Industrial Tribunals Northern Ireland Decisions

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URL: http://www.bailii.org/nie/cases/NIIT/2009/01174.html
Cite as: [2009] NIIT 1174_08IT, [2009] NIIT 1174_8IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 1174/08

CLAIMANT: Thomas O’Prey

RESPONDENT: Granite Financial Ltd T/A CRASH Services

DECISION

The decision of the tribunal is that the respondent shall pay the claimant £613.65 in respect of breach of contract and £225 in respect of unauthorised deduction from wages, totalling £838.65

Constitution of Tribunal:

Chairman (sitting alone): Ms M Bell

Appearances:

The claimant appeared in person.

The respondent was represented by Ms McComb, In-House Solicitor, of the respondent company.

The claimant complained in his claim that he had not received his Summer bonus because he handed in his notice a few days before the bonus payments were made to staff and that he was not paid for the last three days of his notice having been asked to leave before expiry of his notice period, following a disagreement about his bonus payment.

The respondent in its response resisted the claimant’s claims on the basis that the bonus was discretionary and not payable to employees who had given notice to leave at the time the bonus was to be paid, and that the claimant was asked to leave prior to the end of his notice, in the belief that the claimant was intent on causing as much trouble and disruption as he could for the remainder of his notice period as a result of the non-payment of a bonus.

Issues

The issues for the tribunal were as follows:-

(i) Is the claimant entitled to payment of a bonus?

(ii) Is the claimant entitled to three days pay in lieu of notice?

Evidence

The tribunal considered the claim, response, agreed bundle of documentation from the respondent, the claimant’s contract of employment, agreed calculation of bonus and notice pay, and heard oral evidence from the claimant, Ms O’Reilly, Director in the respondent company and Ms Magee, the claimant’s team leader.

Findings of fact

The claimant commenced employment with the respondent as a credit controller on 2 July 2007.

At interview for his post, the claimant was informed by Sinead McAllister, the respondent’s finance director and Niall Grimley, an independent consultant engaged by the respondent, that the respondent operated a bonus scheme.

On commencing his employment the claimant was given a contract of employment and staff handbook. The only reference to the bonus scheme appears in the Staff Handbook, as follows:-

“There may be a discretionary profit/performance bonus scheme in place details of which are available” from “the office”.

No additional written details on the scheme were however available to employees.

The respondent’s discretionary bonus scheme was dependent on profit, employee performance and length of service. Each December and June, the respondent considered the half-yearly profit of the respondent company compared to the profit of the company in the same period in the previous year and also the cash flow before taking a decision whether to award a bonus. If the respondent determined that a bonus would be payable, then the respondent considered the value of the bonus to be paid to each employee in view of the performance of that employee in the previous half-yearly period. Employees still within their probationary period do not qualify for the bonus payment.

The claimant did not qualify for a bonus payment in December 2007 as he was still within his six month probationary period. The claimant however understood from a conversation with Michael McKeown, Managing Director, in December 2007, that he would be eligible for the Summer 2008 bonus.

Due to personal problems the claimant tendered his resignation on 6 June 2008 giving the respondent one month’s notice.

At a board meeting on 20 June 2008 the respondent company considered whether a bonus would be paid out in June 2008. A decision was made that a bonus would be paid in June 2008 and consideration was then given to the performance of individual employees and the amount to be paid to them. One employee was leaving the respondent’s employment that same day, and a decision was made not to pay a bonus to her. The respondent had never before had a situation where an employee was working his notice when giving a bonus and on consideration decided that the bonus would not be paid to the claimant for that reason.

On 23 June 2008, bonuses were confirmed to all employees save for the claimant. When the decision not to pay a bonus was communicated to the claimant he approached Mr Tony McKeown, Sales and Marketing Director, and was told he was not receiving the bonus as it was a loyalty bonus. The next day the claimant sought a meeting with Ms O’Reilly, but when still dissatisfied with the explanation as to non-payment of the bonus to him given by her, he wrote to Mr Michael McKeown, Managing Director, by email, querying the explanation that the bonus was a loyalty bonus having previously been informed that it was a performance-based profit-share bonus. Ms O’Reilly replied to the claimant, on behalf of Mr McKeown, who was out on long-term sick leave, copying the claimant in on her correspondence to Mr McKeown seeking clarification that “in this situation and at your own discretion, you have directed that no bonus is given where an employee has ceased employment or has given notice of resignation during the period, i.e. before 31 December or 30 June”. Mr McKeown replied:-

“I agree with you. You are correct.

The Bonus may well not be available due for example to cash flow or indeed if there is no material change in profit from one half-year to the corresponding half-year.

It is a clear condition in my mind that it does not have to be given to all or to anyone. I may decide to give only to some employees and not to others.”

A further meeting took place on 1 July 2008 between the claimant, Ms O’Reilly and Ms Magee at which the claimant became angry at the respondent’s non-payment of the bonus to him and the suggestion that it was not being paid to him because it was for loyalty. The claimant gave examples of conduct to Ms O’Reilly and Ms Magee which he considered might be interpreted as being “disloyal”. Ms O’Reilly felt intimidated by the claimant’s behaviour and was unsure if he was in fact making threats against the company. Ms O’Reilly asked the claimant to leave her office for a moment, and she discussed the matter with Ms Magee. The claimant was then called back in and Ms O’Reilly informed the claimant that she would have to ask him to leave the building and not to come back, the claimant asked if he was going to be paid for the remainder of his notice but Ms O’Reilly indicated that she was not sure.

The claimant’s employment ended by reason of his resignation.

It was agreed between the parties that the claimant would have received a net bonus of £613.65 if eligible for the bonus payment.

It was agreed between the parties that the claimant’s notice pay entitlement, if payable, would have been £275.

The law

An employer’s discretionary power to award a bonus payment is not unfettered. In Clark v Nomura International PLC [2000] IRLR 766, the High Court ruled that the employer cannot arbitrarily reduce or withhold a bonus, even where the employee has left the company, it puts forward that the correct test is whether no reasonable employer would have reached the conclusion it did acting in accordance with its contractual obligations.

Article 45 of the Employment Rights (Northern Ireland) Order 1996 provides for a worker’s right not to suffer unauthorised deductions from wages by his employer.

Application of law to facts found

Giving consideration to all of the evidence before it and in particular on the basis of the respondent’s oral evidence, it is clear that the contract between the claimant and the respondent provided for a discretionary bonus based on profit, performance and length of service and as such the claimant’s entitlement should stand or fall upon those terms. The decision not to pay the bonus to the claimant on the basis of him having given notice does not comply with the terms of the discretion previously contemplated and communicated to the claimant, this scenario not having previously been considered or arisen, on the respondent’s own evidence.

It is the tribunal’s view that for the employer to take into account other factors which had not previously been expressly stated and to withhold the bonus which would otherwise have been paid to the claimant, save for him having given his notice of resignation is in breach of the terms of his contract of employment and is, as such, a conclusion that no reasonable employer would have reached acting in accordance with its contractual obligations.

The tribunal accordingly orders the respondent to pay a bonus in accordance with the agreed calculation furnished of £613.65 net.

Whilst the claimant’s behaviour on 1 July 2008 may have been interpreted, on his own admission, as threatening and may have entitled the respondent to take steps to summarily dismiss him, it is clear from the respondent’s evidence that the claimant was not summarily dismissed but simply asked to leave the premises and not to work the remainder of his notice which he would have otherwise been ready and willing to work. The claimant has accordingly suffered an unauthorised deduction from wages and is entitled to three days pay in lieu of notice as per the agreed calculation furnished by the parties as follows:-

3 x £75 = £225

23. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing: 5 November 2008, Belfast

Date decision recorded in register and issued to parties: