Full time salary changing to commission only to avoid redundancy

JReacher1

Thrugelmir said:

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? 

As his proposed salary would be based on commission I would assume if he did less hours he would make less sales and less commission. Therefore it’s probably not a good idea to do less hours. 

Thrugelmir

JReacher1 said:

Thrugelmir said:

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? 

As his proposed salary would be based on commission I would assume if he did less hours he would make less sales and less commission. Therefore it’s probably not a good idea to do less hours. 

I'm assuming that business activity generally will be quieter. Working fewer hours benefits all parties. 

JReacher1

Thrugelmir said:

JReacher1 said:

Thrugelmir said:

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? 

As his proposed salary would be based on commission I would assume if he did less hours he would make less sales and less commission. Therefore it’s probably not a good idea to do less hours. 

I'm assuming that business activity generally will be quieter. Working fewer hours benefits all parties. 

I don’t think it really benefits either party. 

The business owner is proposing to not pay the OP a salary. In that scenario the OP is basically generating their own income so doing less hours is only reducing the potentialincome he receives. 

Likewise if the business owner agreed to the OP working less hours that is reducing the amount of sales his business can attract. 

Normally I would agree a compromise could be reached on hours but in this proposed scenario it’s in both parties interest to do as many hours as they can. 

Hervness

JReacher1 said:

Thrugelmir said:

JReacher1 said:

Thrugelmir said:

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? 

As his proposed salary would be based on commission I would assume if he did less hours he would make less sales and less commission. Therefore it’s probably not a good idea to do less hours. 

I'm assuming that business activity generally will be quieter. Working fewer hours benefits all parties. 

I don’t think it really benefits either party. 

The business owner is proposing to not pay the OP a salary. In that scenario the OP is basically generating their own income so doing less hours is only reducing the potentialincome he receives. 

Likewise if the business owner agreed to the OP working less hours that is reducing the amount of sales his business can attract. 

Normally I would agree a compromise could be reached on hours but in this proposed scenario it’s in both parties interest to do as many hours as they can. 

We havn't discussed hours.   I imagine that as I'm only paid by results my boss won't mind/care what hours I work as its up to me to me to make it work to my benefit

CKhalvashi

Hervness said:

JReacher1 said:

Thrugelmir said:

JReacher1 said:

Thrugelmir said:

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? 

As his proposed salary would be based on commission I would assume if he did less hours he would make less sales and less commission. Therefore it’s probably not a good idea to do less hours. 

I'm assuming that business activity generally will be quieter. Working fewer hours benefits all parties. 

I don’t think it really benefits either party. 

The business owner is proposing to not pay the OP a salary. In that scenario the OP is basically generating their own income so doing less hours is only reducing the potentialincome he receives. 

Likewise if the business owner agreed to the OP working less hours that is reducing the amount of sales his business can attract. 

Normally I would agree a compromise could be reached on hours but in this proposed scenario it’s in both parties interest to do as many hours as they can. 

We havn't discussed hours.   I imagine that as I'm only paid by results my boss won't mind/care what hours I work as its up to me to me to make it work to my benefit

As Thrugelmir says though, if business is quieter, a general (but hopefully time limited) reduction in working hours may benefit you both, enabling you to deal with customers and secure the sales the company needs whilst having a guarantee of at least some income.

If there's only 20 hours of sales work to do in a week, there's no point paying someone for 40 hours, however you still need the cash to eat, and I feel that it's potentially unfair on you in a dismissal/redundancy case to take no basic salary at all. There's no reason why in the above scenario, you can't earn at least half the revenue for the company in this time, by focusing on the customers who are actually ordering whatever it is you sell.

74jax

Can you take redundancy then work on commission on a self employed basis? 

Hervness

74jax said:

Can you take redundancy then work on commission on a self employed basis? 

I think I'm going to ask for that and see what the response it.   Thanks

phillw

74jax said:

Can you take redundancy then work on commission on a self employed basis? 

Isn't that a problem for HMRC?

Thrugelmir

phillw said:

74jax said:

Can you take redundancy then work on commission on a self employed basis? 

Isn't that a problem for HMRC?

Pitfalls for the employer too. If the leads are passed elsewhere.