Complainant

Respondent

Anonymised Parties

Sales Executive

Telecom Company

Representatives

Ross Hetherington

Ronan Dodd, Dodd & Company Solicitors

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-00031488-001

10/10/2019

The complainant was a Sales Executive with the respondent commencing employment on 3 September 2018.   The complainant’s remuneration consisted of a basic salary plus commission on sales. The complainant resigned her position with the respondent effective 9 October 2019 and the dispute is in relation to the non-payment of commission on sales which the complainant alleges she earned prior to her resignation.

The respondent has refused to pay the complainant commission on sales that she made in the period July 2019 to September 2019.

When the complainant queried the matter on her final working day she was advised by management that no commission would be paid to her.

Subsequent contact with the respondent failed to clarify the situation as the complainant does not accept the respondent’s clarification / interpretation of her contract in this regard.

There is also money due to the complainant from a ‘claw-back’ pot.

The complainant’s contract states that payment of commission ceases on termination of employment.

Commission is only paid when contract is signed.

The largest contract had to undergo major revision after complainant left and a new contract had to be issued and signed.

Payments from the ‘claw-back’ pot are entirely at management’s discretion.

The complainant was employed as a full-time Sales Executive by the respondent commencing on 4 September 2018. The complainant was employed through a recruitment agency with most of the discussions regarding terms and conditions taking place through the third party. The complainant received a copy of her contract through the agency. In that document there is a clause on remuneration which states as follows:

1.       Basic Salary of €35,000 per annum plus commission as outlined in the Commission Structure.

2.       All commission entitlements cease on cessation of employment.

3.       Sales targets for the first 6 months will be agreed on commencement of employment.

4.       Remuneration will be reviewed after 6 months.

The complainant stated that she had received a copy of the commission structure at this time through the agency.

In February 2019 the complainant was promoted to Account Manager. The rules of the commission structure provided for the payment of commission to sales staff on a deferred, quarterly basis. Thus, for instance, commission earned on sales made in the period January – March (Q1) would be paid on 25 May. The other pay dates were Q2 on 25 August, Q3 on 25 November and Q4 on 25 February. During her employment the complainant also received a bonus payment of €500.00 which she understood came from what was termed the ‘claw-back’ pot.

The complainant later in 2019 decided to resign her position with the respondent and accordingly on 2 October 2019 gave one week’s notice of this intention. The respondent had a partner company in the UK and the Sales Manager was based with that company. The complainant therefore travelled to the UK later that week to do a handover of her accounts. The complainant queried when she would receive her commission on sales generated in the period July – September but did not receive a definitive answer.   The complainant returned to the Irish office and on 9 October, her last day at work, she met with the CEO.   The CEO informed the complainant that she would not be receiving any payment of commission and referenced the clause in her contract that stated that “all commission entitlements cease on cessation of employment”. According to the complainant the meeting got quite heated and that when she told the CEO that she would seek advice on the issue from the WRC he demanded that she leave the office. The CEO for his part disagreed with the complainant regarding how the meeting terminated. This was the final face to face meeting between the parties. The complainant referred the complaint to the WRC on 10 October 2019.

The CEO did contact the complainant the following week and this resulted in a phone conversation between the parties with the CEO providing further explanation as to the respondent’s position and stating that he would be prepared to make an offer to the complainant when he had further examined the matter. No agreement was reached, however, and the complainant informed the CEO that she would leave the matter to the WRC.

This is a complaint under the Payment of Wages Act, 1991. Section 5(1) of the Act states:

An employer shall not make a deduction from the wages of an employee (or receive any payment from the 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 the deduction, the employee has given his prior consent in writing to it.

Section 5(6) of the Act states:

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 such deductions as aforesaid) are paid to the employee,

then, except as in so far as the deficiency or non-payment is due to an error in 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.

The High Court has determined in the case of Dunnes Stores (Cornelscourt) Limited v Lacey, (2007) 1 IR 478,   that the first issue to be addressed is the determination of what wages are “properly payable” under the complainant’s contract.

In the case before me the respondent’s position is that the decision not to pay the complainant the commission on sales made by her in the period 1 July to 30 September 2019 was primarily due to the clause in her contract that stated that “all commission entitlements cease on the cessation of employment”. The respondent also drew attention to other clauses in the Commission Scheme Rules dealing with the fact that commission would not be paid on new customer accounts until after a direct debit payment has been received and cleared and that commission could be withdrawn if the respondent found that a product had not been sold correctly. The respondent is therefore claiming the protection afforded to them by Section 5(1)(b) of the Act as set out above.

The complainant, for her part, argued that the respondent’s position is a gross misinterpretation of the clause in her contract and that she is due commission on sales made prior to her resignation from employment. As noted above, the respondent has a commission payment system that involves a considerable delay in the sales person receiving their commission in their wages. Indeed, in documentation provided to the hearing by the respondent in respect of the operation of the commission scheme, an example is given of a scenario where a customer signs a contract on 30 June but, because of the requirement for clearances, etc., the sales person does not receive their commission until 25 November. The interpretation adopted by the respondent would seem to suggest that sales generated for a period of up to five months prior to cessation of employment would not qualify for payment of commission. This appears to me to be an unreasonable interpretation that is outside of the norm for the operation of sales commission schemes. The complainant had an expectation that she would receive commission on sales which she had finalised prior to her resignation. A more reasonable interpretation of this clause would be that the entitlement to earn commission would cease on the cessation of employment but that commission already earned would, of course, be payable.

The next issue therefore relates to the other clauses in the Commission Scheme Rules. The contract does not itself incorporate these clauses but, as set out above in the clause covering remuneration, refers to “commission as outlined in the Commission Structure”. The parties have provided different documents in this regard. The respondent’s document sets out the different commission rates for Sales Manager, Account Manager and Sales Executive, explains the operation of the ‘clawback pot’, sets out the Quarterly Pay-out Schedule and contains clauses dealing with Post-Signature Review and Contract Profitability. In particular, the section dealing with Post-Signature Review states that all contracts are subject to a managerial review of what is being offered to the customer and a further review post-signing to ensure that the services offered are valid and achievable. The section concludes by stating that “we reserve the right to withdraw commission if the product has not been sold correctly”.

The complainant had a different document. In explaining its provenance the complainant explained that when she had been considering taking up employment with the respondent she had requested and received a document outlining the commission scheme from the recruitment agency. Some time in 2019 when she could not locate the original copy she again went back to the recruitment agency and they located a document dealing with the scheme on her file and forwarded same to her.   This document is much briefer than the respondent’s document and deals with the main elements of the employment package such as basic salary, commission rates for Sales Executive and Account Manager, a brief detail on the ‘clawback pot’ and mention of other benefits such as Health Insurance, Mileage, Gym Membership and provision of Laptop /Mobile Phone.

The respondent’s CEO in evidence accepted that the complainant had not been directly provided with a copy of the Commission Scheme Rules but stated that it was readily available together with the respondent’s other policies and procedures and could be accessed electronically at any time by the complainant. The complainant stated that that she was never advised of this facility.   Commission obviously forms an important part of the remuneration package of salespersons. It is an integral part of their terms and conditions of employment. Section 3 of the Terms of Employment (Information) Act, 1994 states that an employer shall

“give or cause to be given to the employee a statement in writing containing the following particulars of the terms of the employee’s employment…”

Subsection 1A(d) specifies “the rate or method of calculation of the employee’s remuneration” as being one of those particulars. The wording of the legislation places a positive onus on the employer to ensure that the employee is provided with the required particulars specified therein.

As regards the issue of quantifying the claim for commission it is accepted by both parties that the five contracts on which the complainant had worked had a total value of €61,438.92. As an Account Manager the complainant would have been due payment at the rate of 10% which equates to €6,143.89. Without prejudice to the position that no commission was due to the complainant as she had resigned, the respondent also argued that invoices had not been issued in respect of three of the customers at the time of the complainant’s resignation and that no matter what interpretation was put on the disputed clause, these three transactions could not be included in any calculation of commission due to the complainant. The respondent drew particular attention to the largest contract which had a value of €39,840.00 (Customer ‘K’). The CEO in evidence stated that a lot of issues had arisen in regard to this contract after the complainant had left employment. The proposed system had to be reconfigured to such an extent that a new contract had to be drawn up in place of the contract that the complainant had generated in September 2019. This new contract was dated 17 October 2019 and thus was signed after the complainant’s resignation. The CEO accepted that no similar issues were encountered with the other contracts.

The complainant stated that the practice in dealing with customers was that following discussions and demonstrations with the client she would give details of their requirements to the support team who would then configure a system and present it to the client. When the client was satisfied a contract would accordingly be drawn up for signing which would also detail payment schedules, etc. An invoice would follow in due course. The complainant also said in evidence that payment of commission should be made on signed contracts but that if the contract was not completed then no commission would be due.

The other issue put forward by the complainant relates to the ‘clawback pot’. It was accepted by both sides that 1.5% of the total value of a contract was put into this pot. The complainant stated that her understanding was that this sum was part of a salesperson’s commission, that it was held as insurance against the cancellation of a contract before it expired and that any money left over at the end of the year would be paid out. The document that the complainant received from the recruitment agency states that the 1.5% paid into the pot was to cover repayment of commission for customers who go out of business during their contract term and that part of the pot is paid to the sales team at the end of the year. The complainant in her submission states that her estimated payment into the pot was €2,500 in 2019. The complainant (who was the only sales person in Ireland) said that she had received a payment from the pot early in 2019 of €500.   The respondent’s Commission Scheme Rules refers to this pot as a protection against unfulfilled contracts.   An example of how it operates is provided. The clause then states that if there is not enough money in the pot to cover this eventuality then the remaining amount will be taken from the sales person’s future commission. It concludes by saying that any amount remaining in the pot at the end of the year will be paid as an extra bonus at the Sales Manager’s discretion. The CEO in his evidence stated that payments from the pot were pooled between all sales staff (both UK and Ireland) and that any payments were at the Sales Manager’s discretion.

I have carefully studied all the evidence and submissions before me. In determining the issue of what money, if any, is due to the complainant as being properly payable as set out in the legislation I am faced with two differing understandings of the operation of the commission scheme.   I have to say that I have grave reservations as regards the document the complainant received from the recruitment agency as it appears to me to be a summary of the terms and conditions of the position on offer rather than an official document. I have already stated my belief that the respondent’s initial and fundamental position that all commission entitlements cease on cessation of employment is unfair and particularly onerous in view of the long delay that occurs between completion of signing up a customer and the payment of commission. I also have to consider whether the respondent can enforce clauses in a document in regard to paying commission that the complainant states she had never seen and the respondent accepts was never given to her. I have decided therefore that the complainant was due commission on all sales that were completed by her in the period 1 July to 30 September 2019. In relation to the transaction involving Customer ‘K’, the evidence before me is that this sale had not been completed as the contract on which it was based had to be revised and re-issued after the complainant had left. I therefore find that the complainant is due commission at the rate of 10% on sales totalling €21,598.92 which equates to €2,159.89.

With regard to the claim for payment from the ‘clawback pot’, I note that there is no evidence before me specifying any guarantee of payment of any sum of money from the pot. The complainant’s own submission states that the pot was viewed as an insurance against default by a customer and that any remaining money is paid out at the end of the year. The CEO stated in evidence that any payment is purely discretionary. It would appear to me therefore that any payment was dependant on the calls made on the pot during the year and that there was no guarantee that a payment would be made every year. I therefore accept that this was a discretionary payment and that there was no custom and practice such as to create a specific anticipation or expectation of payment of a particular or any amount.

Complaint No. CA-00031488-001:

This is a complaint under the Payment of Wages Act, 1991. For the reasons set out above I find this complaint to be in part well-founded and I order the respondent to pay to the complainant the sum of €2,159.89 as compensation in this regard.