Official Statement Sat 4th April 2020
Following today’s welcomed update on the Gov.uk website around the inclusion of “your regular, compulsory commission” within the calculation for sales staff placed on Furlough Leave.
The IMDA would like to bring some more clarity especially for those sales people with the term ‘discretionary commission’ within their Contract of Employment.
It is our understanding the fact that you are paid a ‘regular’ monthly salary & commission along with the fact that your average commission is paid whilst you are on holiday which is legislation under the EU Working Time Directive deems that if you are placed on Furlough Leave by your employer that your employer would be entitled to claim 80% of this average from HMRC through the Coronavirus Job Retention Scheme.
This payment must then be passed onto the employee.
Our understanding is shared with Industry Expert Nigel Morris, Employment Tax Director at MHA MacIntyre Hudson who made this statement in a communication with the IMDA earlier today.
“Our reading and understanding is that regular commissions are now to be included. This is a legal point, and on that I suppose the real acid test is what right of recourse does an employee have if the Dealer decided not to pay the monthly commission. Given the custom and practice and regularity it would seem that a Tribunal would award it. If that thinking is supported by the lawyers it follows that it is ‘compulsory’. The annual bonus based on profits and performance is still truly discretionary and therefore different. ”
These details will hopefully bring some much needed clarity to the situation.
Extract from the GOV.UK website:-
How your monthly earnings are calculated
If you’ve been employed (or engaged by an employment business in the case of agency workers) for a full year, employers will claim for the higher of either:
• the amount you earned in the same month last year • an average of your monthly earnings from the last year
If you’ve been employed for less than a year, employers will claim for an average of your regular monthly wages since you started work. The same arrangements apply if your monthly pay varies such as if you are on a zero-hour contract.
If you started work in February 2020, your employer will pro-rata your earnings from that month.
The grant paid to your employer will be calculated based on your regular, contractual pay, such as wages, compulsory commission and past overtime. The calculation will not include discretionary commission (including tips) payments or bonuses, non-cash payments or benefits in kind.
The Government Website update can be seen in full here:-
We are unsure if our online Petition had any impact on this decision however it certainly has helped get the message in front of the general public.
The IMDA would like to take this opportunity to thank you for your support
Umesh Samani, IMDA Chairman.