Full time salary changing to commission only to avoid redundancy

Thrugelmir

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

lincroft1710

Thrugelmir said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

I'm still not convinced that the employer's intentions are honourable. But given the situation, I would be quite happy if I was wrong.

Sandtree

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

The OP has to work through the details obviously and probably seek advice more formally than a forum.

Contractually its perfectly possible to protect their redundancy assuming the company is still solvent, you would need to look into the consequences for statutory redundancy payments if the company is insolvent.

Commission only work can be very lucrative and earn people way above £50k PA but you need to look at the whole model both how it currently works and how it would work if you accepted the deal. If you are a independent agent doing whatever you can to get business now then thats all probably fine but if you are given warm leads or a contact list to work or something you'd also need to consider how to protect yourself from just being given the dross whilst the salaried peps get the better quality leads.

Hervness

missile said:

How much would your redundancy payment be?

It the statutory amount which is roughly £5k

prowla

Statutory redundancy isn't going to be a huge amount.

Plus notice.

Hervness

Thrugelmir said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

Sandtree said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

The OP has to work through the details obviously and probably seek advice more formally than a forum.

Contractually its perfectly possible to protect their redundancy assuming the company is still solvent, you would need to look into the consequences for statutory redundancy payments if the company is insolvent.

Commission only work can be very lucrative and earn people way above £50k PA but you need to look at the whole model both how it currently works and how it would work if you accepted the deal. If you are a independent agent doing whatever you can to get business now then thats all probably fine but if you are given warm leads or a contact list to work or something you'd also need to consider how to protect yourself from just being given the dross whilst the salaried peps get the better quality leads.

Thanks so much for all you comments.  Yes my commission could realistically be anything from £20k-£35k+ depending how the Covid situation develops/changes over the next year so I was viewing it as a kind of paycut to keep business going, and feel that its a reasonable offer that needs a bit of tweaking.   I'm just worried about the lack of security and that if sales don't happen I won't get a penny in redundancy (nor holiday/sick pay) and I can't fathom what I could suggest to my boss for him to be able to give me that safety net?

CKhalvashi

Hervness said:

Thrugelmir said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

Sandtree said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

The OP has to work through the details obviously and probably seek advice more formally than a forum.

Contractually its perfectly possible to protect their redundancy assuming the company is still solvent, you would need to look into the consequences for statutory redundancy payments if the company is insolvent.

Commission only work can be very lucrative and earn people way above £50k PA but you need to look at the whole model both how it currently works and how it would work if you accepted the deal. If you are a independent agent doing whatever you can to get business now then thats all probably fine but if you are given warm leads or a contact list to work or something you'd also need to consider how to protect yourself from just being given the dross whilst the salaried peps get the better quality leads.

Thanks so much for all you comments.  Yes my commission could realistically be anything from £20k-£35k+ depending how the Covid situation develops/changes over the next year so I was viewing it as a kind of paycut to keep business going, and feel that its a reasonable offer that needs a bit of tweaking.   I'm just worried about the lack of security and that if sales don't happen I won't get a penny in redundancy (nor holiday/sick pay) and I can't fathom what I could suggest to my boss for him to be able to give me that safety net?

OH doesn't work in sales, but her pay was reduced by a percentage in March for a year, in order to stop the company burning too much money while a restructuring takes place (which should be completed by December, the company isn't insolvent but is heavily capital intensive and also heavily affected by the current situation). She worked nothing in April, 2 days in May and returned almost to normal hours by August.

This has a stipulation of only being for a year and non-extendable for existing employees, with new hires on similar money to that offered temporarily.

Would this be something to consider for both of you?

Hervness

CKhalvashi said:

Hervness said:

Thrugelmir said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

Sandtree said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

The OP has to work through the details obviously and probably seek advice more formally than a forum.

Contractually its perfectly possible to protect their redundancy assuming the company is still solvent, you would need to look into the consequences for statutory redundancy payments if the company is insolvent.

Commission only work can be very lucrative and earn people way above £50k PA but you need to look at the whole model both how it currently works and how it would work if you accepted the deal. If you are a independent agent doing whatever you can to get business now then thats all probably fine but if you are given warm leads or a contact list to work or something you'd also need to consider how to protect yourself from just being given the dross whilst the salaried peps get the better quality leads.

Thanks so much for all you comments.  Yes my commission could realistically be anything from £20k-£35k+ depending how the Covid situation develops/changes over the next year so I was viewing it as a kind of paycut to keep business going, and feel that its a reasonable offer that needs a bit of tweaking.   I'm just worried about the lack of security and that if sales don't happen I won't get a penny in redundancy (nor holiday/sick pay) and I can't fathom what I could suggest to my boss for him to be able to give me that safety net?

OH doesn't work in sales, but her pay was reduced by a percentage in March for a year, in order to stop the company burning too much money while a restructuring takes place (which should be completed by December, the company isn't insolvent but is heavily capital intensive and also heavily affected by the current situation). She worked nothing in April, 2 days in May and returned almost to normal hours by August.

This has a stipulation of only being for a year and non-extendable for existing employees, with new hires on similar money to that offered temporarily.

Would this be something to consider for both of you?

Yes possibly.  The tricky bit would be deciding what % to reduce my salary by.  My boss's business has suffered hugely so he doesnt want to take any risks at the moment which means he'd want to offer me the lower end of the projected commission as a salary (£20k). His thought process of paying me commission only is his way of creating the opportunity for me to earn much more than this (perhaps as much a £35k) if things go well..

Thrugelmir

lincroft1710 said:

Thrugelmir said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

I'm still not convinced that the employer's intentions are honourable. But given the situation, I would be quite happy if I was wrong.

Cash is the life blood of any business. It's a brutal world. Employees, except those in the know, rarely have any comprehension of what's going in with a business. In particular how close to the edge of insolvency it is. 

Thrugelmir

Hervness said:

CKhalvashi said:

Hervness said:

Thrugelmir said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

Perhaps the employer is merely trying to keep the company afloat. More than likely the immediate financial position is dire and this is part of one final role of the dice. Losing staff totally is of no benefit either. If anything can compound the problem. As there's fixed costs that need covering that cannot be eradicated. Seconds to destroy what has taken years to build. 

Sandtree said:

lincroft1710 said:

I like this idea!

There is an employee on £50K pa who we no longer need. Instead of paying an exorbitant amount of redundancy, let's offer him a commission only contract, where we only need to pay him if he brings in any business.

Your employer is doing you no favours!!

The OP has to work through the details obviously and probably seek advice more formally than a forum.

Contractually its perfectly possible to protect their redundancy assuming the company is still solvent, you would need to look into the consequences for statutory redundancy payments if the company is insolvent.

Commission only work can be very lucrative and earn people way above £50k PA but you need to look at the whole model both how it currently works and how it would work if you accepted the deal. If you are a independent agent doing whatever you can to get business now then thats all probably fine but if you are given warm leads or a contact list to work or something you'd also need to consider how to protect yourself from just being given the dross whilst the salaried peps get the better quality leads.

Thanks so much for all you comments.  Yes my commission could realistically be anything from £20k-£35k+ depending how the Covid situation develops/changes over the next year so I was viewing it as a kind of paycut to keep business going, and feel that its a reasonable offer that needs a bit of tweaking.   I'm just worried about the lack of security and that if sales don't happen I won't get a penny in redundancy (nor holiday/sick pay) and I can't fathom what I could suggest to my boss for him to be able to give me that safety net?

OH doesn't work in sales, but her pay was reduced by a percentage in March for a year, in order to stop the company burning too much money while a restructuring takes place (which should be completed by December, the company isn't insolvent but is heavily capital intensive and also heavily affected by the current situation). She worked nothing in April, 2 days in May and returned almost to normal hours by August.

This has a stipulation of only being for a year and non-extendable for existing employees, with new hires on similar money to that offered temporarily.

Would this be something to consider for both of you?

Yes possibly.  The tricky bit would be deciding what % to reduce my salary by.  My boss's business has suffered hugely so he doesnt want to take any risks at the moment which means he'd want to offer me the lower end of the projected commission as a salary (£20k). His thought process of paying me commission only is his way of creating the opportunity for me to earn much more than this (perhaps as much a £35k) if things go well..

Have you asked to work fewer hours as well to compensate the potential salary reduction?