Furlough Payment

NikyK

Hi, my partner's boss has paid the 80% of his basic pay but has not calculated the commission. He gets a minimum wage basic but gets 6% of the items he sells, making his wages 2-3 times more. I calculated what he should receive on the gov website. His boss keeps saying he got it right when he clearly didn't. Is there anywhere we can go to sort this out as his boss seems unwilling to change it. 

daKlone

This is a hot topic and is still disputed widely, so expect to get different opinions on this one.

My own opinion is that the direction is clear that the 'reference salary' cannot include sales commission, as the reference salary 'cannot vary according to any of the relevant matters described in paragraph 7.5' says section 7.4(a), and section 7.5(c) states 'the performance by the employee of any duties of the employment', which sales performance certainly is.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf

I'm not aware of an 'appeals' type process so it really comes down to you convincing the employer that you are right and he is wrong. Do you have any other references that support your point of view, perhaps from a legal firm or such?

Is your partner in a union? Perhaps they could help you?

Is the business he works for part of an industry body? Perhaps they have some guidance on this issue that might persuade them?

yksi

I think many people will argue that he didn't earn any commission while not working and this will be why the company has excluded it from the calculations.

I hope that the payment was at least 80% of minimum wage?

Jeremy535897

daKlone said:

This is a hot topic and is still disputed widely, so expect to get different opinions on this one.

My own opinion is that the direction is clear that the 'reference salary' cannot include sales commission, as the reference salary 'cannot vary according to any of the relevant matters described in paragraph 7.5' says section 7.4(a), and section 7.5(c) states 'the performance by the employee of any duties of the employment', which sales performance certainly is.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf

I'm not aware of an 'appeals' type process so it really comes down to you convincing the employer that you are right and he is wrong. Do you have any other references that support your point of view, perhaps from a legal firm or such?

Is your partner in a union? Perhaps they could help you?

Is the business he works for part of an industry body? Perhaps they have some guidance on this issue that might persuade them?

Yes, there is a lot of debate on this. Someone asked me for my interpretation of paragraph 7.5, and this is what I said:
"I need to put it in the context of paragraph 7.
7.1 says an employee has to be paid 80% of "reference salary" for the employer to claim CJRS (or £2,500 if lower).
7.2 says variable pay employees' "reference salary" is the higher of the amount paid in the previous calendar year, or an average of 2019/20 pay, subject to 7.3.
7.3 says "reference salary" (for all employees) excludes anything which is not "regular" salary or wages.
7.4 defines "regular" as everything payable under the contract of employment (or other enforceable agreement, undertaking, scheme,transaction or series of transactions) except something that is conditional on any matter (nobody knows what this means), or a benefit.

7.4(a) and (d), taken together with 7.5, say that if a payment of salary or wage is not payable under the contract of employment (or other enforceable agreement etc), and is a "relevant matter", it is not "regular" salary or wages, and so is not part of "reference salary". 7.5 goes on to define "relevant matters" as payments based on business performance, employee performance, performance of duties (performance related pay), and other things payable at the discretion of the employer, or anyone else (like customers paying tips).

So to take the example of a car salesperson whose contract of employment says they get a commission every time they sell a car, and get a bonus based on the number of cars sold by the business every month, are the commission and bonus "regular" salary or wages, and therefore included in "reference salary"?  At the end of the year the boss says they have done so well that they will get a extra bonus of 1% of sales. He could have given them nothing. Is that included in "regular" salary or wages, and therefore in "reference pay"?

For the commission and bonuses to be part of "reference salary", they must be part of "regular" salary or wages. If, like the commission and first bonus, they have to be paid, if earned, under the contract of employment, you don't get to the exclusions in 7.5 and can ignore them all. But the extra 1% bonus is not payable under the contract of employment. It is payable out of the kindness of the boss's heart. Is it then excluded from "regular" salary or wage and thus "reference salary"? Yes, if it is a "relevant matter" within 7.5. In this example, the 1% bonus is caught by 7.5(a).

Doubt has been cast on this analysis. Some people think that 7.4(b) "is not conditional on any matter" excludes anything like bonuses or commissions. A QC has said it could exclude all zero hour contracts, where pay is conditional on hours of work being offered. This interpretation clearly frustrates Government intentions, but it wouldn't be the first time Courts have done this (proroguing Parliament comes to mind). Taken to its absurd conclusion, it could preclude all pay, as getting paid is conditional on the employee turning up to work.

I hope that helps. It is my interpretation, but I think I have persuaded most contributors to the forum that answer questions in this area that it is the most likely interpretation to be right. Of course we could all be wrong!"

liz_bartun

yksi said:

I think many people will argue that he didn't earn any commission while not working and this will be why the company has excluded it from the calculations.

I hope that the payment was at least 80% of minimum wage?

Current minimum wage rates do not apply to furlough pay

daKlone

yksi said:

I think many people will argue that he didn't earn any commission while not working and this will be why the company has excluded it from the calculations.

I hope that the payment was at least 80% of minimum wage?

I don't subscribe to that argument myself.

The scheme is based on a calculation of prior earnings, what you may or may not have earned if you were working is neither here nor there (for scheme puposes). I know that sounds like the same thing, but there is a subtle difference.

daKlone

Jeremy535897 said:

Yes, there is a lot of debate on this....Of course we could all be wrong!

I guess that's the problem

At the moment there is no definitive answer that the OP can point to and say "Ha! You've done it wrong!". Opinions on a forum such as this will carry little weight with anyone when thier 'bottom line' is at stake.

All the while that is the case, and although I am very sympathetic to the OP's cause, I can see why the employer has erred on the side of caution.

JATP

Think it hinges on whether the Sales Commission is mentioned in contract of employment as making up part of salary ?