Complainant

Respondent

Parties

Martin  O Sullivan

W H Scott & Son (Engineers)Ltd

Representatives

  Martin O Sullivan in person

Helen Quinn IBEC

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-00040695-001

30/10/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00040696-001

30/10/2020

The complaint is concerned with non-payment of commission to the Complainant after he had left the employment. The amount in dispute is agreed as €495.67. There was no serious conflict about the facts. The dispute centred on the interpretation of the terms governing the payment of commission and the application of those terms post the ending of the employment relationship through redundancy.

Note-the complaint has two CA numbers. As the hearing was notified under CA-40695-this is also the CA number for the Decision.

The Complainant was employed as a Business Development Manager with the Respondent from the 9th of April 2018 until 30th of September 2020 when he was made redundant. There was a statement of terms and conditions of employment which did not include any reference to payment of commission. Terms for wages and commission were set out in a document dated the 9th of April 2018 which gave his annual salary and “a commission of 1.5% is to be paid on all sales at or above company standard margin”. The complaint is concerned with payment for a sale of €33,045 which he achieved during the final week of his employment and for which a pro forma confirmation invoice was then produced and sent to the customer on the 29th of September against their purchase order 36526. The delivery date was approximately ten weeks thereafter. On the 23rd of October, the Complainant sent an email to the Financial Controller reminding him that commission for this sale was due and seeking confirmation. In the absence of a response, he lodged a complaint with the WRC. In November he contacted the Respondent directly to see if they had reconsidered their decision. He received an email from the HR Manager stating that it was a future sale and commission was based on goods invoiced and that he would lose his case at the WRC.

The position of the Complainant is that the terms of the commission payment are extremely vague and that there is no reference to what would happen if a person was made redundant in terms of commission on sales generated while that person was in employment. He drew comparison with a person who remained in the employment receiving commission for goods invoiced sometime after the purchase order was placed and one who had done the same work as he did in his final days and was denied payment on grounds of redundancy. The Complainant pointed to the relatively small amount of the payment and felt that he had been very poorly treated considering the amount of work that he had done in his final days of the employment to achieve the payment from which the Respondent had benefited.

The Respondent submitted that section 5(6) of the Payment of Wages Act 1991 applies in this case:

“...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, [...] then [...] the amount of the deficiency [...] shall be treated as a deduction made by the employer from the wages of the employee on the occasion”.

The Respondent disputes that the monies claimed in this case were “properly payable” to the employee on “that occasion”, arguing that the complainant had received his full and proper wages as per his contract and the 1.5% commission structure.

The facts are that the order placed from Company C (the customer in question) was not actualised when the employee left the company and was not invoiced until 28 January 2021. The Complainant had received his statutory redundancy payment and an ex-gratia payment from the Respondent and there was no deduction from his wages in accordance with the terms of his contract and the commission structure. At the hearing it was explained that the custom and practice in the employment was that payment of commission was made to employees in the month following the generation of an invoice and this was the system which had applied to the Complainant during his employment. The concession of this complaint would mean that any employee could return long after they had left an employment seeking payment for commission on sales which were achieved during the employment relationship but not invoiced until after they had left the employment. The Respondent contended that such an interpretation of the terms of commission on sales would be illogical.

The first point of note is that the Complainant referred to the lack of detail around the commission-based aspect of his salary structure contained in the letter of 9th April 2018. This point is well made and if the Respondent has found themselves in a case of this kind related to commission it is not entirely surprising given that lack of detail and clarification provided to the Complainant in the document issued to him in April 2018. It might be added that the conclusion of a waiver signed by the Complainant at the time of termination of his employment would have allowed for a proper discussion about what was to happen with that specific piece of commission and the issue may have been resolved at that point or otherwise comprehended by the terms of a waiver. Paying an ex gratia payment and not linking it either to a waiver or any unpaid wages means that the ex gratia payment cannot be relied upon after the event to dispose of any entitlements accrued by statute or contract. Without establishing a specific linkage to accrued entitlements, the ex gratia payment has no more than standing than a gesture of goodwill.

In the absence of a clearly set out structure for commission payment, the answer to the complaint lies in whether the Respondent was consistent in their application of the commission on sales in respect of the disputed sale. At the hearing, the Respondent indicated that their position is, that once an employee has left the employment, they are not entitled to any commission on sales either on a PO or on an invoice during the period of their employment. This position is not accepted. If the Respondent wants to rely on custom and practice as to how payments were made in the past it follows that the custom and practice continues to apply following the termination of employment and the obligation to the employee to pay commission continues under that practice, unless otherwise agreed at the time of termination, or provided for in the previously agreed terms of commission payments. The commission payment is a direct part of the wages or salary package of an employee and cannot be divorced from that package merely by the termination of the employment. If accepted, the position of the Respondent would leave an employee not entitled to any other arrears of wages including statutory entitlements accrued during the period of employment solely because the employment relationship had ended. The fact that the employment relationship was ended by a redundancy makes no difference to this case.

Once the custom and practice established the basis of how the commission system operated while the Complainant was in the employment and how commission was paid, the Complainant cannot succeed in his complaint unless custom and practice was not followed in respect of his sale at the end of September 2020. At the hearing, he did not dispute the Respondent explanation of how the system had worked while he was in employment and that payment of commission on the invoice for the goods which he sold would not have been paid to him until the month after the invoice was issued were he still in the employment after that time. This would have meant payment of the commission in February 2021. What issued in September 2020 was a pro-forma invoice, not the invoice which resulted in payment for the goods, which did not issue until the following January. Payment on an invoice which was not generated in the month before the employment relationship ended is not a valid claim. To decide otherwise would be to give credibility to the Respondent’s contention that if the complaint was accepted then they could be liable for commission on sales invoiced at any time after the employee had left the employment.

 To be clear, had the actual invoice been generated while he was in employment in September he would have been entitled to payment as arrears of wages up to the end of October consistent with the practice which would have applied while he was in the employment. It is the fact that the invoice on which the sale of the goods was completed was not generated until January, some months after he left the employment which forms the basis of denying his complaint.

The position of the Complainant that he need not have worked to generate the sale if he knew he was not to be paid commission belies the fact that he was also paid wages for working for the employer during September 2020 irrespective of whether he generated sales and that it was part of his job and contract for those wages to do his best endeavours to continue to generate sales until the end of the employment relationship.

Payment of Wages Act 1991-CA-40695-001- The complaint brought by the Complainant under the Payment of Wages Act 1991 is not well founded

Commission