PWD205

1.Appeal of Adjudication Officer Decision No. PW/19/42.

BACKGROUND:

2.The Employee appealed the Adjudication Officer's Decision to the Labour Court in accordance with Section 7(1) of the Payment of Wages Act, 1991 on the 7th May 2019. The Court heard the appeal on the 26th November 2019.



DETERMINATION:

This matter comes before the Court as an appeal by A Worker (the Appellant) of a decision of an Adjudication Officer in a complaint made against her employer, A Recruitment Company under the Payment of Wages Act, 1991 (the Act). The Appellant's complaint to the Workplace Relations Commission was made on the 10th October 2018. The Adjudication Officer, in a decision dated 3^rdMay 2019, decided that he did not uphold the complaint and that it was dismissed.

The case

The Appellant is a director of the Respondent. It is common case that the Appellant’s employment with the Respondent commenced in 2010 and that she was issued with a new contract of employment upon taking up a more senior role in the Respondent’s employment in October 2013.

That contract of employment made provision for a Commission Scheme and contained the following sentence in the section of the contract dealing with Commission

• “It should be noted that by signing this contract of employment you are confirming your understanding of the Commission Scheme and the Company’s right to amend or withdraw the scheme based on the operational needs of the business”.

A final amendment prior to the making of the within complaint was made to the contract in February 2017 upon her promotion to Director. That amendment specified details of Commission Structure, Retention Bonus, Bonus Scheme, Long Term Incentive Programme, Defined Contribution Pension Scheme and Healthcare Insurance. The document making these amendments stated that“All other terms and conditions of employment remain unchanged”.

The Appellant’s role changed following her promotion to Director and, as a result of a subsequent re-assignment away from the client to whose account she had been assigned, changes also took place to her commission arrangements and payment levels. The Appellant in the within appeal contends that any loss of commission payments suffered by her as a result of her change in role or re-assignment constitute a breach of the Act.

It is common case that the Appellant’s overall earnings in 2016 were €211,000 approximately and in 2017 were €253,000 approximately. The Appellant has submitted that her earnings in 2018 were €278,000.

The complaint giving rise to the within appeal was made to the Workplace Relations Commission on 12^thOctober 2018. No application has been made to the Court to extend time for the making of the within complaint and therefore the cognisable period for the making of the within complaint is 13^thApril 2018 to 12^thOctober 2018.

Summary position of the Appellant

The Appellant submitted that she had earned commission on a particular basis prior to her appointment in 2017 as a Director of the company. She had been placed on a particular client account prior to her appointment as a director and had earned significant commission as a result of her work on that client account. Some months after her appointment to the role of director she was assigned to work with clients other than the client whose account she had worked with prior to her appointment as Director.

She submitted that the contract of employment which issued to her in October 2013 made provision for a Commission Scheme and contained the following sentence in the section of the contract dealing with Commission

• “It should be noted that by signing this contract of employment you are confirming your understanding of the Commission Scheme and the Company’s right to amend or withdraw the scheme based on the operational needs of the business”.

• “The company reserves the right to alter the commission structure at any time to suit the operational needs of the business.”

“All other terms and conditions of employment remain unchanged”.

A final amendment / addendum prior to the making of the within complaint was made to the contract in February 2017 upon her promotion to Director. That amendment specified details of Commission Structure, Retention Bonus, Bonus Scheme, Long Term Incentive Programme, Defined Contribution Pension Scheme and Healthcare Insurance. The document making these amendments stated that

“All other terms and conditions of employment remain unchanged”.

That document did not state

• “The company reserves the right to alter the commission structure at any time to suit the operational needs of the business.”

The Appellant’s earning structure changed upon issuance of the 2017 document. In addition, her duties were changed by the Respondent later in 2017. Her earnings from commission declined.

The Appellant submitted that in May 2018 she reached an agreement with the Respondent to ‘clean all fees owed to her from previous months up to March 2018’ and a payment of €51,000 was made to her in August 2018 arising from that agreement. The Appellant submitted that she is owed €239,000 in respect of the period from April 2018 to March 2019 and that the Respondent made deductions in respect of commission in that amount over that period. She submitted a tabular statement of her commission payment history which included the period encompassed by the within complaint. That tabular statement indicates, by the Court’s calculation (which was necessary because the Appellant did not make the calculation as part of her written submission), that the Appellant claims that unlawful deductions in the amount of €83,740 plus some element of €16,748 and some element of €20,748 took place in the cognisable period for the within complaint.

Summary position of the Respondent

The Respondent submitted that no unlawful deduction within the meaning of the Act has taken place during the cognisable period for the making of the within complaint. The claim of the Appellant was made on 12^thOctober 2018 and the cognisable period for the within complaint runs from 13^thApril 2018 to 12^thOctober 2018.

The Respondent submitted that the wages alleged by the Appellant to be due to her are not properly payable to her. The Commission scheme in place in the Respondent employment was and is discretionary in nature. The discretionary nature of the scheme is specifically set out in the Appellant’s contract of employment dated 23^rdOctober 2013. That contract, which is signed by the Appellant, provides for the “Company’s right to amend or withdraw the scheme based on the operational needs of the business”. The Respondent submitted that this provision of the 2013 contract remains in force and was not deleted or removed by any subsequent amendment or addendum to the contract, of which there have been a number.

The Respondent submitted that the meaning of the Appellant’s claim is that she is entitled to commission payments relating to a specific client account in perpetuity, regardless of whether or not the Respondent had continued to assign her to work on the particular account in question. The Respondent asserted that this proposition is an absurd one and clearly unworkable in any employment relationship.

The Respondent submitted that at about August 2017 the operational needs of the business changed and the Appellant’s role in terms of assignment changed. Those operational needs arose primarily as a response to engagement with the client to whose account the Appellant had been assigned. The Respondent submitted that the Appellant agreed to the change. Arrangements as regards payment of commission to the Appellant altered as a result of the 2017 addendum to her contract. Payment of commission was also affected by her re-assignment in August 2017 arising from operational needs of the business.

The Respondent put in place a temporary transition arrangement whereby the Appellant received a payment of €12,500 per month between August 2017 and January 2018 at which time the Appellant’s annual salary review would take place. The Appellant conditionally agreed a new salary structure in April 2018.

The Respondent made extensive submissions setting out a history of engagement between the Respondent and the Appellant which it said demonstrated that it had acted fairly and reasonably in exercising its discretion to alter the commission scheme as it applied to the Appellant. The Respondent submitted that it had met all of its obligations arising from the contract of the Appellant and the law.

Relevant law

The Act at Section 5 in relevant part provides as follows:

Regulation of certain deductions made and payments received by employers.

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

It is common case that the structure of the Appellant’s remuneration arrangements were changed following her appointment as a director of the company and her subsequent re-assignment in terms of client responsibility. In particular it is common case that arrangements for the payment of commission were altered. It is the alteration of commission arrangements which gives rise to the within complaint under the Act.

It is common case that the Appellant’s contract of employment at all times until February 2017 made provision for the unilateral alteration by the Respondent of the commission scheme as it applied to the Appellant. The Appellant contends that the document which issued to her in 2017 removed from the Respondent the right to amend, alter or withdraw the commission scheme. Her contention in that regard is founded on the undisputed fact that no statement affirming that continuing right was contained within that document.

The Respondent contends that the document which issued in 2017 asserted that all terms and conditions of employment not amended by the document of 2017 remained unchanged. The Respondent submitted that it at no time removed from the Appellant’s contractual arrangements a provision setting out the Respondent’s right to alter or amend the commission scheme as it applied to the Appellant.

The Court has examined the document which issued in 2017 and notes that many elements of the Appellant’s contractual terms established by the 2013 contract and subsequent amendments and addendums are not expressly addressed in that document. The Court notes that no contention is made that the 2017 document affected any term or condition of employment not expressly addressed in the 2017 document itself. The Appellant however contends that the 2017 document addressed the issue of the commission scheme as it applied to the Appellant and, consequently, any other provision of any earlier document which related to the commission scheme was removed as a term or condition of her employment.

It is clear and undisputed that the 2017 document does state clearly that“All other terms and conditions of employment remain unchanged”.It is clear also that the document, insofar as the commission scheme is concerned, was confined to specifying the percentage commission which would apply to the Appellant in respect of one named account and the percentage commission payment in respect of team placements outside that account.

In all of the circumstances the Court concludes that 2017 document, in asserting as it did that all other pre-existing terms and conditions of employment remained unchanged, can only reasonably be interpreted as meaning that the earlier enunciated right of the Respondent to alter the commission scheme at its own volition remained unchanged by the 2017 document.

In light of that conclusion the Court must find that the alteration to the commission scheme as it applied to the Appellant by the 2017 document or as a result of her re-assignment to accounts other than the account she had been assigned to prior to August 2017, was provided for in the contract of employment of the Appellant in being before and during these events.

The Act at Section 5(1)(b) provides as follows:

• An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—

  (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,

Determination

The Court determines that the alteration to the Respondent’s commission scheme as it applied to the Appellant was provided for in her contract of employment in place prior to and during the material time. The within appeal therefore cannot succeed. The decision of the Adjudication Officer is affirmed.

The Court so determines.

	Signed on behalf of the Labour Court
	Kevin Foley
CC	______________________
24 January 2020	Chairman