Furlough - commission included?

l_brett

Does anyone have clarity on the difference between ‘compulsory commission’ & ‘commission’. If an employee has a salary & is also entitled to receive commission as part of the companies commission scheme, of which earnings are based on a % of sales banked by the business - should this commission be included in furlough calculations? The scheme is not part of a contract but the scheme is in writing and this commission has been paid every month for 10+ years. Thank you

gary83

The guidance on commission is this;

The grant paid to your employer will be calculated based on your regular, contractual pay, such as wages, compulsory commission and past overtime. The calculation will not include discretionary commission (including tips) payments or bonuses, non-cash payments or benefits in kind.

as your commission is a bonus incentive scheme and based on the success  of the business it should be excluded from your furlough payment.

l_brett

Thanks Gary. The section you reference is the section I have seen and I am not clear on. Would this commission not consist of regular wages and should be calculated based on the below? What’s the definition of compulsory commission? 

This is commission, not a bonus. 

I have seen responses from HMRC on twitter stating that for car salesman their commission should be included in their calculation based on compulsory commission being the amount that would usually be a part of every wage/ salary in normal trading circumstances.

“If your pay varies and you’ve been employed (or engaged by an employment business in the case of agency workers) for a full year, employers will claim for the higher of either:

• the amount you earned in the same month last year
• an average of your monthly earnings from the last year”

l_brett

Note - my case is not for a car salesman but is for an estate agent. The commission is based on what the company banks each month in total (not per the individual employee). Thanks 

gary83

In your case it’s not a compulsory payment though, it’s a bonus based on a % of the estate agents sales. It’s an incentive scheme that benefits everyone, not just the sales staff/negotiators. 

Look at it this way (forgetting Corona virus for a second) if something like a hard Brexit had forced the housing market to grind to a halt and the company hadn’t made any sales in a month none of you would have made any of that commission - for that reason it can’t be classed as anything other than a bonus or discretionary commission. 

l_brett

Thanks Gary. The furlough scheme has been set up up specifically due to covid19 though. My point above with car sales, no cars and going to be sold during this time but HMRC are advising that their commission is calculated on the same period last year, or an average of the last 12 months therefore I believe the same would apply to estate agents. 

Are there are other estate agent owners or employees that can advise what their view is on commission? Thanks

gary83

HMRC are not advising that car sales commission is included, sales based commission incentives is a bonus and is excluded from the furlough payment, car sales staff amongst others have been hit particularly hard, their trade body the independent Motor Dealers Association are campaigning against it. Don’t rely on Twitter to make your decisions look at the government guidance, that’s what the HMRC auditors will be looking at when it comes to reviewing all these claims.

l_brett

Thanks Gary. I believe they are.
i can’t post the link but if your refer to the car dealer article posted yesterday (16 hours ago)

Thanks

Jeremy535897

https://cardealermagazine.co.uk/publish/hmrc-confirms-compulsory-commission-can-paid-furloughed-sales-staff/189593
I'm not 100% clear that the person at HMRC really understood the question.

l_brett

I’m not 100% clear either, hence looking for advice from other estate agents on here.
Thank you