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The Facts
Employee earns sales commission under employer's sales
program
Between May 2005 and November 2013, the employee was employed as
a sales representative selling large scale printing solutions to
corporate and government clients.
Her employment contract stipulated that she would be paid a base
salary and could also earn commissions through the employer's
sales program.
During a six-month period between 1 November 2009 and 30 April
2010 (the "measure period"), the employee exceeded her
sales quotas to such an extent that for that period she was 500%
over budget.
As a result of this achievement, she calculated that for the
measure period, she was entitled to $446,250.39 in commission.
Employer reviews employee's sale plan, capping commission
payable
The employer's sales program provided that when a
salesperson reached an identified performance threshold, a
management review would occur. As a result of the review,
management could adjust various components of the employee's
sales plan.
The employee had reached this performance threshold and so her
sales plan was subject to review.
In May 2010, the employer conducted the review and placed a cap
on the employee's commission payment. This was done
retrospectively, after the measure period.
Consequently, the employer paid the employee just $136,500 of
the $446,250.39 commission to which she had calculated she was
entitled.
Employee successfully sues employer for full payment and
employer appeals
Three years after leaving her employment, the employee commenced
a claim against the employer in the ACT Supreme Court for
$309,750.39, the amount by which she claimed to have been
underpaid, plus interest.
The employee's claim was successful, and the employer
appealed to the Supreme Court's Court of Appeal.
case a - The case for the employer
case b - The case for the employee
The employee is not entitled to any more commission than we
have already paid her.
The employment contract clearly states that if the content of
company policies refers to obligations on us, those obligations are
guides only and not contractual terms. The sales program under
which the employee was eligible to earn commission was contained in
our global sales compensation policy. Therefore, the sales program
did not have contractual force and we are allowed, as a principle
of employment law, to change that policy at our discretion as and
when necessary.
Even if the sales program is found to have contractual force,
the review process in the sales program envisages that we may
change or cancel the sales program at our discretion, even
retrospectively, which is what we did.
As we legally exercised our discretion to cap the
employee's commission, the court must uphold our appeal.
The global sales compensation policy referred to by the
employer was not in existence at the time that I accepted my offer
of employment and its characterisation as a "policy" was
not agreed to by me.
The commission is a salary component under my employment
contract. If I earn that payment based on my performance, then I am
contractually entitled to be paid. I cannot be deprived of this
payment merely because the method for calculating the amount of the
entitlement is contained in a document unilaterally designated as a
policy by the employer.
It's true that the employer has a right to conduct a
management review. However, this review doesn't entitle them to
unfettered discretion, nor does it entitle them to place a cap on
my sales commission retrospectively.
After I proved that my sales ability was exemplary, the
employer responded by breaching the employment contract to avoid
paying me. The court must reject this behaviour and dismiss the
employer's appeal.
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