Mr C McDaid v Xeretec Office Systems Ltd: 4103617/2022
JUDGMENT
Employment Case Number: 4103617/2022 a claim for notice pay and sought the amountREASONS
TRIBUNALS (SCOTLAND) Judge: R Sorrell Respondent Paralegal Mr R Wilson - Represented, by: Respondent In Person Claimant of of dealing with cases justly and fairly and to ensure that parties were on an document was lodged by the claimant during the course of the hearing. The importance of referring to the relevant documents when giving evidence was called one witness, Mrs G an ‘Offer of Employment’ letter which enclosed a summary of the principal terms of the on commencement of employment. Commission earned from business signed On 4 October 2021, the claimant sent Mrs Bennett an email accepting the a verbal agreement was made by Mr P Connolly, Regional Director with the claimant that he would be but not was lodged prior to the hearing. A further offer. In the cover letter, Mrs Bennett referred to the commission guarantee: “For the first 3 months of your employment you will receive a commission paid a commission guarantee payment of £2,000 per month for three months in November 2021 , December 2021 and January 2022. This was reiterated confirmed in writing. Other than what was stated in the ‘Offer of Employment’ guarantee during this 3 month period will be deducted from the guarantee. ” (D25-26) be agreed employment, Bennett, Head of Human Resources for the respondent company. being deducted from the commission sent the claimant will commenced of his employment, The claimant’s date of birth is 23 February 1 980. The claimant gave evidence. The respondent The following facts are found to be proven or admitted; The respondent is a provider of office solutions. offer to join the respondent company. (D37) 2021, Mrs Bennett of this when the claimant amount A joint bundle of productions Prior to the commencement explained to the claimant. letter about commission the exact On 30 September by Mr Connolly equal footing. Findings in Fact guarantee; 10 11 5 6 7 8 9 5 10 15 20 30 25 20 17 16 1 5 14 13 12 contract that was signed by the customer on 31 January 2022. payment of £4,494.87. The majority of the commission payment was for a In March 2022 the claimant was paid his basic pay and a commission payment of £1 50.00. (D48) In February 2022 the claimant was paid his basic pay and a commission Company in respect of, but not limited to, the above. ” (D34) contract, you hereby agree to the lawful deduction of monies owed to the any employee concerned. reserves the right to recover an equitable amount from any payments due to you. In the event of shortages arising of cash or of stock the Company cost of repairing any damage or loss to the Company’s property caused by was your responsibility, excess holiday, outstanding loans, advances and the limited to any missing property including petty cash that was in your control or remuneration any time during concerned deduction of remuneration: which he signed on 3 November 2021. (D29-35) Clause 19 of the contract The claimant was provided with a contract of employment by the respondent being made. the commission ‘signed’ was the relevant date in respect to any deduction being made from being ‘signed’ and ‘paid’ by the customer. The date on which business was payment was made by the customer. There was a time lag between business Commission paid around the 22 nd of each month, together with any commission due. The claimant was paid a gross basic salary of £40,000 per annum This was Senior Sales Specialist on 1 November 2021 . The claimant commenced claimant did not seek any additional information. payment, no further details were provided to the claimant about that and the was paid monthly in arrears based on a monthly figure once any monies owed to the Company by you including but not guarantee payment as a result of a commission or in any event on termination By accepting and agreeing to the terms of this full-time employment “The Company reserves the right at with the respondent to deduct from your payment as a three months were individual payments relating to the particular month in of your resignation and that your final date of employment with Xeretec will be result in monies being deducted from your basic salary in April and May. As you have taken in excess of your accrued annual leave by 2 days, this will be from the 1 which they were paid and were not therefore cumulative. Mr Sheran did not On 21 April 2022, Mrs Bennett wrote to the claimant as follows: “Thank you for your email resignation dated 13 April 2022 in which you advised of your guarantee in line with the terms of your contract of employment. This may deducted from your final pay which will be processed in May and sent to you On 13 April 2022 tendered his resignation by email to Mr Connolly and Mrs At that meeting, Mr Sheran informed the claimant that he would not be due any wages on 22 April 2022 because the respondent had made an error in paying him the commission payments of £150 and £4,494.87 in February and November 2021 and 31 January 2022 as the business had been signed this with Mr Sheran as he thought the £2,000 commission guarantee payments made to him in respect of each of these Friday 13 May 2022. You can now spend the remainder of your notice period along with your P45. I can confirm that all items of property have been On 21 April, Mr J Sheran, respondent Group Operations & Service Director, asked the claimant to meet with him to discuss the reasons for his resignation. intention to leave our employment. I can confirm the Company’s acceptance on garden leave. Your access to all company systems has been removed. Please note that the Company will make adjustments to your commission earnings associated with the period during which you had a commission he had received between Bennett and gave one month’s notice effective from that date. (D40) should have been deducted payment accept that this was the agreement made. which 2022 respectively, The claimant questioned commission during that period. returned." (D41) cumulative March 20 21 18 19 15 20 25 5 30 25 15 25 24 Respondent’s 23 claimant was paid his full notice pay and salary for April and May, but the error was spotted and the deduction was made. The result being that the in error. When the final totalling up was done that was due to the claimant, the to a contract signed within the guarantee period but it was paid to the claimant payment is made to the sales person. In this case the commission pay related by the customer and it is the latter that triggers the time the commission instance. There is usually a lag between contract signing and invoice paying as possible and the claimant was urged to do this with the client in this January 2022. It is the respondent’s practice that contracts are signed as soon The contract giving rise to the commission said. as £2000.00 per month rolling, then that is what the offer letter. would have £6,000.00. If the respondent had wanted to express it in a different way such guarantee sum or that the sum is to be looked at as a whole amount of relating to contracts signed within that 3 month period is deducted from the and May 2022. There is no doubt within the offer letter that commission The respondent submitted that the claimant was paid his notice pay for April made to the claimant after deductions was £216.20. (D50) claimant had taken in excess of his accrued annual leave. The net payment There was also a deduction made of £307.68 for two days annual leave the that remained payable of £297.02 to the claimant for April and May 2022. commission overpayment to 13 May 2022. From that basic gross pay, there was a deduction made of a date of termination of employment. £4,871.73 for the period from 1 April to 13 May 2022, in accordance with the This pay slip shows that the claimant was paid his basic gross pay of you offer letter. ” (D43) the outcome you are looking for but we have applied what was detailed on final pay slip dated 31 May 2022. (D50) In his email Mr Sheran stated: “It isn’t On 26 April 2022, Mr Sheran emailed the claimant and attached the claimant’s Submissions of £4,347.85, which took account of commission This included the notice period of 1 3 April in question was signed on 31 deduction reduced the balance payable to him. The deduction was made in and the offer of payment is to ensure an employee is not penalised for moving to a new role and that it is paid one month in arrears. In employment with the respondent, so this guarantee payment was in place to He was put under a little pressure to have the main contract concerning the• commission guarantee payment signed in January. This was done on the for that contract once and Mr C Hamilton, respondent General Manager, who have many years of this was incorrect at the time. It was never said to him or clarified in his given to him about it. There was nothing in writing to confirm the details or and this should have been signed off at the highest level in order to avoid any Section 27(1) Employment Rights Act 1996 (‘ERA’) defines ‘wages’ as any any fee, bonus, commission, holiday pay or other emolument referable to the his previous job, he gave one month’s notice and was put on garden leave. in October before he began the invoice was paid. His commission payment for this contract was correctly paid. It was agreed by three senior members of staff, Mr Connolly, Mr Sheran experience behind them, so he finds it very strange that they did not notice contract that the commission guarantee payment was based on a quarter figure. This never happens in other work places. There were no clear details amount of the commission guarantee payments at the start of his employment sums payable to the worker in connection with his employment. This includes The claimant submitted that the deduction is wrong. It is his understanding contract understanding that he would be paid his commission support new staff joining the respondent company. with clause 19 of the claimant’s This affected his ability to make commission that a guarantee commission Submissions misunderstanding. Definition of Wages employment. accordance 4103617/2022 Relevant Law Claimants 26 27 28 5 10 15 20 25 25 20 32 Issues to be Determined by the Tribunal 31 30 Unlawful deductions from wages 29 Payment in lieu of Notice right to recover overpayments will still apply. the scope of the protection of wages provisions, the common law rules on the overpaid from a subsequent wage. Although the deduction will not fall within the worker. carrying out his or her employment made (for any reason) by the employer to overpayment of the deduction wages. It states that section 13 of the ERA does not apply where the purpose Section 14 of the ERA excludes certain kinds of deductions from a worker’s that occasion after deductions. less than the total amount of wages properly payable by him to the worker on wages paid on any occasion by an employer to a worker employed by him is making of the deduction. A deduction is defined as where the total amount of statue or contract, or where the worker has previously agreed in writing to the wages of a worker employed by him unless the deductions are authorised by of the ERA which provides that an employer shall not make a deduction from The law relating to unlawful deductions from wages is contained in section 13 The Tribunal identified the following issues require to be determined:- wages for the purposes of the protection of wages provisions. ‘garden leave.’ It was further held it was only this category which constituted termination and given an ‘advance’ of wages for the notice period, the effective date of categories principal In Delaney v Staples (t/a De Montfort Recruitment) 1992 ICR 483, HL, four employment. categories of pay in lieu of notice were identified. One of these In such circumstances, is where a worker is given notice but told not to come into work of wages, or in respect of expenses incurred by the worker in being at the end of that period which is commonly known as is the reimbursement an employer may simply deduct the sum of the employer in respect of an witness, Mrs and January 2022 and whether these amounted to a cumulative payment of £6,000 over the three month period for which any commission earned as a separate monthly payments for which any commission earned as a result of this issue, I have also noted the claimant’s evidence that he considered the that commission was only payable to him once payment was made by the made to the claimant in his pay of £150.00 in February 2022 and of £4,494.87 in March 2022. This is because I was satisfied it was reasonably clear in the 'Offer of Employment’ letter that earned from business signed during those three from the Bennett gave their evidence in a clear way giving an honest account of events payments of £2,000 made to the claimant in November 2021 , December 2021 from the cumulative total of the payments to date, or that these were three term 'business signed’ to be vague and open to interpretation, but accepted Having carefully considered all the evidence in the round, I found that there The material issue in dispute concerned the three commission guarantee result of business ‘signed’ during that three month period could be deducted business ‘signed’ in respect of one of these months could only be deducted guarantee payment. In considering the commission guarantee payment was a three month cumulative payment If so, is the respondent entitled to recover the overpayment? Did the respondent make an overpayment to the claimant? made unlawful deductions that the claimant and the respondent If so, how much is the claimant to be awarded? from that particular months commission of commission If not, has the respondent as they remembered them. months would be deducted. claimant’s wages? from which commission Overall, I considered was an overpayment customer. Conclusion (iii) (iv)(i) (ii) 15 25 5 10 20 25 20 15 10 39 38 section 13 of the ERA does not apply where the purpose of the deduction is of the protection terms of Delaney (“supra”), garden leave constitutes wages for the purposes commission is defined as wages under section 27 (1 ) of the ERA and that in facts the claimant was not protected by section 13 of the ERA. Although claimant’s final pay which included the notice period. This is because on these found that the respondent was entitled to recover that overpayment On the basis that there was an overpayment of commission to the claimant, I practice in this field. (D70) basis, which was supported by the evidence he lodged of another company’s from commission and his previous experience is that any monthly commission due is deducted claimant’s credible evidence that he has worked in the industry for 17 years be made to the claimant in March 2022. This was particularly in view of the both the claimant and the respondent staff who actioned these payments to his employment which may have avoided any possible misunderstanding explained by the respondent to the claimant prior to the commencement Notwithstanding deducted from the cumulative total of that payment. commission guarantee payment was made and should therefore have been error as they were signed during As such, I found these commission made in the month in which the business was signed. earned would only be deducted that period would be deducted and there was no indication that commission for the first three months of employment from which business signed during the 'Offer of Employment’ business was signed. I further noted that the wording of the relevant term in once payment because in his evidence he accepted that commission only became payable difference between business ‘signed’ and business ‘paid’ by the customer In reaching this view, I considered was made by the customer which was always after the of wages provisions, this finding, letter simply referred to ‘a’ commission guarantee payments made on a monthly not cumulative I considered from the commission payments were made to the claimant in the three month that the claimant section 14 of the ERA is clear that this could have been better period in which guarantee payment did appreciate from the the the by of of the employer in respect of an overpayment of wages would have been with section 19 of the the claim for notice pay is not well founded and is that in any event, the respondent in accordance made for any reason by the employer to the worker. entitled to recover the overpayment Date of Judgment: 11 October 2022 Entered in register: 12 October2022 claimant’s contract of employment.