Ms A Dunnington v NGP Utilities Ltd: 2500176/2018
REASONS
Before Employment Judge Garnon (sitting alone) Appearances For the Claimant Ms L Mankau of Counsel For all Respondents Ms K Jeram of Counsel Reasons ( bold print is my emphasis throughout )[1]Introduction and Issues 1.1. The claim is now of unlawful deduction from wages only. There are many complex issues of fact which is why it was set down for a three-day hearing, but that was not enough to enable me to give a reasoned judgment on all of them. 1.2. However, there are some general points to be determined. Counsel agreed I should determine the following issues and give a judgment in the hope they would be able to agree the remainder. If they cannot, a further hearing will take place. 1.2.1. What were the express and/or implied terms of the claimant’s contract as regards her entitlement to be paid commission and any incentive payment? In particular. what was payable and when? 1.2.2. Did the respondent fail to pay to the claimant when it was due(a) her commission(b) an incentive payment? 1.2.3. Are any of the claims time barred? 1.3. On the first day of the hearing, I asked Ms Jeram whether the respondent’s case was it had the right to withhold commissions and/or clawback irrespective of “fault” on the part of the claimant for the contract being downvalued or “lost” . She confirmed that was its case. An application made by the respondent dated 24 April suggests otherwise. It concludes with a request for written reasons and I believe I should consider the other aspects of that application at a telephone hearing once the parties have had the opportunity to consider these reasons.[2]Relevant Law 2.1. Section 27 of the Employment Rights Act 1996 ( the Act) defines ““wages”, so as to include any sums payable to a worker in connection with his employment, by way of commission, or other emolument referable to his employment, whether payable under his contract or otherwise. Section 13 of the Act , so far as relevant, provides(1) An employer shall not make a deduction from wages of a worker employed by him unless— (a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker’s contract, or (b) the worker has previously signified in writing his agreement or consent to the making of the deduction.(2) In this section “relevant provision”, in relation to a worker’s contract, means a provision of the contract comprised— (a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or (b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion.(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker’s wages on that occasion. 2.2. The phrase “properly payable” in section 13(3) means properly payable under her contract. The Court of Appeal have in Agarwal v Cardiff University held tribunals are entitled to determine questions of contractual interpretation, including whether a term should be implied, in the context of a wages claim. 2.3. Terms of contracts are express or implied. If express they may be ambiguous. Rules set out by Lord Hoffman in Investors Compensation Scheme-v-West Bromwich Building Society are helpful in resolving ambiguity from which I will quote selectively : (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] 2 W.L.R. 945(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. 19851 A.C. 191, 201: ". . . if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense." 2.4. Terms cannot usually be implied into a contract contrary to express terms. I cannot imply a term simply because I think it is “reasonable”. There are four common reasons for implying terms into a contract. 2.4.1. To give effect to Custom and Practice which subsists in an industry. 2.4.2. To give “Business Efficacy” to a contract which. without the implied term. would be practically unworkable. 2.4.3. The remaining two , which overlap to an extent are (a) to reflect the conduct of the parties during the contract to the extent it shows they both must have understood what happens in practice was what both always intended to happen and (b) to insert terms which are obviously what the parties intended but failed to say, sometimes called the “officious by-stander test” . 2.5. Caution is needed on point (a). One party may of its own initiative do something repeatedly, for example paying late, and the other party may for commercial reasons tolerate it. That would not evidence a term of the contract at its inception that payment could as of right be made late or any lawful variation of contract, a point Ms Jeram rightly did not argue. There may be cases where the evidence shows the employee, after an employment contract is entered into, for valid consideration, agreed to a change of terms. It takes a contract to vary a contract. Change cannot be imposed unilaterally by an employer. Simple forebearance by a party in enforcing a right does not prevent him or her doing so later ( Pinnell’s Case) 2.6. Contracts are made when one party makes an offer which the other accepts , valid consideration usually in the form of mutual promises is given and there is an intention to create legal relations. The essential question is what were the terms of the contract agreed at the time it was made. Parties may enter into a bargain which one of them later regrets. This is particularly common where both parties are anxious to complete a bargain for commercial reasons. To adapt the old proverb ”contract in haste, repent at leisure”. The party who regrets the bargain cannot change it. It is a fundamental principle of law that terms which restrict a party’s liability must be notified to the other party at or before the contract is made ( Olley-v-Marlborough Court Hotel and Thornton_-v-_ Shoe Lane Parking ) . Such notice may be inferred from previous dealings between the parties or a practice so commonplace in the industry the party affected by the limitation must have realised existed. The emboldened words in Paragraph 2.1. above are a statutory addition to this common law principle 2.7. A feature of this case which sets it apart from many employment contracts is that both parties had some bargaining power at the time the contract was made . In recent cases, where bargaining power has been manifestly disparate, Courts have been willing to interpret a contract in a way advantageous to the party with little bargaining power at the time it was made. There is no need to do so here.[3]Findings of Fact and Conclusions 3.1. I heard the claimant and, for the respondent, Ms Leah Barrett who joined the respondent on 1 July 2016 as a Sales Team Leader but is now Service Operations Director and Mr Paul Gleghorn, a Sales Ledger Manager who has worked for the respondent since June 2017. The claimant was employed from 3 October 2016 until she was dismissed with immediate effect on 21 September 2017. 3.2. The respondent brokers contracts between business consumers of energy and suppliers of gas and electricity. Energy suppliers purchase gas and electricity from companies which produce or generate and compete to enter into contracts with consumers of energy. Energy suppliers are prepared to pay brokers to arrange contracts with consumers which tie them to paying a certain rate for a certain period for the energy they consume. The broker is paid commission built into the contract (known as an uplift) by adding it to the unit price being paid for the gas/electricity. It is paid to the broker directly by the energy supplier. The terms on which the broker receives commission is determined by the contract between the broker and each individual supplier (the supplier payment terms). 3.3. The respondent employs Business Account Managers (BAMs), of which the claimant was one, to negotiate the terms of energy supply contracts. They cold call prospective consumers to ascertain if they are willing to use an energy broker. If they are, the BAM negotiates the terms of a contract between it and an energy supplier. 3.4. In addition to basic salary, BAMs are paid commission on the contracts they sell. The amount is determined by their contracts of employment. Clause 9 says . “ You are eligible to receive commission under the following commission structure: Quarterly Achieved Target Your Percentage £0-£30k 0% £30-59k 4% £60-£79k 8% £80-£99k 12% £100-£115k 16% £116+ 20% Commission will be paid when the company is in receipt of payment from the suppler whilst you are [in] employment" 3.5. In practice, commission is paid in the next available pay run. As salaries are paid on or about the last working day of the month, so to enable the accounts department to process the payments, the commission from the supplier would need to be received by the respondent at least a week before the end of the month, otherwise commission would be paid in the following month. 3.6. I accept the claimant’s evidence, which neither of the respondent’s witnesses could contradict, that no caveats on the commission payment terms. and importantly no “ retention” or “claw back” provisions, were notified to her at of before she accepted the offer of employment on the terms quoted above. The supplier payment terms set out clawback and other limiting provisions as between the respondent and the energy supplier but have no bearing on how the employee’s share of such commission payments are calculated or when they are paid. The claimant never agreed to terms other than her being entitled to a share of commission payments received by the respondent on sales she had negotiated, when it received its commission, provided at that date she was still employed. 3.7. On a literal reading if the claimant brokers a contract which results in a commission payment being made to the respondent on a day when she is still in employment, she is entitled to a percentage of that commission. On that date her right to a payment accrues. However, at that date the amount cannot be determined because her percentage share depends upon her sales performance in a quarter. There is need to imply a term to give the contract business efficacy as to the date upon which a liquidated payment becomes due, later than that upon which the right to some payment accrues. It is the next practically workable monthly pay date. Mr Gleghorn succinctly explained how this is achieved in practice. Apart from that, the written terms of the contract need nothing to supplement their effect. 3.8. Ms Jeram’s submission is the wording is plain but to the opposite effect. She says “eligible to receive” does not mean “entitled to receive” and “will be paid when” does not mean “will be paid upon receipt”. I disagree. I am looking for the intention of both parties at the time the contract was made. A major factor in deciding this point comes from Ms Barrett’s statement ( TCV stands for Total Contract Value): As is standard practice within the industry, for the majority of sales the Respondent will pay BAMs a proportion of their commission upfront upon a sale being completed, based on the speculative TCV figures prior to the actual consumption of the meter becoming known. .. From the BAMs’ perspective this is an extremely attractive aspect of the remuneration package as they start receiving payment far sooner than if they were paid once the actual TCV could be confirmed. The eligibility to receive forward payments also acts as powerful psychological driver to motivate them to secure more sales. However, this practice exposes the Respondent to a substantial financial risk; as the actual TCV of a contract may end up being a lot lower than initially anticipated (or the contract may subsequently be confirmed as an entirely lost sale) in which case the Respondent will have overpaid commission to the BAM for that sale. 3.9. One reason for reading a contract in a way which is not literal is that it flouts business common sense. At the time it was made, this one did not. A good indicator of whether a contract does, is a manifest imbalance of advantageous and disadvantageous terms as between the parties on a literal reading. In this instance, if a BAM worked hard to broker a contract which would produce a large commission payment from the energy supplier to the respondent and that payment arrived on the day after her employment ended, for whatever reason including her death, she would be entitled to nothing. The respondent could retain all of the commission without paying her any share of it at all. That is a major downside to the bargain from her point of view. The corresponding upside for the claimant of payments “upfront” is exactly as Ms Barrett sets out .Most suppliers pay a percentage on three dates(a) signing of a contract (the sign date)(b) the supply being started (“ the live date”) and(c) and its end (“ the end date “) . Dates (a) and (b) may be the same . A typical split of percentages would be 30/50/20 or 40/40/20. The 20% is meant to be a margin to cater for initial overestimation of TCV. As a contract may last several years, any BAM who leaves before the end date will receive no share of the 20 %. The downside for the respondent of paying a share of its commission to the BAM is that they may overpay a BAM and not be able to claw it back. The upsides for the respondent are (a) to motivate its staff to earn commissions for it by making it clear they will have their share early and (b) not having to pay commissions to any BAM who leaves. All commercial contracts are about apportionment of risk and this has fairly high risks for both, apportioned crudely but in a balanced way. 3.10. The claimant signed her contract which contained the above terms on 26 September 2016 before she started work and before whatever “induction” she had. She had not previously dealt with the respondent. Both the claimant and Ms Barrett are young ladies who have worked for several companies in their career in the energy broking business, and there is no industry norm. 3.11. The respondent says when a BAM receives commission is determined by the applicable “agent payment terms”, which are based on who the supplier is and what type of contract has been sold. My first decision of principle is there were no such express oral terms in the claimant’s contract and no reason to imply such terms. The respondent’s standard basic annual salary for a BAM ranges from £30,000 to £45,000, depending on the individual’s experience. The respondent does not cap the amount of commission a BAM can earn. Over the last 12 months its highest earning BAM received £118,000 in commissions. The claimant’s sales experience was considerable but she accepted a basic salary of £35000, very probably because of the attractive commission terms . Successful sales people are in demand. Ms Barrett started on 1 July 2016. She does not know who put what offer of employment to the claimant in late 2016. At that time the respondent was a “young” company, incorporated in early 2015, doubtless trying to attract good salespeople. 3.12. Ms Barrett’s statement says “As is the case industry wide, the Respondent has a high turnover of sales staff; the Claimant herself was in employment with the Respondent for just under 12 months.” and later “At all times, the only individual within the Respondent with authority to determine how agent commission payments are structured for any given supplier at any given time is the Respondent’s founder and Chief Executive Officer, Fokhrul Islam”. The claimant’s statement says” I was a very successful saleswomen for the Respondent and generated exceptional revenue. Not only this, I have successfully worked for three separate employers in the same role since entering the industry over a decade ago. I have never lost sales, been accused of amending consumptions or experienced any delays in commission payments with any other company. She says since her dismissal, Mr Islam has offered her job back on a number of occasions and she produces a text message from Mr Islam on 31 March 2018 (page 380) saying she should let him know if she ever wanted to "come back to NGP". and saying she "did decent rev[enue]". What neither Mr Islam nor anyone else at the respondent can lawfully do is unilaterally impose conditions after the contract is made. In the financial services industry, commissions are paid “ upfront “ on sales of such products as life insurance policies which may lapse. Clawbacks in employment contracts which mirror those between the broker and insurance company are common, but I have never seen a contract in that industry which does not have some corresponding provision for a salesperson receiving some payment for commission “ in the pipeline” for a “run off “ period after termination . 3.13. Ms Barrett’s main responsibilities now are overseeing sales processing, revenue protection, supplier billing and sales “objections”. During 2017 it became apparent a small number of individuals, including she says the claimant, were facilitating the early termination of existing energy supply contracts in circumstances that did not legally allow them to do so in order to sell the customer a new supply contract, or were selling contracts on inflated projected consumption rates in the knowledge the meter would never consume that level. The claimant was dismissed as a result of serious allegations of this nature. Ms Barrett’s new role was created in October 2017 to introduce much more stringent internal verification and compliance checks to put a stop to any mis-selling, which, even by just a couple of BAMs, was costing the respondent money as a result of lost sales and commission payments being made to BAMs that were not always properly payable. I fully agree this role was necessary. However, it did not exist at the time the claimant entered into her employment contract. Ms Barrett says the payment of commission to a BAM remains subject at all times to the respondent’s internal quality and compliance checks so no commission will be paid to a BAM unless those checks have been completed and no issues with the sale have been identified. This too is not a contractual term. On the contrary, it flies in the face of the plain wording of clause 9. 3.14. I find it to be instructive to note what has happened since. Clause 9 no longer figures in contracts of employment issued by the respondent. In its place has been introduced a commission policy. The respondent’s rights to retain commission which Ms Barrett argues have always existed, are now express terms of employees contracts. My conclusion is that they were not terms of such contracts before. 3.15. Ms Barrett’s statement says Ultimately the Respondent has no control over the mechanics of any supplier clawbacks and may receive a supplier statement out of the blue for a significant clawback it was not expecting; If internal provisions are not made to account for this risk it is easy to see how several significant clawbacks might result in a broker becoming insolvent; I believe one of the factors that contributed towards the Respondent’s direct competitor, Utilitywise plc, going into administration earlier this year was significant supplier clawbacks. The Respondent does what it can to mitigate this financial risk by undertaking its own internal verification checks and, to the extent it is able to do so, monitoring live consumption rates by reference to the customer’s supplier invoices in order to try to identify for itself any contracts on which a clawback may potentially be applied. If a high risk contract is identified (such as an under-consuming meter or notification of a potential COT) then the Respondent will take steps internally to provide for the anticipated clawback. Specifically, the sale will be flagged on the CRM as being held or placed into objection meaning that any commission the Respondent has already received for that contract will be notionally set aside and not treated as revenue for the Respondent’s internal accounting purposes. Further, no commission will be payable in respect of that sale to the relevant BAM until the Respondent is comfortable that no clawback will be applied. 3.16. Ms Barrett ‘s present method is to check if a contract is high risk first, before paying any share of commissions to BA’s. Energy supply companies pay first and , if they have overpaid or the sale is “lost”, demand the money back. I accept her oral evidence that if commission payments were to be made to BAM’s and a clawback provision incorporated in their contracts mirroring that which is incorporated in the contracts between the respondent and the energy suppliers, it may cause a BAM who does not have the self-discipline to treat her share of the commission as unsafe to spend, problems when clawback is applied. However none of that entitles the respondent unilaterally to retain commissions for any time after the express terms of the contract, supplemented by the one term I have implied, say they should be paid. 3.17. There is another example of the respondent altering the rules to suit changing circumstances. What Ms Barrett terms a “compliance issue” includes a BAM failing to ensure the individual in the customer’s business with whom they are negotiating has legal authority to sign the contract on its behalf. The claimant failed to do so she says and I have been taken to one example. The claimant is making no claim in respect of the particular transaction thereby acknowledging her error. The extension of principle which the respondent makes is that because the claimant has had a compliance issue in regard to one contract she may have such issues in respect of others. Therefore, it claims the right to be able to embargo her commissions on other contracts. There is no legal warrant for that. 3.18. Once an energy supply contract has been sold there are a number of reasons why it might not ultimately generate the revenue originally expected. Should there be any discrepancy between the estimated meter consumption and the actual meter consumption, all suppliers reserve the right to clawback some/all commission payments already paid to the broker. Such clawbacks are industry standard. Herein lies the problem for the respondent. There would have been absolutely no reason why a clawback provision mirroring that in the contract it had with the energy supplier could not have been incorporated into the contract of employment it had with its BAMs , but it was not .There is no warrant for me to imply one . 3.19. Ms Barrett says she knows from her own induction, the mechanics of the agent payment terms are explained to all BAMs during the first week of their employment and it will have been made clear to them (as it was to her when she started) these were subject to change from time to time. She adds agent payment terms are recorded on the computer system the respondent calls “ CRM” and at “ the outset of their employment” BAMs are informed any commission paid may be clawed back through the CRM at any time. As I took care to confirm with Ms Barrett and Mr Gleghorn, what operates as between the energy supply company and the respondent can best be termed a “running account” . Any commissions which fall to be returned by the respondent to the supply company are commonly offset against other commissions that become payable. The respondent uses CRM in a similar way as between itself and the BAM’s with a notable difference they have no contractual right to do it. Ms Barrett says that at all times the claimant was aware from CRM commission was being withheld or clawed back, and at no point during her employment did she query this. Two conclusions follow. The first is that as she had no access to CRM at the time the contract was made she cannot have known about this other than if she were expressly told which I find she was not. It is a classic example of the principle established in Olley and Thornton . The second is that the claimant cannot reasonably have been expected to follow the detail of what was happening to her commission share from CRM even when she gained access to it. 3.20. I find she did query the situation on several occasions. When she started it took some time to build up a pipeline of sales. She later knew she had a lot of commission outstanding and so queried this . She had a conversation with a Ms Lynne Gilroy on 29 November 2016 and sent an email the following day (page 157). She emailed Ms Gilroy on 25 July 2017 requesting various payments specifically commission payments for The Island Free School (which at that time made up the majority of sales on which she was entitled to commission). Orally she regularly complained about various non-payments of commission to Damon Peer, Zara Anderson and Andy Laird. The response was almost always it would be paid "next month". 3.21. In summary on the first issue I conclude that if the regime the respondent has in fact been applying to the claimant had been explained to her before she entered into the contract she may well have replied “Fair enough, but in that case I want some protection against having to forfeit commissions I have earned which are being held in objection but are then cleared for payment shortly after I leave.” That negotiation never happened. Instead she took the high risk of forfeiting such commissions in return for the benefit of being paid as soon as practically possible after the respondent received its commission from the energy supply company. That was the express contractual term, and neither the respondent nor I can rewrite it. 3.22. The claimant is also claiming an incentive payment, known as a Beast Mode payment, in respect of a month she sold contracts with a combined TCV in excess of £100,000. From time to time the respondent operates additional incentive schemes but I accept it does so at its absolute discretion. In the month of June for which she claims, a manager senior to her queried why she had not received the payment which does tend to suggest, as Ms Mankau submits, there was a legitimate expectation of payment upon satisfaction of the monthly target. However, the claimant cannot have it both ways. The written commission terms in her contract dictate what she receives and when. There is no mention in her contract of a beast mode payment being an entitlement and no need to imply a term it should be. 3.23. I turn to the final issue of time limits. Section 24 contains (2) Subject to subsection (4), an employment tribunal shall not consider a complaint under this section unless it is presented before the end of the period of three months beginning with— (a) in the case of a complaint relating to a deduction by the employer, the date of payment of the wages from which the deduction was made, or (3) Where a complaint is brought under this section in respect of— (a) a series of deductions or payments, or the references in subsection (2) to the deduction or payment are to the last deduction or payment in the series or to the last of the payments so received. (4) Where the employment tribunal is satisfied that it was not reasonably practicable for a complaint under this section to be presented before the end of the relevant period of three months, the tribunal may consider the complaint if it is presented within such further period as the tribunal considers reasonable. 3.24. In Bear Scotland-v-Fulton Langstaff P said Whether there has been a series of deductions or not is a question of fact: “series” is an ordinary word, which has no particular legal meaning. As such in my view it involves two principal matters in the present context, which is that of a series through time. These are first a sufficient similarity of subject matter, such that each event is factually linked with the next in the same way as it is linked with its predecessor; and second, since such events might either be stand-alone events of the same general type, or linked together in a series, a sufficient frequency of repetition. This requires both a sufficient factual, and a sufficient temporal, link. 3.25. Pausing there I have no difficulty in finding this was a series. The link is that from the start the respondent was applying policies which contradicted contractual terms I have found to exist. However, Langstaff P went on to say Since the statute provides that a Tribunal loses jurisdiction to consider a complaint that there has been a deduction from wages unless it is brought within three months of the deduction or the last of a series of deductions being made… I consider Parliament did not intend that jurisdiction could be regained simply because a later non-payment, occurring more than three months later, could be characterised as having such similar features that it formed part of the same series. The sense of the legislation is that any series punctuated from the next succeeding series by a gap of more than three months is one in respect of which the passage of time has extinguished the jurisdiction to consider a complaint that it was unpaid. 3.26. There is a gap of over three months identified in Ms Jeram’s submissions which would mean any unlawful deductions made prior to number 11 on page 65 are out of time. Ms Mankau submits it was not reasonably practicable for the claimant to present her claim in respect of those before she did. I do not accept that submission. 3.27. In Palmer v Southend on Sea Borough Council 1984 IRLR 119 the Court of Appeal held to limit the meaning of “reasonably practicable” to that which is reasonably capable physically of being done would be too restrictive a construction. The best approach is to ask “Was it reasonably feasible to present the complaint within three months?” The question is one of fact for the Tribunal taking all the circumstances into account. It will consider the substantial cause of the failure to comply with the time limit and investigate whether and when the claimant knew she had the right to complain. There is ample case law eg. Dedman v British Building and Engineering Appliances Ltd 1974 ICR 53, to the effect time limits are just that—limits not targets so even a day late is still out of time. The burden of proving it was not reasonably practicable rests on the claimant. 3.28. The claimant may have had difficulty in understanding the situation by looking at CRM but she must have known she was not getting paid anything like the amount she should have been had the terms of the contract, as she understood them to be and as I have found them to be, been complied with. One does not need to be able precisely to identify a liquidated sum in order to bring a claim of unlawful deduction from wages. Applying Palmer, her earlier claims are ones I cannot consider.[4]Postscript 4.1. Absent from my above findings are any decision on whether the claimant was guilty of “mis-selling”. Ms Jeram did not base her case on a right to deduct for misselling. Section 25 (4) says: (4) Where a tribunal has under section 24 ordered an employer to pay or repay to a worker any amount in respect of a particular deduction or payment falling within section 23(1)(a) to (d), the amount which the employer is entitled to recover (by whatever means) in respect of the matter in relation to which the deduction or payment was originally made or received shall be treated as reduced by that amount. 4.2. Once the terms of a sale have been agreed, the end user enters into a binding contract with the relevant supplier. Misrepresentation is an untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss. There are three types of misrepresentation, fraudulent negligent and innocent for which the remedies are rescission and/or damages. Where the contract is rescinded and the parties are put back into the position in which they were before it was made. In Salt v Stratstone the Court of Appeal confirmed it was possible to set aside a contract despite the claimant having had some enjoyment of a car he bought as “new” which was not. 4.3. I see instances where the supply company may well have had, and exercised, the right to rescission where statements made by the claimant on behalf of the consumer turned out not to be true. If that would have led to the respondent having a claim in the County Court for the return of the share of its commissions paid to her, it may no longer pursue such a claim because it has contravened what Parliament has always intended Part II of the Act to achieve, which is to protect wages which have become payable at a certain date from being withheld in any way other than as required by law or authorised by prior contractual agreement. The reason I gave an ex tempore judgment on 10 April was I understood, subject to arithmetic checking, the claimant would be paid the commissions she claims save where her claim is time barred. I would not have done so had I understood arguments referred to in the application by the respondent dated 24 April, numbered paragraph 2 ,of deliberate mis-selling remained “live”. T M Garnon T M Garnon EMPLOYMENT JUDGE[1]The claimant was entitled to be paid, at variable rates, a share of the commissions received by the respondent in respect of contracts she had brokered between energy suppliers and consumers. She was entitled to be paid such sums on the monthly pay date by which it was practicable for them to be calculated. The respondent has failed to pay those sums.[2]The claimant was not entitled to any incentive payment.[3]The tribunal cannot consider her claims in respect of deductions preceding number 13 on the schedule at page 65 of the agreed document bundle. The parties were to inform the Tribunal within 28 days if they required a further hearing. This application is by the respondent, in connection with paragraph 1 of the judgment only, on two grounds . The claimant has not asked for reconsideration of paragraphs 2 or 3. 1.2. In advance of the hearing I had received electronically and read the very lengthy witness statements of the claimant and, for the respondent, Ms Leah Barrett who joined it on 1 July 2016 and Mr Paul Gleghorn who had worked for it since June 2017. The claimant was employed from 3 October 2016 as a Business Account Managers (BAM)until she was dismissed with immediate effect on 21 September 2017. On 26 September 2016 before she started work and before whatever “induction” she had, she signed her contract which contained in clause 9 “ You are eligible to receive commission under the following commission structure: Commission will be paid when the company is in receipt of payment from the suppler whilst you are [in] employment" 1.3. At the hearing the claimant was represented by Ms L Mankau of Counsel and the respondent by Ms Jeram. I had not seen the document bundle. I noted in the witness statements allegations of the claimant “mis-selling”, a term which was not defined. There were many complex issues of fact which is why it was set down for a three-day hearing, but that was not enough to enable me to give a reasoned judgment on all of them. 1.4. At 10:10 am on 8 April I started a brief discussion with Counsel as to how they were putting their cases.I asked Ms Jeram whether the respondent’s case was it had the right to withhold commissions and/or “clawback” if a contract was downvalued or “lost” . Ms Jeram said it could, and my note reads: ”irrespective of why it may be clawed back i.e. no distinction between no fault clawback and clawbacks for churning and overestimating”. I recall explaining my use of the word “churning” by reference to the insurance industry in which it means a broker, having sold a policy on behalf of one insurance company to an insured person and received a commission, persuades the insured person to cancel that policy and take out another with a different insurance company so the broker can receive another commission. Ms Jeram’s submission was “eligible to receive” does not mean “entitled to receive” and “will be paid when” does not mean “will be paid upon receipt”. 1.5. Ms Mankau’s case was when the respondent received commission from energy suppliers, the claimant’s right to a percentage of it crystallised. The respondent could not withhold payment because its commission may be clawed back, still less offset sums clawed back by the energy suppliers in respect of contracts which underperformed or been lost against commissions properly earned by her on other contracts. 1.6. Counsel asked for some time to discuss matters and I needed to read several pages of the large document bundle so we broke until 12.10 pm. The main issue between the parties was their opposite readings of clause 9. I said I would determine the issues: 1.2.1. What were the express and/or implied terms of the claimant’s contract as regards her entitlement to be paid commission and any incentive payment? In particular. what was payable and when? 1.2.2. Did the respondent fail to pay to the claimant when it was due(a) her commission(b) an incentive payment? 1.2.3. Are any of the claims time barred? 1.7. Ms Barrett said that during 2017 it became apparent a small number of individuals, including the claimant, were facilitating the early termination of existing energy supply contracts in circumstances that did not legally allow them to do so in order to sell the customer a new supply contract, or were selling contracts on inflated projected consumption rates in the knowledge the meter would never consume that level and the claimant was dismissed as a result of allegations of this nature. Ms Barrett’s new role was created in October 2017 to introduce much more stringent internal verification and compliance checks to put a stop to any mis-selling. I fully agreed this role was necessary. However, it did not exist at the time the claimant entered into her employment contract. 1.8. Ms Barrett said the payment of commission to a BAM was subject at all times to the respondent’s internal quality and compliance checks , a high risk sale would be flagged on a computer system called CRM as being held or placed into objection and no commission was payable to a BAM unless those checks have been completed and no issues with the sale have been identified. I held this was not a contractual term. No “ retention” or “claw back” provisions, were notified to the claimant when she accepted the offer of employment. She never agreed to terms other than her being entitled to a share of commission payments received by the respondent on sales she had negotiated, when it received its commission, provided at that date she was still employed. If she brokered a contract which produced a large commission payment from the energy supplier to the respondent and that payment arrived on the day after her employment ended, for whatever reason including her death, she would be entitled to nothing. The respondent could retain all of the commission without paying her any share of it at all. That was a major downside to the bargain from her point of view. All commercial contracts are about apportionment of risk and this had fairly high risks for both, apportioned crudely but in a balanced way. 1.9. What the respondent was doing , and cannot lawfully do, was unilaterally imposing conditions after the contract was made. There would have been absolutely no reason why a retention and/or clawback provision could not have been incorporated into the contract of employment when it was made , but it was not .There was no warrant for me to imply one . Thus far, I have no reason to change my decision for which I gave much fuller written reasons later. 1.10. I believed at the time it was agreed I would give judgment on the construction of the contract which is exactly what I did, with brief oral reasons on the last day Although I was not asked for written reasons at the time, I anticipated I would be, so they were in the course of preparation when the respondent’s letter of 24 April making this application arrived. Written reasons were sent on 30 April. 1.11. At numbered paragraph 2 on page 1 the respondent’s solicitors said “ It was always part of the respondent’s case that the claimant was not entitled to the commission payments sought, by reason of her deliberately submitting inflated consumption figures and/or knowingly selling or attempting to sell contracts based on false changes of tenancy in order to generate commission for her personal gain” and at paragraph 7 on page 2 “ Furthermore whilst EJ Garnon expressed reservation about making findings of improper conduct, they are, and always were, central to the respondent’s case. Submissions were closed off after the primary issue and arguable points in relation to items 16 to 21 were not concluded in submissions”. and at paragraph 10 on page 3 it “ is an implicit term that in order to be eligible for commission on a contract, the claimant must have had reasonable grounds at that date of sale of the contract to believe that the respondent would be entitled to earn and retain the payments upon which she was to be paid commission” and at the end of paragraph 12” EJ Garnon closed off submissions without hearing from the respondent on its secondary position”. 1.12. I agree submissions were confined to the issue of whether , as the respondent’s statements said, it had the contractual right to retain commissions on sales which it described as being “placed into objection” and/or to clawback the claimant’s share of commissions where the energy supplier clawed back the commission from the respondent. I did not “close them off” in the sense of imposing a cut off on them. I was of the view the respondent had no secondary position. Unless I had believed I was acting with the consent of both Counsel that the only issue I had to determine was whether the terms of the contract contained the provisions for which the respondent argued , I would not have given judgment on a preliminary issue, but adjourned the case part heard to complete the evidence and submissions on all matters contained in the pleadings and witness statements. Because of the exchanges I had with Counsel , I did not see the respondent would be advancing any argument that, even if contract properly construed did not permit retentions or clawbacks , some doctrine of law prevented the claimant having a right to a share of commission on contracts which she had knowingly mis-sold. 1.13. A contract, lawful when made. can become illegal if it is performed in an illegal way, which often only comes to light when the employee brings a claim which the employer seeks to defend it by asserting the contract was performed illegally and should not be enforced against it. Where the tribunal accepts the employer’s assertion, the consequences for the employee are that she is barred from remedy in any statutory claims founded on the contract. The Court of Appeal considered in Hall -v- Woolston Leisure illegal performance could act as a bar to the claimant’s enforcement of her contract of employment, but it was necessary for the respondent to show on balance of probability both knowledge of and participation in the illegality on her part. In the non-employment case of Patel v Mirza 2016 UKSC 42, the Supreme Court held by a majority the key question was whether allowing the claim would harm the integrity of the legal system. 1.14. A term I could have found implied under the officious bystander test and/or in order to give the contract business efficacy was that the claimant would not knowingly broker a contract by misrepresentation to the energy supplier causing it to pay any or greater commission to the respondent than it would had it known the true material facts. 1.15. At the end of my reasons, and after reading the respondent’s letter of 24 April , in a section headed “postscript” I wrote, “Absent from my above findings are any decision on whether the claimant was guilty of ”mis-selling” and added 4.2. Once the terms of a sale have been agreed, the end user enters into a binding contract with the relevant supplier. Misrepresentation is an untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss. There are three types of misrepresentation, fraudulent negligent and innocent for which the remedies are rescission and/or damages. Where the contract is rescinded and the parties are put back into the position in which they were before it was made. In Salt v Stratstone the Court of Appeal confirmed it was possible to set aside a contract despite the claimant having had some enjoyment of a car he bought as “new” which was not. 4.3. I see instances where the supply company may well have had, and exercised, the right to rescission where statements made by the claimant on behalf of the consumer turned out not to be true. If that would have led to the respondent having a claim in the County Court for the return of the share of its commissions paid to her, it may no longer pursue such a claim because it has contravened what Parliament has always intended Part II of the Act to achieve, which is to protect wages which have become payable at a certain date from being withheld in any way other than as required by law or authorised by prior contractual agreement. The reason I gave an ex tempore judgment on 10 April was I understood, subject to arithmetic checking, the claimant would be paid the commissions she claims save where her claim is time barred. I would not have done so had I understood arguments referred to in the application by the respondent dated 24 April, numbered paragraph 2 ,of deliberate mis-selling remained “live”. This shows I saw the potential argument, but did not think at the time Ms Jeram was running it. There are essentially two applications before me today or rather two grounds for the one application for reconsideration. What I will term the second of these is to admit new evidence and I will deal with that later. The first ground is that I mis-interpreted her words as an abandonment of any arguments such as outlined in 1.13 and 1.14 above. 2 Today’s submissions and My Conclusions 2.1. The claim originally related to 5 customers (i) The Island Free School (ii) Treadmill Gym Ltd (iii) Sheridan Fabrications Ltd (iv) Blue Harbour Ltdand (v) Stanley Dock Hotel Ltd. They are as numbered 1 to 21 on a schedule at page 65 of the trial bundle. 2.2. Most of the Island Free School contracts and that for Treadmill Gym Ltd are out of time. The claimant did not pursue Sheridan Fabrications Ltd. Ms Jeram agreed claims numbered 13 and 14 in respect of The Island Free School. 2.3. In respect of number 16 for Blue Harbour Ltd and 17 to 21 for Stanley Dock Hotel Ltd Ms Jeram contends she did not expressly abandon a secondary argument that, even if the express terms of the contract did not permit retentions or clawbacks, in circumstances where the claimant had acted as described in the next paragraph when concluding the contract between the consumer and the energy supplier, her right to any share of commission was negated. Therefore, it is in the interests of justice that any elements of the judgment which appear final on the issue of whether the claimant is “entitled” the respondent has “failed” to pay what is properly payable should be reconsidered. 2.4. Ms Jeram says her words to me at the beginning of the hearing meant only that the respondent’s primary position was it had the right to make retentions and clawbacks for whatever reason a contract failed, for example a prospective consumer failing a credit check, however, if I were not with her on that, in circumstances where the claimant had acted as alleged in paragraphs 9(b) and (c) of the letter of 24 April no commission was “properly payable” to her. I quote those paragraphs for the avoidance of doubt :[9](b) “ whether the claimant improperly generated sales so as to generate commission for her personal financial gain in circumstances where she knew or ought to have known they were likely to fail. In respect of each of the sales the tribunal heard that the claimant sold new contracts for the supply of energy during the lifetime of an extant energy supply contract in circumstances where there was no genuine change of tenant. 9 (c) whether the claimant improperly inflated the energy consumption rates so as to generate an inflated commission in circumstances where she knew or ought to have known that it was likely to fail . 2.5. These points were covered in evidence. Ms Barrett ‘s witness statement contained Sale ID 9706 (MPAN 0806) 70. This meter was a Nomination sold by the Claimant on 9 June 2017 on the basis that the meter serviced a high usage premises (a hotel) resulting in AQ figures of approximately 2.4millon kWh, equating to a TCV of £418,800.40 (see page 126 for the CRM screenshot); in fact, the reality was that this meter was a sub-meter on a derelict site with historic consumption figures of just 3,000 kWh. I remain at a loss as to why the Claimant would have sold the contract based on AQ figures of 2.4m kWh. 71. There was an initial issue with this sale as a result of an outstanding debt on the meter that was not cleared until 13 July 3017. Following the resolution of this issue, on 27 July 2017 the discrepancy between the estimated and actual AQ figures was then flagged to the Respondent by the existing supplier (Eon). At the same time, Eon confirmed that the meter had not in fact been connected since March 2017. This meter was ultimately disconnected and the sale confirmed as lost on 6 November 2017. Sale ID 9091 & Sale ID 9083 (MPAN 1801 & 8600) 73. These two gas supply contracts were sold as COTs. The existing energy supply contract with Engie was held by Blue Harbour Ltd; these original contracts were sold to the customer by Matt Harrison. The Claimant attempted to terminate these existing contracts early (they were due to run until 31 August 2017) by claiming that the occupier of the premises had changed to Stanley Dock Hotel Ltd in March 2017, thereby giving rise to a COT situation permitting early termination (see page 263 for an email from the Claimant to Engie stating this position). Blue Harbour Ltd and Stanley Dock Ltd were subsidiaries of the same corporate group and so essentially these were manufactured COTs. This fact was picked up by the existing energy supplier (see the email at page 261) who ultimately objected to process the COTs; Engie’s policy is to refuse to process COTs between companies within the same group structure, presumably for reason that there is a high likelihood that they are simply being engineered so as to permit the end user to renegotiate more beneficial supply contracts. 74. Upon it becoming clear that the COTs would not be approved, in early September 2017 the Claimant sought to transfer the existing Engie contracts from Blue Harbour to Stanley Dock by way of a novation and sell Stanley Dock an extension to the existing contract. However, this novation was rejected when Stanley Dock failed the supplier’s credit checks (see pages 319 to 324 for the relevant email exchange between the Claimant and the supplier). The fact that the Claimant was attempting to novate the original supply contract and sell an extension with Engie for these meters on 14 September 2017 demonstrates that the Claimant was aware at this point that the contracts she had sold in June 2017 (Sale ID 9091 and Sale ID 9083) were never going to go live. Despite this, the energy supplier the Claimant had sold the new contracts with, Dong Energy, paid the Respondent an initial upfront commission payment for the contracts in August 2017 on the assumption that the COTs would go through. As it was, the COTs were ultimately refused and the Dong contracts were confirmed as lost sales, requiring the Respondent to repay the commission payments it had received from Dong in full. Sale ID 8749 & Sale ID 8750 (MPAN 3456 & 0392) 75. These two electricity supply contracts were sold as COTs, though they were originally uploaded to the CRM by the Claimant as renewals. The existing energy supply contracts with Haven were held by Titanic Belfast Ltd; these contracts were also originally sold to the customer by Matt Harrison. The Claimant processed these sales on the basis that the occupier of the premises had changed to Blue Harbour Ltd, thereby giving rise to a COT situation permitting early termination and re-sale (see page 193A confirming the COTs and page 290 confirming that Matt Harrison’s original sale was subsequently confirmed as lost). Again, Titanic Belfast Ltd and Blue Harbour Ltd were subsidiaries of the same corporate group and so, essentially, these were also manufactured COTs to enable the Claimant to complete two new sales. Whilst Haven agreed to process these COTs (the energy supply was remaining with Haven under the new contracts) queries were raised by Haven regarding the AQ figures which were not resolved until mid-August 2017. However, shortly after this the Respondent was informed that the site where MPAN 3456 was located had in fact been sold, resulting in Sale ID being placed into objection in September 2017 and ultimately being confirmed as a lost sale in December 2017. (For completeness I can also confirm that Sale ID 8750 was also a lost sale, however as the Claimant is not claiming any commission in respect of this sale it does not form part of these proceedings.) The claimant denied wrongdoing on any of these contracts. 2.6. The claimant did not attend and was not represented today . I make no criticism of her or her representatives. Having held a case management discussion by telephone with Ms Mankau and Ms Jeram on 22 May ,ordered the respondent to make clear its applications and given the claimant the opportunity of reply, both parties did precisely that. I well understand the claimant’s desire to save costs where possible. Her solicitor’s letter of 5 July argues the secondary position the respondent takes was not pleaded. I disagree in that the assertion it had made no deductions from the sums properly payable to the claimant is sufficient in my judgment to come encompass both arguments. 2.7. They also argue the secondary position was expressly abandoned. I have had the opportunity of reflecting at length on what happened at the hearing. Ms Jeram accepted she did not make her position clear and I accepted I did not pin her down on the point. Suffice to say that had I realised it was being run , I would have asked more questions of both the claimant and Ms Barrett as to precisely why they took the positions they did. 2.8. On the first ground of application I am invited , so it seems to me , to do no more than accept the respondent had not abandoned the secondary argument so we should turn the clock back to what I would have done had I realised that which was(i) asked more questions of both Ms Barrett and the claimant than I did(ii) hear the parties further submissions . I would certainly have had to adjourn part heard to do so. 2.9. I do exactly that. Ms Jeram had prepared a note of her submissions today which she had not had time to copy to the respondent but she volunteered to do so afterwards . I accept that although finality of litigation is important, on the authority of Trimble-vSupertravel Ltd the respondent has not had the opportunity fully to argue its secondary position. The claimed sums are in excess of £120000 even on the six contracts still in issue. My initial reaction when I read the letter of 24 April was, using Ms Mankau’s words, the respondent was seeking to have a second bite at the cherry. Upon reflection, in circumstances where I was trying, as I believed the parties wanted, to reach a conclusion in the time allotted for the hearing, I misinterpreted Ms Jeram’s position. On the basis more detailed evidence will be taken and more submissions heard another 2 days will be required, even if no “new” evidence is admitted. 2.10. This brings me to the second ground of the application. Evidence sent to the respondent some time ago being a statement of a Mr Rawlingson, has been supplemented by a statement from Mr Scott High sent on 23 July. If accepted, they tend to show the claimant had been dishonest in the claiming of commissions in employment she obtained subsequent to her dismissal ,not in the field of energy brokerage but in a recruitment business arranging contracts between prospective employers and employees. Ms Jeram says it is in the interests of justice for the judgment to be reconsidered even if I was not with her on the first ground. She contends on the Ladd-v-Marshall test this evidence could not reasonably have been known of at the time of the hearing and is relevant . The email of 23 July at 13:59 arrived a little late for the claimant to reply to fully. However an email from her solicitor sent at 17:42 that day contains For the avoidance of doubt the Claimant maintains that the 'New Evidence' provided by the Respondent is not relevant to the her claim before the Employment Tribunal given that the allegation of mis-selling is not a matter which requires determination. As the Judgment confirms that there are no circumstances in which the Respondent can claw back commission payments the reason for the purported claw back is irrelevant. The Claimant maintains her position that the second reconsideration therefore has no reasonable prospects of success. As EJ Garnon has already confirmed (by letter dated 9 July 2019) that the Claimant must be given an opportunity to make further written representations on the second application, if it is decided that it has reasonable prospects of success, the Claimant writes to confirm that she intends to rely only on written submissions (as set out in this email and in our correspondence of 5 July 2019, attached for ease) at the reconsideration hearing due to be held on 30 July 2019. 2.11. In my letter to the parties on 11 June I said that if either application succeeded I would fix a hearing and the question of what exactly it would encompass which could be discussed on 30 July. At that time, and until an hour before this hearing started , I had anticipated both parties representatives would be attending because an email sent by the respondent’s representative at 12:22 on 26 July had not been linked to the file. As I am with Ms Jeram on the first ground , this becomes only an application to admit new evidence. Also on 23 July further evidence from a Mr Gary Nolan was sent by the respondent’s representative to the claimant and the Tribunal. It relates to her alleged dishonesty in a previous employment with “Utilitywise “. I agree with Ms Jeram that all I have to decide today is whether the application to admit this evidence has a reasonable prospect of success . If I so decide, the claimant must be given an opportunity to make further submissions on whether it should be admitted. 2.12. To show any contention has no reasonable prospect of success is a very high hurdle as explained in Balls-v-Downham Market. Now I have decided that the allegation of misselling is a matter which requires determination, the application to admit new evidence must in my view have a reasonable prospect of success. Ms Jeram will. when the point comes from determination. heavily on the speech of Lord Bingham in O’Brien -v-Chief Constable of South Wales Police at paragraphs 4 and 5 and the other authorities she quotes in her note. 2.13. Of the two categories of new evidence which the respondent seeks to introduce one is of her conduct in subsequent and different employment but the recently disclosed statement Mr Nolan relates to her conduct in a previous employment in the energy brokerage sector. The claimant in her witness statement says she was dismissed for gross misconduct on 21 September 2017 without being provided with a copy of Ms Barrett’s Investigation which purported to show detailed reasons for the termination of her employment. She says “Had I been provided any opportunity to put aside my version of events and provide an explanation for these findings I would have done so (although as this is not relevant to the proceedings, I have not included it here)”. She adds “ From my point of view I cannot understand why I was dismissed or why my commission payments have been withheld. I was a very successful saleswomen for the Respondent and generated exceptional revenue. Not only this, I have successfully worked for three separate employers in the same role since entering the industry over a decade ago. I have never lost sales, been accused of amending consumptions or experienced any delays in commission payments with any other company. I am frankly astonished at the allegations levied against me and deny that I ever committed any acts of gross misconduct. I am equally surprised at the number of sales it is alleged have been lost since my employment ended particularly when one considers that since my dismissal, Mr Islam has offered me my job back on a number of occasions”. 2.14. By the words I have emboldened she makes an assertion as to her previous good character which may also be relevant to whether Mr Nolan’s evidence should be admitted. 2.15. Finally, Ms Jeram had earlier said my judgment had not made clear the claims I found to be out of time were dismissed and should be amended to do so . We did not cover this today so the matter remains to be addressed at some stage. 2.16. The orders which I agreed to make at Ms Jeram’s suggestion give to the claimant an opportunity to be heard further . I believe the claimant’s representatives probably have enough information to submit written submissions as to whether these two categories of evidence should be admitted. If they cannot do so within the time allotted, they are welcome to apply for more time. They may also apply for a telephone hearing if there is any doubt as to what it is they have to answer. If the parties agree, I could determine the issue of the admissibility of new evidence without a hearing but if they want a hearing in person or on the telephone they need only ask. If it is in the interests of justice to admit this further evidence it could add a day or two to the resumed hearing but I do not view that as a relevant consideration to whether it should be admitted.