United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr J Griffiths (Consultant) IR Consultancy Services Wistaria Cottage Jersey Road Ferring Worthing BN12 5PZ


 


MR JUSTICE LINDSAY: We have before us, as a Preliminary Hearing, an Appeal by Mrs J Panter in the matter Panter -v- Swan (Worthing) Ltd. It is an Appeal about the computation of the basic award in Mrs Panter's favour; it was an award of compensation for unfair dismissal.

Mrs Panter was employed by Swan (Worthing) Ltd, the Respondent company, as a car sales woman in relation to business user, fleet sales and Motobility. On 24th March 1998, she wrote a letter to her Employers which she handed to them on 26th March 1998. It gave a month's notice.

On 2nd July 1998 she lodged her IT.1 claiming three things: illegal deduction of wages; breach of contract; and unfair dismissal. That unfair dismissal was by way of constructive dismissal. In her IT.1 she claimed that her remuneration was £8,000 per annum with bonuses. The bonuses were described as commission of £50 for each unit and insurance warranty sold. Against the background of car salesmanship, it is not unfamiliar to have a commission payable to those who are engaged in that trade. That was her IT.1. On 29th July 1998, it was met with an IT.3 from Swan (Worthing) Ltd and her details as to remuneration were agreed to be as she had claimed them to be.

Then on 3 days, 24th September, 6th October and 23rd October 1998, there was a Hearing before the Employment Tribunal and on 3rd November the decision was promulgated and it held in favour of Mrs Panter that she had been unlawfully dismissed, that unlawful deductions had been made from her wages and that there was a breach of contract as to her remuneration through April and March of 1998, and also in relation to post-termination deliveries.

The Employment Tribunal went on to deal with Remedy and, so far as concerns the basic award in Mrs Panter's favour, they computed it as £8,000 per annum equals £153.84 per week, then multiplied it by 16 and that led to a figure of £2,461.44 as a basic award. That basic award did not reflect the possibility or likelihood of commission. There was also a compensatory award in her favour that did reflect commission. She was also compensated for her loss of use of a car and loss of statutory rights and unlawful deductions and also in respect of breach of contract for March and April. That last figure also reflected the possibility of commission, but as I said, the basic award did not include any reflection of the possibility of commission.

On 12th November 1998, Mrs Panter asked for a review. She said that her remuneration contained something by way of commission which varied according to the amount of work done. On 19th November 1998, the Chairman declined a review, saying that it had no reasonable prospect of success and that, in any event, there had been no contention before the Employment Tribunal of variability of remuneration according to work done.

On 7th December 1998, Mrs Panter put in her Notice of Appeal. She accepted, by her Advisers, that the point had not been argued below but it was said that it was self-evident that commission should have been reflected and had not been.

The Chairman, in refusing a review, took the line that there was an important difference between commission on sales on the one hand and upon a variation of the amount of work done on the other. It is an attractive distinction. Commission on sales reflects not necessarily work done and still less, work done during a particular period, but rather the success attendant upon work done and it is certainly easy enough to imagine a conversation in which a car salesman says "I've worked like mad this month but haven't sold a thing" or "I've only been in the showroom half the time this month, but I've sold more than ever". And there is the further confusion that sales in Month 5, let us say, could reflect work done in Months 3 or 4. Equally, it is very easy to see that the expression in the Statute which we will come onto, namely variation "with the amount of work done" - conveniently describes a form of remuneration that varies, not with hours worked but, say, with how many widgets have been produced during the hours that are worked. So that one is bound to have some sympathy for the Chairman's approach.

However, it does seem to us that at least two arguments undermine it when one comes to look at the Statute itself. Section 221(4) says:

"In this Section references to remuneration varying with the amount of work done includes remuneration which may include any commission or similar payment which varies in amount."

Now Mrs Panter had a remuneration which might include a commission which varied in amount. It is, it seems to us, at the very lowest arguable that if one gives the words "vary with the amount of work done in the period" in Section 221(3), a meaning which as required by Section 221(4), includes remuneration which might include any commission which varied in amount, then Mrs Panter's remuneration might fall within Section 221(3). This is the first argument that seems to us arguable in her favour.

The second is this. Section 221(5) says:

"This section is subject to Sections 227 and 228."

Section 228 deals with the case where an Employee has not been at work long enough to enable a proper calculation to be made within the Sections 220-227. Where you have such a case, Section 228(2) says this:

"In determining that amount the Industrial Tribunal

(a) shall apply as nearly as maybe such of the preceding provisions of this chapter as it considers appropriate; and

(b) may have regard to such of the consideration specified in sub-section;

(3) as it thinks fit".

Then in sub-section (3) it says:

"The considerations referred to in sub-section (2)(b) are:

(a) Any remuneration received by the Employee in respect of the employment in question,

(b) the amount offered to the Employee is remuneration in respect of the employment in question,

(c) the remuneration received by other persons engaged in relevant comparable employment with the same employer; and

(d) the remuneration received by other persons engaged in relevant comparable employment with other employers".

Those paragraphs in Section 228(3) manifestly could include commission on sales and therefore the position is that in the case of Section 228 where a computation is made under that section, commission on sales could be included. That leads to an argument based on anomaly. Could it possibly have been intended that when a calculation under Sections 220-227 cannot be made, Section 228 enables commissions on sales to be included, yet (if the Chairman was right) if a calculation within Sections 220-227 can be made, then that commission has to be excluded. That would seem to be a very anomalous position.

There are, therefore, in our view, arguments that have a real prospect of success available to Mrs Panter. Moreover, the case raises a question which could affect many classes of employees whose remuneration includes commission which reflects work or which reflects not so much work done as the success attendant upon that work. It seems to us that this is an appropriate case to go to a Full Hearing.

Mr Scouller has drawn to my attention two reported cases which I think it would be convenient that we should draw to the parties' attention. One is called Weevesmay [1977] ICR 244 and the second in the same volume at page 425 is J & S Bickley. We see this as appropriate to go to a full hearing and, as it does involve a principle that could involve many thousands of people, we think it right that it should go to Class A.