employment before he was entitled to bonus. This was a unilateral change in the bonus scheme which resulted in the claimants, amongst others, earning less bonus than they had previously earned. The matter was not rectified by the 10% increase in payment for PUs as this had been an unilateral decision of the respondents made for different reasons than negotiation of the Single Status Agreement.
15. The tribunal holds that the reduction of the bonus paid to the claimants was not required or authorised by statute or under the contract of employment and was not consented to by the claimants. The reduction is consequently made in contravention of Article 45 of the 1996 Order.
16. At the outset of the hearing the parties requested the tribunal to give a decision on the matters referred to above and that the question of compensation should be left to be dealt with at a further hearing, if agreement on compensation could not be reached between the parties.

Chairman:

Date and place of hearing: 3 – 5 July 2006, Belfast

Date decision recorded in register and issued to parties: