Business

Insurance firm ordered to pay salesman docked salary after attempt to ‘claw back’ bonuses

Employee tells Workplace Relations Commission that actions were ‘outrageous’

An insurance company said they deducted man's wages in a bid to claw back bonus payments. Photograph: Alan Betson

Stephen Bourke
Tue Mar 26 2024 - 16:16

An insurance company which deducted a salesman’s monthly wages from his last pay packet in what they said was a bid to claw back bonus payments owed to them has been ordered to pay back the money.

In a decision published on Tuesday, the Workplace Relations Commission ruled Ur Insurances (Europe) Ltd, trading as Actual Insurances, had “simply no basis” for claiming the worker, Alan Rooney, owed it nearly €5,000 worth of commission payments back.

Denying a complaint of unlawful wage deductions under the Payment of Wages Act 1991 by Mr Rooney, the company claimed the worker was missing his sales targets and had been overpaid commission.

Mr Rooney told the employment tribunal at a hearing in June 2023 that the company’s actions in deducting the entire net amount of his final month’s gross salary of €2,500 when he resigned in February that year were “outrageous”.

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The WRC was told the company processed the payment through payroll, and paid income tax to the Revenue Commissioners, but then deducted €2,138.58 from his net salary – all of take-home pay for the month, the tribunal noted.

Company director Albert Noonan gave evidence that there was a “lack of sales . . . for a while” by Mr Rooney. His fellow director, Ger Noonan, said the complainant had been getting half commission to “encourage him”.

The company’s position was that there was a “deficit” in Mr Rooney’s targets and that it was “entitled to claw back the commissions previously paid”, the tribunal noted.

The directors maintained their company was owed back €4,932 by Mr Rooney.

Mr Rooney’s evidence was that any commission he received was paid to him for a month when he hit his targets.

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He told the WRC the firm was “trying to confuse the commission structure and basic salary” and that his failure to meet sales targets after receiving earlier commission targets was “not the same thing as overpayment”.

He explained that there had been a monthly sales target of €8,000 while he was there – a “rolling target” which would see any shortfall added to the following month’s goal, so that a €6,000 sales total would lead to a €10,000 target the following month.

Mr Rooney said there were “ups and downs” in his sales during his time at Actual Insurances and that he ultimately resigned because of a combination of the stress of the role and the deficit in his sales target which had built up.

In his decision on the case, adjudicator David James Murphy said the worker’s salary for his last month on the job was “of course properly payable to him”.

Mr Murphy said the company had attempted to rely on the defence of an overpayment of wages to justify the deduction, but that it had “at no time overpaid the complainant”.

On the directors’ argument that they clawed back the sum because they became “unhappy” with his performance, Mr Murphy added that there was “no suggestion” Mr Rooney ever agreed to a deduction or that a proposal to take the deduction was ever put to him.

“There is simply no basis to assert the complainant owes or owed the respondent €4,932,” he said.

He ordered the firm to pay Mr Rooney €2138.58 for his net wages in February 2023.

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