United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R HENDRY (CONSULTANT) (Instructed by) Collinson Grant Consultants Ltd 20 Worsley Road Swinton Manchester M27 5WW


 


JUDGE PETER CLARK: This case concerns the Applicant, Mr Fenton's entitlement to commission payments for the purposes of an unlawful deductions claim under Part II of the Employment Rights Act 1996.

1. He was employed by the Respondent company, Mills & Allen Ltd, from 22^nd March 1993 until his dismissal by reason of redundancy with effect from 31^st July 1998. Following his dismissal he presented a complaint of unfair dismissal and unlawful deductions from wages to the Employment Tribunal.
2. The complaint came before a Tribunal at London (North) chaired by Mr Lincoln Crawford on 2^nd December 1998. By a decision with extended reasons dated 1^st March 1999 that Tribunal found that he had been unfairly dismissed and further, that there had been unlawful deductions from his wages in relation to commission payments.
3. By his original contract of employment dated 24^th May 1993 the Applicant was included in the company's commission scheme on the following terms:

i. No allowance is given for sick leave;

ii. Allowances will be made for holidays providing at least 2 weeks' notice is given for up to and including 2 days' leave. Any more than 2 days will require at least 6 weeks' notice;

iii. No allowance is given for public holidays;

iv. Payment under this scheme is subject to your being in the employment of the company at the time of payment and not under notice whether given or received.

4. On the 1^st April 1998, the Applicant's salary was increased and his contract then provided:

"Your inclusion in the 1998 direct sales commission scheme is designed to potentially enable you to increase your earnings to £45,000 per annum if your sales targets are achieved. The Rules of the scheme and how commission is calculated is fully set out in the Contract with the following proviso:

"Notwithstanding the Rules of this scheme commission will be payable solely at the company's discretion.""

5. It was the company's case that:

i. whatever commission may be owing to the Applicant a condition of payment was that he had to be in the company's employ at the time of payment;

ii. whatever his entitlement to commission payment was solely at the discretion of the company; and

iii. the scheme was reviewed each year.

6. The Employment Tribunal found that the company could not rely on the Applicant's unfair dismissal to deny him commission entitlement and further, that although the scheme was discretionary, the Applicant had earned the commission and had a reasonable expectation that he would receive it. Applying the Employment Appeal Tribunal decision in Kent Management Services Ltd -v- Butterfield [1992] ICR 272, the claim for unlawful deductions was made out. Subsequently, a different Employment Tribunal, chaired by Mr C A Carstairs, assessed compensation for unlawful deductions in respect of renewal commission in the sum of £793.97, by way of compensation for unlawful deductions from wages. Compensation for unfair dismissal was agreed between the parties at £7,500.
7. In this Appeal by the company, Mr Hendry challenges the Crawford Employment Tribunal's finding of unlawful deductions. He submits that under the terms of the contract no commission was due in respect of anniversary renewals after notice was given. Further, the fact that the employment was terminated by the company unfairly, as the Tribunal found, is immaterial to the Applicant's contractual entitlement to further commission. Secondly, he submits that Kent -v- Butterfield may be distinguished on the basis that in that case the bonus scheme was discretionary, although the Court held that the employee had a reasonable expectation of payment under the scheme. Here, he submits that the terms of the scheme are absolutely plain. The Applicant in this case would have no reasonable expectation of the commission which fell due after notice was given to terminate the employment.
8. We think that these points merit full argument. In these circumstances, we shall direct that the case be listed for a full hearing for ½ day, Category C. There will be exchange of skeleton arguments between the parties not less than 14 days before the date fixed for the full appeal hearing. Copies of those skeleton arguments to be lodged with this Tribunal at the same time.