Complainant

Respondent

Parties

Urban  Kristan

Keeper Security EMEA Ltd.

Representatives

David Gaffney, Solicitor of Padraig J. Sheehan Solicitors

Deirdre Malone, Solicitor of EY Law Ireland

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00063690-001

24/05/2024

The Complainant’s employment was terminated by the Respondent. The Complainant had less than twelve (12) months’ service at the time. No reason was provided for the termination.

The Complainant’s salary comprised two elements – 1. a guaranteed base salary and 2. a variable portion, paid quarterly in arrears.

This case is about whether or not the manner in which the Complainant’s employment ended disentitles him to payment under the variable aspect (VCT) of the Respondent’s incentive plan.

The Complainant is seeking the amount of €17,286.

The Respondent denies the Complainant’s claims and submits that the commission part (VCT) of his compensation package which he is claiming was not ‘earned and payable’ at the date of the termination of his employment, and therefore no monies are owing to the Complainant.

Opening Submission by Mr. David Gaffney, Solicitor for the Complainant

He submitted that this case pertains to one particular clause in one particular incentive plan, and whether the manner in which the Complainant was terminated should disentitled him to the VCT.

He said that the Respondent’s position was that the Complainant was not entitled to it. However, the policy governed

-                      Voluntary resignation

-                      Dismissal on the basis of a breach of the Respondent’s policies

He submitted that neither applied in this case and that there was a lot of ‘in between.’

The Complainant, Mr. Urban Kristen,  gave evidence on his own behalf

He outlined that he started working for the Respondent company in January 2023 as a Channel Sales Manager. He said that his job description was that he was a ‘default channel sales manager.’ He explained that his daily work comprised different activities but that there were two revenue flows, and one was more valuable to the Respondent. He outlined the two sources as being:-

1.                Fulfilled – we did the hard work

2.                Source – Channel parties did the hard work, identified, registered.

sourcing new business, new customers for the Respondent company.

He explained that he was working remotely and that the weekly check-in with his line manager was a basic need in remote working. It was an opportunity to share progress, to discuss what was going on, what things to improve, and to exchange thoughts up with your direct manager.

He explained that his employment came to an end on 5th January, 2024, at a one-to-one meeting. He outlined that there were three people on the call, on this occasion – the Complainant, John Anderson (UK) who was his direct line manager and Anne Nash, HR. He said that the meeting was ‘very brief. They had decided to terminate my employment.’ He was asked: ‘Why?’ The Complainant said that he was not told why his employment was being terminated. He said: ‘I don’t understand why I was being terminated.’ He said he was told that ‘as he had less than one year’s service, no particular reason has to be given.’ He clarified that he was ‘not told’, neither officially nor unofficially. He said that he ‘didn’t get a reason. Not that I recall.’ He was asked if he received anything in writing? He said: ‘No.’

He was asked whether he received confirmation of his termination. He said: ‘Yes. On 5th January 2025, by email.’ It contained ‘no reason.’ The email does not say why he was dismissed.

It is submitted that commissions (not base wages or bonuses) attracted no conditions under the contract, that the Complainant did not resign, nor was he told that he was dismissed because of a breach of policy.

On cross-examination

s. 8 of the Complainant’s Statement of Terms of Employment was put to him which sets out:- “In addition to your base wage, you will be eligible to earn variable compensation based on a target of €44,000 per year (“Variable Compensation Target” or “VCT”). VCT is performance-based and based on the achievement of structured performance targets including but not limited to those mentioned in this agreement. Keeper EMEA may from time to time and without compensation, amend, replace or withdraw any compensation plan or scheme, or your right to participate in any compensation plan or scheme. Base wages and bonuses are payable less all statutory deductions including PRSI and PAYE. Commissions will be paid Quarterly (in the first payroll following the close of the prior month) based on the prior month’s collected sales on your closed deals.”

Each element of that was put to him:

-                           Quarterly

-                           In arrears

-                           Based on the prior month’s collected sales on your closed deals.

He said: ‘That’s how I understand it, as well.’

The last page of the Incentive Plan was put to him, which he had DocuSigned, which he accepted.

It was put to him that this was a policy and was to be read separately to his contract of employment.

The paragraph entitled ‘Quota Credit and Commission Payments’ which sets out: ‘The Participant will receive credit for all contracted and invoiced revenue sourced by and registered by your assigned accounts. Invoiced revenue will count against your annual quota attainment. Commissions on invoiced revenue are based on the understanding that a commission is not fully earned and payable until the invoice is paid by the Customer associated with the invoice, as more fully set forth herein. All commissions earned will be paid in arrears for the previous month’s paid revenue subject to this Plan.’ was put to the Complainant.

It was put to him that commissions are paid in arrears, subsequent to receipt of payment from the customer, based on that paragraph.

The paragraph entitled ‘Termination’ was put to him. It sets out: ‘In the event that the Participant is terminated, either voluntarily or involuntarily, commissions will cease being earned as of the termination date.

Where a Participant voluntarily terminates employment, or where the Company terminates the Participant for a breach of Company policies (including but not limited to Company discounting policies and the terms and conditions set forth in Company’s Employee Handbook), Participant will only receive commission payments that are earned and payable as of the date of termination.

In addition, where Participant voluntarily terminates employment, the Chief Revenue Officer reserves the right to re-assign any account to another employee at his discretion for the purposes of transferring relationships and work that is in process. The Participant will not be entitled to commissions for accounts that have been re-assigned even if the Participant worked those accounts prior to termination.’

The Complainant said: ‘I know exactly what I signed.’ He said: ‘I do not fall into either of these two categories.’

He submitted that the figure due and owing to him was: ‘€17,286.’ He said that there was an unpaid balance for Q3 and Q4. The sales generated figure of €96,037 is not in dispute. How he had calculated the figure of €17,286 was explored with him, and it was put to him that the CFO’s calculation for owed commission, at the end of the day is €12,348.61. The Complainant said: ‘I’m not saying that I’m perfectly on point with this number, but the number was not challenged until now.’ Until now, the employer was ‘only challenging my entitlements to the commission [not the figure].’

How the employer had arrived at its calculation was put to him.

The line setting out ‘prior month’s collected sales’ in the Excel spreadsheet submitted was put to him.

Date: 21/04/2023

VCT - €10,000

April Payment pertaining to Q1

VCT - €10,000

€6,350 was paid on 28/07/2025 pertaining to Q2

€8,982.41 was paid on 20/10/23  pertaining to Q3

A Christmas Bonus of €1,000 which is unrelated was also paid.

Then, VCT in the amount of €6,895.62 was paid to him in the payroll run on 26/1/24, him having been notified of the termination of his employment on 5/1/24.

It was accepted that the Complainant is not disputing anything he has been paid, that he was just disputing the commission he wants paid.

In respect of Q4, the relevant section of the Excel spreadsheet submitted and the accepted generated sales figure of €96,037 and that it was still currently unpaid by that date was put to him.

He said that the sales closed, the invoice issued. If the invoice would be paid, he said would not expect the company to keep the monies if it was ‘me on it.’ [i.e. that he was the named employee who was credited for the generated sale.] He characterised it as a ‘trust’ issue.

On re-direct

It was put to the witness that he was told he would be disentitled. He said that ‘it was stated nothing going to be paid because I wasn’t going to be an employee.’

He said that he had followed up on it, called [a named person] ‘because I don’t agree.’

He was asked why he was pursuing this. He said: ‘In my opinion they breached the contract.’ He outlined that he thought there were two circumstances in which he would not receive the VCT – one was voluntary resignation, and the second was dismissal on foot of a breach of policy, by the employee. He said that he was ‘of the opinion that I’m entitled to the commissions as of the contract that I signed.’

He was asked whether he expected to get the commission, whether he expected to get payments or not? He said he ‘expected the agreement to be followed. It’s a contractual matter. I expected to be paid what I made.’

He re-iterated his calculation as being €17,286. He said that it was what ‘the plan clearly states.’ He outlined the basis of his calculation as being €275,537 (complete review), that he would be entitled to €49,500. He said the portion - based on the figure of €90,637 which was still unpaid – amounted to 34.8% of €49,500 = €17,286. The Complainant posed the question ‘if [he] is terminated, who benefits?’ He said ‘the money stayed with the employer. The company benefits.’

Mr. Gaffney, Solicitor for the Complainant – Closing comments

He submitted that it is quite simple, that the contracts that he got subsequent to his termination, outlined two bases (voluntary resignation or termination for breach of policy) on which he would not receive the VCT. He was not terminated on that basis.

He submitted that the issues involved related peculiarly to that policy document in the absence of any explanation of why the Complainant was terminated. He said, of the evidence at the hearing, was that all we had heard about are numbers and figures as to whether he is entitled to this or that, but that no-one from the Respondent’s side has said he is not entitled to anything at all. Despite their submissions, no-one said he is not entitled to it. He submitted that nobody has said it is unfounded. He submitted that the Complainant had not resigned, nor had he been told he had been let go due to a breach of the Respondent’s policies.

He submitted that the failure to pay the Complainant the monies claimed constituted a breach of the Payment of Wages Act 1991, that it was a breach of his contractual entitlement by not giving it to him. He submitted that there is nothing within the very plan that would or could allow this.

In response to a query from the Adjudication Officer as to whether in light of the explanation of the figures provided by the Respondent, the figure sought by the Complainant had altered or not, Mr. Gaffney reiterated that the figure sought was €17,286.

Summary of the Complainant’s written submissions

It is respectfully submitted that the Respondent’s interpretation of the Commission Plan and their assertion that commissions were “not properly payable” is both contractually inaccurate and legally unsound. The arguments advanced in their submission rely on mischaracterizations of the contractual terms and an overextension of provisions that were never intended to apply to the Complainant’s termination circumstances.

Misrepresentation of Contractual Language

The section of Incentive Compensation Plan, signed on 22/03/2023, entitled “Termination”, provides as follows:

“In the event that the Participant is terminated, either voluntarily or involuntarily, commissions will cease being earned as of the termination date. Where a Participant voluntarily terminates employment, or where the Company terminates the Participant for a breach of Company policies (including but not limited to Company discounting policies and the terms and conditions set forth in Company’s Employee Handbook), Participant will only receive commission payments that are earned and payable as of the date of termination.”

The Respondent’s submission introduces the phrase “for whatever reason” in reference to termination. This phrase does not appear anywhere in the Commission Plan or the Complainant’s Employment Contract. The Plan clearly outlines that commission payments cease only in two specific scenarios:-

“Where the employee voluntarily resigns, or

Where the employee is terminated for breach of company policy.”

The Complainant’s termination did not fall under either of these categories. Therefore, the Respondent’s attempt to generalize this clause to apply to all forms of termination is a clear misrepresentation of the contractual language. It is not open to the Respondent to retroactively broaden the scope of the clause to suit their position in this dispute.

Commission Was Properly Payable

The Respondent claims that the commissions were “not properly payable.” The Complainant categorically rejects this assertion. The commissions in question were:-

-       Directly attributable to his work and performance;

-       Invoiced to the customer during his period of employment;

-       Ultimately paid to the company after the Complainant’s termination

The fact that customer payment occurred post-termination does not negate the fact that the commission was earned through the Complainant’s efforts. The Plan does not state that commissions are permanently forfeited if payment is received after termination, with the exception of the two specific scenarios set out above.

Statutory Protection Under the Payment of Wages Act 1991

Under Section 1 of the Payment of Wages Act 1991, “commissions” are explicitly included in the definition of “wages.” Section 5(6) of the Act further provides that where an employer fails to pay wages that are properly payable, the deficiency is treated as an unlawful deduction unless it is due to a computational error.

It is submitted that what is required to be determined is whether the commissions were properly payable, and which it is submitted they were, and then to determine if the Respondent had a lawful or contractual entitlement to withhold same. In this case, the employer’s justification is based on a misreading of the contract and the introduction of non-contractual language. There is no lawful basis for the non-payment.

Unjust Enrichment

The Respondent has retained the full benefit of the work carried out by the Complainant. This constitutes unjust enrichment, a principle recognised in Irish law where one party benefits at the expense of another without legal justification. The Respondent’s refusal to pay commissions after receiving payment is a clear example of this.

Fairness, Equity, and Contractual Integrity

It is unreasonable and inequitable for an employer to deny commission payments for work that were completed and invoiced during the employee’s tenure, simply because the customer paid after the termination date. This interpretation undermines the integrity of the contract. Employment contracts are usually drafted by the employer. It is submitted that the Contra Proferentem rule applies in such circumstances and there is an obligation to interpret contractual terms and conditions it in favour of the employee, as they are the weaker bargaining party.

Collins v J. Ray McDermott SA — Supreme Court ([2007] IESC 14)

The Supreme Court applied ordinary modern principles of contractual construction and, where an ambiguity remained about the duration of disability payments, resolved it in favour of the injured employee (i.e. against the party who sought to rely on the narrower reading).

Analog Devices BV v Zurich Insurance Co & Ors — Supreme Court ([2005] IESC 12)

The Court emphasised that where exclusion/exemption clauses are ambiguous — particularly in insurance/limitation contexts — ambiguity will be construed against the drafter. The judgment also endorses the “modern approach” to interpretation (look at context/business common sense first; apply contra proferentem only as a last resort).

Opening submission by Ms. Deirdre Malone, Solicitor, on behalf of the Respondent.

It was submitted that the figure of €17,286 is disputed, that commissions were payable but not payable in accordance with the Complainant’s contract. It was submitted that the terms of the plan are clear, and that they were accepted by the Complainant in the signing of his Statement of Terms of Employment.

It is therefore submitted that they are ‘not properly payable’ under the Payment of Wages Act 1991, that they are not ‘earned and payable’, that the phrase ‘earned and payable’ are to be read together. That it is a matter for the Adjudication Officer to determined whether there is or was a deduction.

Ms. Amy Lindenmeyer, CFO, gave evidence on behalf of the Respondent

She explained that as CFO, she oversees all the commission programmes, that she has been working for the Respondent company for five (5) years now, that she has responsibility to review VCT to ensure they are properly done. She said that the Channel Sales Manager’s compensation package comprises two (2) components – base salary and VCT quarterly.

She explained that in relation to the commission portion, that there is an annual target, broken down quarterly, and paid ‘in arrears’. She explained that Q1 pertains to the period January to March, and that the employee was paid in April, that payroll was at the end of the month. She explained that as per s. 8 of the incentive policy, the commission is paid ‘on the prior month’s collected sales.’

She outlined that ‘earned and payable’ are in practice read ‘together.’ She said that once the invoice is paid to the company in full, the employee is paid their commission in the month following the quarter that payment was made.

The termination clause in the Complainant’s Terms of Employment was put to her. She explained that in those circumstances, all monies due to the employee were paid ‘in the final payroll of that terminated individual.’

The witness was taken through the Excel spreadsheet submitted and clarified how the incentive structure worked. She explained there were two components - 90% (VCT) and 10% (direct sales leads, resulting in 100% being awarded across all four quarters, in relation to the 10% aspect.)

The 90% component is calculated by quarter, it is a target – then the figure can be above or below, it depends. Row 23 in the Excel spreadsheet sets out the attainment.

She explained the initial ‘draw period’ for the first three (3) months, there is a guaranteed 100% earning in order to give the employee a ramp, because they have to get a pipeline of sales which usually takes 1-3 months in order to start closing sales and for the Respondent to start getting paid for sales.

Line 15 was put to  her pertaining to March, April, May  and Lines 63, 64, 65 which set out 100% draw calculations which had been paid (the Complainant accepts that).

In Q1, there were no sales. In Q2, Q3, Q4, Line 21 sets out the ACV: The Annual Contract Value in the month it was closed when the sale was recorded. Then, further down the Excel spreadsheet sets out when it was paid: 38% - Q1, 49% - Q3, 115% - Q4.

The quota attained pertains to when a booking is made (sale is recorded).

As an example, the sales target in May was examined. She said Line 35 was the basis for earned and payable. €120 closed in May.

‘Paid quota attainment’ was addressed in the context of Q4, in relation to 1. When it is paid to the company and 2. When it is paid to the individual.

She said that the figure of €6,895.63 aligns with the final payslip dated 26/01/2024.

Row 70 was examined. It pertains to any ‘unpaid balance.’ The figure pertaining to Q3 and Q4 is not in dispute.

It was explained that the employee participated, is tagged when the sale is made, not paid to the company. She explained that there is no structured claw back in the company’s programme.

The re-created calculation for Q3 & Q4: Rows 9 and 14 were examined. The witness explained that if you took out the €13,500 that was paid ‘in draw’ (Paid at 100% with no sales expectation), the Complainant would come extremely close to that number - €12,348.61

On cross-examination

Ms. Lindenmeyer was asked whether she drafted the incentive plan. She said ‘part of it, yes.’

She outlined that there were lots of other people involved too – CHRO, CEO, CRO, the Board etc

She was asked whether she had terminated the Complainant or had anything to do with his termination. She said: ‘No.’

She was asked how the plan is administered in practice by the company ‘as earned and payable.’ She explained that in the event of termination, a month is payable at termination by the plan. She said the company does not make payments to any non-employees – that they are not entitled to it.

The company’s administration of the policy in practice, post-termination, in the context of a dismissal was explored. The idea of ‘earned’ V. ‘earned and payable’ was explored with her, along with the concept of ‘my commission is not fully earned.’

Ms. Lindenmeyer said: ‘I believe that we are fully adherent to the policy.’

It was put to her that the Complainant had not resigned voluntarily and that the manner in which the Respondent administers the plan substantiates the Complainant’s position.

Ms. Malone, closing comments on behalf of the Respondent

Ms. Malone relied upon the detailed submissions setting out the Respondent’s position.

She set out the Respondent’s evidence that the compensation plan is based on the Complainant’s prior month’s collected sales, on closed deals, that commissions are only paid when the Respondent is paid.

She submitted that the Complainant had signed his Terms of Employment and set out that s. 5 of the Payment of Wages Act dealing with deductions needs to be considered to determine whether the sum is properly payable.

She submitted that it was ‘not earned or payable’, that she disagreed with the submissions made by the Solicitor for the Complainant, that the claim was disputed in its entirety.

She set out that there is no claw back provision in the plan, that the sales reps left behind have to do material work in respect of the accounts where invoiced have been issued but payment is yet to be made, subsequent to an employee leaving/being terminated. She said that the terms of the incentive plan were clear. She said that the Complainant read and understood the plan, that it was a simple structure.

Without prejudice to the foregoing, she also disputed the Complainant’s calculation, and submitted that the correct figure is €12,348.61.

Summary of the Respondent’s written submissions

The Complainant alleges that he was not paid the sum of €17,286 gross.

The Respondent denies the Complainant’s claim. It submits that the Complainant was paid in accordance with the terms of his contract of employment and its written Incentive Compensation Plan (“the Plan”) for 2023. (A copy of the Plan was submitted). It is submitted that the amount now claimed by the Complainant was not properly payable in circumstances where the Plan provides that a commission is not fully earned and payable until the invoice is paid by the customer, and in circumstances where the Plan also provides that in the event of the termination of the employment contract, the participant will only receive commission payments that are earned and payable as of the date of termination. The amount claimed by the Complainant was not earned and payable as of his date of termination.

Factual Background

The Complainant commenced employment with the Respondent on 30th January 2023 and worked until termination of his employment on 5th January 2024. The Complainant had less than twelve (12) months’ service. (A copy of the email confirming the Complainant’s termination was submitted, dated 05/01/2024.).

The Complainant’s role was Channel Sales Manager, in respect of which his gross salary was €6,820.00 per month (€81,850.00 per annum).  It is submitted that the Complainant was paid fully in accordance with the terms of his contract of employment and the Plan. (A copy of his payslips for the duration of his employment were submitted).

In addition to the Complainant’s base pay, the Complainant also received variable commission, paid in arrears for the previous month’s paid revenue in accordance with the Plan.  The Respondent provides every employee in such a role with a personal Incentive Compensation Plan for each calendar year on an annual basis.  The Plan sets out the basis upon which the Complainant is incentivised to achieve goals in sales and how this is paid to employees.  

It is submitted that the Plan states that a commission is only deemed finalised when the customer of the Respondent pays their invoice in full. In particular, it states as follows under the heading “Quota Credit And Commission Payment”:

“The Participant will receive credit for all contracted and invoiced revenue sourced by and registered by your assigned accounts. Invoiced revenue will count against your annual quota attainment. Commissions on invoiced revenue are based on the understanding that a commission is not fully earned and payable until the invoice is paid by the customer associated with the invoice, as more fully set forth herein.  All commissions earned will be paid in arrears for the previous month’s paid revenue subject to this Plan.”

    It further states under the heading “Post Invoice Adjustments” that:

“Commission is only deemed finalised when the customer attributable to such commission remits full payment for Company’s invoice(s) for services.”

Further, the section of the Plan entitled ‘Termination’ provides as follows:

 “In the event that the participant is terminated, either voluntarily or involuntarily, commissions will cease being earned as of the date of termination.Where a participant voluntarily terminates employment, or where the company terminates the participant for a breach of company policies (including but not limited to company discounting policies and the terms and conditions set forth in companies employee handbook), participant will only receive commission payments that are earned and payable as of the date of termination.” (Emphasis added)

The Respondent has reviewed the sums paid to the Complainant and is satisfied that while sales were closed during the Complainant's employment, the invoices related to such sales were not paid by the Respondent’s customer and therefore not earned or payable to the Complainant. In the circumstances, it is denied and strenuously defended that there is any sum due to the Complainant.  

Legal Submissions

i.         The terms of the Plan are clear

The Respondent provided the Complainant with a written contract of employment as well as a comprehensive written Incentive Compensation Plan (‘the Plan”). The terms of the Plan were clear and unambiguous and provided that commission was not fully earned and payable until the invoice is paid by the customer.

Under the heading “Acceptance of plan and conditions” the Complainant indicated that he had read and understood the terms of the Plan and accepted same. The Complainant signed the plan by way of DocuSign.

In considering the issue of the terms of renumeration to be set out in a contract of employment and, in particular, the issue of a bonus scheme in such a contract, Regan and Murphy, in their textbook, Employment Law 2nd Ed. 2017, say at paragraph 3.28:

i.        “In drafting any bonus scheme, regard should be had to the High Court decision in Finnegan v J & E Davy, a case involving Davy Stockbrokers and the payment of a deferred bonus to a former employee.

ii.       Mr Finnegan was an accountant with Davy Stockbrokers. His contract of employment did not include reference to a bonus payment but Mr Finnegan received a performance-related bonus at the end of each year. A number of years into his employment, Mr Finnegan was told that thereafter, he would receive only a portion of his bonus in the year to which it related, and that the balance would be deferred until the following year. He was also told that if he left his employment before the balance fell due, he would not be paid that balance. The terms and conditions of the bonus scheme were not reduced to writing. When Mr Finnegan left Davys to work for a competitor, he sued the company for the balance of his bonus entitlements.

iii.      The High Court held that, to the extent that deferring a portion of Mr Finnegan’s bonus was a condition of his contract of employment, it was a restraint of trade and the Court ordered that the deferred element of the bonus be paid to Mr Finnegan.

iv.     It should be noted that in this case, the High Court was influenced by the following facts:

(i)the rules of the bonus scheme were not in writing and so had to be interpreted through the evidence of the parties;

(ii)the decision to defer part of the bonus was a unilateral change to the terms and conditions of Mr Finnegan’s employment and he had never accepted this change; and

(iii)Davys only refused to pay the deferred element because Mr Finnegan joined a competitor and therefore, it was clear that the refusal was a restraint of trade and had no other bona fide purpose.

It is submitted that the instant case is distinctly different from Finnegan in respect of the facts which influenced the High Court to hold in favour of the plaintiff and as set out at (i) – (iii) above. In particular, the Complainant in the instant case was provided with a comprehensive, written Incentive Compensation Plan which he signed and accepted and the terms of which he stated that he had read and understood. There was no change to the Plan which the Complainant had signed. The refusal by the Respondent to pay the sum as claimed by the Complainant in this case has a bona fide purpose because it is consistent with the written terms of the Plan and protects the integrity of the Respondent’s contractual terms. 

ii. Commission is not “Properly Payable”

The Respondent’s case is that the commission is not properly payable in circumstances where the Plan provides that a commission is not fully earned and payable until the invoice is paid by the customer, and in circumstances where the Plan also provides that in the event of the termination of the employment contract, the participant will only receive commission payments that are earned and payable as of the date of termination.

Section 5(6) of the Act provides that:

               Where –

b.     the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

c.      none of the wages that are properly payable to an employee by an employer on any occasion (after making such deductions as aforesaid) are paid to the employee,

i. then, except as in so far as the deficiency or non-payment is due to an error in computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion. 

In the case of Dunnes Stores (Cornelscourt) Limited v Lacey, (2007) 1 IR 478, the High Court held that before an issue of non-payment or deficiency can be determined, it must first be determined what wages are “properly payable” under the complainant’s contract.

In the Labour Court decision in Bord Gais Energy v Thomas PWD1729, the employee claimed an entitlement to a performance related bonus in circumstances where he terminated his employment prior to payment of the bonus. In that case, the employee had worked for the full year from January 2016 to December 2016 and had left the employment in January 2017. He did not receive any payment under the bonus scheme in February 2017 for the previous year.  The scheme required an employee to still be in employment at the date of the payment. The employee argued that excluding people who have resigned from receiving a payment is unfair and discriminatory particularly as pro rata payments are made to people who retire or commence work during a review period. The Labour Court relied on the fact that the employee’s contract set out the eligibility requirements for payment of the bonus, which included being employed at the time of payment, and determined that the employee did not meet the criteria to be eligible for a payment under the bonus scheme and therefore the bonus was not “properly payable” and no contravention of the Act occurred.

The case of A Worker v A Communications Company - ADJ-00026589 concerned bonuses which were only paid the following month and employees were only eligible if they still an employee. In finding that the claim was not well-founded it was held:

“I have reviewed the submissions and the evidence presented at the hearing and noted the respective position of the parties. While I acknowledge the extent to which the claimant is aggrieved by the denial to her of the bonus(es) in circumstances where she contributed to its achievement, there is no dispute between the parties in relation to the contractual clause which provides that “ You will only benefit from the Incentive Bonus if you are a current employee at the time of payment”. The claimant left the company on the 9th January 2020 and the bonus was paid on the 6th February 2020. In these circumstances the bonus(es) could not be deemed to be properly payable and accordingly I do not uphold the complaint. I am satisfied that this decision is consistent with the deliberations of the Labour Court in PWD1729.”

In Karina Marchwinska v Sherlock Recruitment Limited [2023] ADJ-00040491, a complainant, employed as a recruitment consultant, claimed unpaid commission of €974.12 for placing three candidates before leaving employment on April 21, 2022.The complainant believed she was entitled to commission upon placing candidates.The respondent argued that commission is paid when the company receives payment from clients, which occurred after the complainant left.TheAdjudication Officer accepted the respondent's arguments that commission was payable when the company received payment from clients and not when the employee was placed as contended by the complainant.Accordingly, theAdjudication Officer concluded that the complainant had failed to provide any evidence that the outstanding commission was properly payable and accordingly, there was no deduction from the complainant's wages. The Adjudication Officer determined that the complainant's complaint under the Payment of Wages Act, 1991, was not well-founded as the commission was not properly payable at the time of her departure.

In the Labour Court case of An Employer v A Worker [2019] 7 JIEC 3101 the Complainant claimed commission payments amounting to €38,592.55, arguing that he had earned this commission before his dismissal. The Labour Court considered the issue in full and determined that the only issue to be decided was whether the deduction was authorized in terms of the scheme, and not whether the commission was earned. In determining the matter the Labour Court held: 

“Another argument made by the Complainant was that he had earned his commission and that the Act protects employees from having unlawful deductions made from their earnings. The Court gave close and detailed consideration to this point. However, it is a fact that under the Act there is express provision in s. 5 that allows for an employee to ‘contract out’ of their entitlements under the Act and that fact cannot be ignored by the Court.

It is not in dispute that the Complainant signed a contract that had an express provision that the terms of the contract included the Respondent’s rules on commission. Nor is it contended by the Respondent that these rules provided that to qualify for payment of commission, the Complainant had to be in the Respondent’s employment on the date that the payment was due.

The only issue in dispute is whether the Complainant had ever received a copy of the rules in question. While noting that the Respondent is unable to state with any certainty that these rules were provided to the Complainant, the Court is of the view that as the Complainant signed a contract that made express reference to the rules, (that were said to be attached to the contract), there was some onus on him to ensure that he was familiar with those rules. Indeed, the letter of acceptance signed by the Complainant states explicitly, directly above the applied signatures;

‘I accept this offer of employment in accordance with the provisions set out above and in the attached Sales, Commission and Bonus Rules’.

The Court is not satisfied, in the circumstances, that the Complainant can rely on an argument that he did not receive the rules and that, as a result, they do not apply to him. Rules that were part of his contract and which he accepted, so clearly, as being part of his contract cannot be disregarded by the Court.

Therefore, as provided by s.5,(1)(b) of the Act, the deduction is authorised by the Complainant’s contract and, indeed, by his signed agreement as per s.5(1)(c) of the Act. S.11 of the Act is not applicable.”

InShane Beere v Cognito HRM Ltd [2024] ADJ-00047211,the Complainant claimed €1,800 in unpaid commission for deals completed in Quarter 1, 2023, before his departure on May 5, 2023. The Respondent argued that commission is paid quarterly in arrears, only after the company receives payment from clients. The payments for the deals in question were received after the complainant's employment ended. The complainant's contract and the bonus scheme's criteria were reviewed. The Adjudication Officer found ambiguity in how the bonus/commission operated. The complainant believed he had earned the bonus before leaving, but the respondent's policy required the employee to be in employment on the payment date. The complainant had signed acceptance to terms that he had to be in active employment when the commission “would normally become payable”. The Adjudication Officer noted that the bonus scheme was not incorporated into the staff handbook and found a lack of clarity in its management. Notwithstanding the above, the Adjudication Officer found that the bonus was not properly payable as the complainant was not employed on the payment date and the claim for the commission was held to be not well-founded. 

Having regard to the above determinations, it is submitted that, in order to determine what wages are “properly payable”, the terms of the Plan must first be considered. It is submitted that the terms of the Plan which was provided for as part of the Complainant’s contract were clear and unambiguous and provided that commission was not fully earned and payable until the invoice is paid by the customer and that in the event that the contract is terminated, for whatever reason, an employee will only receive commission payments that are earned and payable as of the date of termination.

Accordingly, it is submitted that the sums as claimed by the Complainant in these proceedings are not ‘properly payable’ within the meaning of the 1991 Act, or in accordance with the relevant  caselaw. 

Conclusion

It is submitted that the Complainant’s claim should be refused as the amounts claimed are not properly payable.

There is a clear pattern throughout the Complainant’s period of employment as to how the variable portion of his compensation is calculated, and how and when it is paid. The company CFO, Ms. Lindenmeyer outlined in her evidence, there is an on-ramp in Q1, to allow employees to establish a pipeline of revenue. It was submitted that ‘earned and payable’ are, in effect, to be read together as the VCT only becomes ‘properly payable’, once the customer discharges the invoice.

The argument being advanced on behalf of the Complainant is that the manner in which the terms of the Complainant’s employment are set out in the policy on VCT produces a gap: It is submitted that the terms of employment provide for no further earnings in the form of VCT to accrue to an employee subsequent to the date of termination, and for no further earnings in the form of VCT to become ‘earned and payable’ (when the customer in question fully discharges the invoice), subsequent to the date of termination, in two circumstances only:

1.                Where the employee resigns voluntarily, or

2.                Where the employee is dismissed for breaching the company’s policies, i.e. dismissed for cause, on the basis set out.

It is argued that there is a lot in the ‘in between’, including performance; but, in any event, in this instance, no reason was provided despite the Complainant requesting one; and no evidence was provided at hearing by the Respondent as to the reason, if any, underpinning the Complainant’s dismissal.

I accept the submission that any potential commission would have been

1.            Directly attributable to the Complainant’s work and performance

2.            Invoiced to the customer during his period of employment, and

3.            Ultimately paid to the company after the Complainant’s termination

The commission is a variable component of the employee’s compensation package, not guaranteed, and only becomes ‘earned and payable’ once a customer fully discharges their invoice.

The broader context is that the Complainant was dismissed without the provision of a reason, having just under the requisite continuous twelve (12) months’ service required for his employment to come within the terms of the Unfair Dismissals Act 1977.

The broad general parameters worth consideration in this context include:

-       The decision of the Court of Appeal in 2021, Donal O’Donovan V. Over-C Technology Ltd. and Over-C Ltd. [2021] IECA 37, which sets out that an employer can dismiss an employee on probation for performance reasons without fair procedures, as long as the dismissal is not for misconduct; and

-            The European Union (Transparent and Predictable Working Conditions) Regulations 2022, which transpose EU Directive 2019/1152 on Transparent and Predictable Working Conditions in the European Union, which in general limits a lawful probationary period to six months.

The probationary period set out in the Complainant’s terms of employment was as follows as per paragraphs 2 and 11:

2.    The first six (6) months of your employment will be treated as a probationary period. The Employer may extend the probationary period if that is deemed necessary. In the first 13 weeks of employment, the employment relationship may be terminated by you or by the Employer without notice. During the remainder of the probationary period, your employment may be terminated by one week’s notice in writing at any time or at the end of this period. During the probationary period your employment may be terminated without either party having to give reasons. Where your employment is terminated by the Employer, the Employer may at its discretion, not require you to work out any period of notice but may at its discretion pay you in lieu of notice. One week’s notice of termination will apply during any extension of the probationary period.

11.   Following the successful completion of your probationary period, in the event of the termination of your employment in the first year of your employment, you are required to give the Employer, and the Employer is entitled to give you one week’s notice. After the first year of employment, the Employer will give you notice under the Minimum Notice and Terms of Employment Acts 1973 to 2005, and you will be required to give the Employer two weeks’ notice. The Employer shall be entitled to pay you in lieu of notice and shall be entitled to direct that you need not work out your period of notice.”

At the hearing, neither party adduced any evidence as to whether or not the Complainant had passed probation, or whether his probationary period had been extended in line with his contract. He was dismissed with no reason provided, just shy of having twelve (12) months’ continuous service, effective immediately and he indicates on his WRC complaint form that he received a week’s notice.

In Donal O’Donovan V. Over-C Technology Ltd. and Over-C Ltd., the Court of Appeal has held that during a probationary period, an employer must be free, for any or no reason, to terminate the contract of employment, without the need to adhere to fair procedures as long as it pertains to performance. There is still a requirement to deploy the use of fair procedures with respect to any allegation of misconduct.

In Carroll v. Bus Átha Cliath [2005] IEHC 1, [2005] 4 I.R. 184, the High Court (Clarke J. as he then was) reiterated that if a contract of employment entitles an employer to dismiss an employee for no reason then the employee is only entitled to payment for the appropriate notice period. He held at para. 53:- “If the stated reason for seeking to dismiss an employee is an allegation of misconduct then the courts have, consistently, held that there is an obligation to afford that employee fair procedures in respect of any determination leading to such a dismissal. That does not alter the fact that an employer may still, if he is contractually free so to do, dismiss an employee for no reason. It simply means that where an employer is obliged to rely upon stated misconduct for a dismissal or, where not so obliged chooses to rely upon stated misconduct, the employer concerned is obliged to conduct the process leading to a determination as to whether there was such misconduct in accordance with many of the principles of natural justice.”

The Respondent has provided no reason or context for the Complainant’s termination, either to him or at hearing. Throughout the course of his employment, the VCT portion of the Complainant’s compensation package was paid to him in line with the terms set out in the scheme. Subsequent to the conclusion of his employment, he was no longer in receipt of his base pay or VCT, or any other form of compensation from his previous employer.

Under the heading ‘Post Invoice Adjustments’, it is set out that:-

“A commission is only deemed finalized when the Customer attributable to such commission remits full payment for Company's invoice(s) for services. Participant acknowledges and agrees that Company reserves the right to recover any amount of commissions paid to Participant in the case of non-payment by the Customer through payroll deductions from Participant's contingent or finalized commissions on a rolling basis or by other means. For purposes of recovering commission adjustments for non-acceptance and/or non-payment of invoices by Customers, Company may use credits, refunds, chargebacks or other adjustment mechanisms to Participant's commission pay regardless of whether such commission would be paid as finalized or contingent commission. Adjustments in any of these circumstances will be typically charged to Participant in the month any such adjustment occurs and will be deducted from the next commission payment due to the Participant or at such time as Company finally determines that the adjustment should be applied. If Participant is no longer employed by the Company at that time, Participant expressly agrees to promptly repay to Company the full amount of any negative commission balance resulting from such adjustments and further acknowledges and agrees that all such amounts owing to Company represent a valid, lawful debt of Participant to the Company.”

I find for the Complainant.

I find that the commissions identified are ‘properly payable’ under s.  5 of the Payment of Wages Act 1991.

I find that they come within the meaning of the definition of wages under the Payment of Wages Act and are ‘referable to his employment.’

I accept that the commissions were not ‘finalised’ as per the terms of the incentive scheme until ‘the Customer attributable to such commission remits full payment for Company's invoice(s) for services.’ However, in circumstances where no reason was provided by the Respondent as to the Complainant’s termination, and the incentive scheme identifies two specific circumstances in which an employee would forfeit their commissions ‘earned’ prior to them becoming ‘earned and payable’ – one is voluntary resignation which is not applicable here, and the second is termination for breach of the Respondent’s policies – I find that the Respondent cannot rely upon that clause.

As per the dicta of the Court of Appeal in Donal O’Donovan V. Over-C Technology Ltd. and Over-C Ltd. [2021] IECA 37 – within a probationary period, there is a requirement to provide fair procedures in the case of alleged misconduct but not in the case of alleged poor performance. No fair procedures were provided. No evidence was adduced by either side as to whether or not the Complainant was in an extended probationary period. It is common case that the Complainant had just shy of twelve (12) months’ continuous service when his employment was terminated, which is of relevance in terms of the ambit of the Unfair Dismissals Act 1977.

I also note that the same paragraph in the incentive scheme which sets out that the commissions are not ‘finalised’ until ‘the Customer attributable to such commission remits full payment for Company's invoice(s) for services’ allows the employer to seek the return of any monies deemed to be overpaid, even after an employee is no longer in the Respondent’s employment stating: ‘If Participant is no longer employed by the Company at that time, Participant expressly agrees to promptly repay to Company the full amount of any negative commission balance resulting from such adjustments and further acknowledges and agrees that all such amounts owing to Company represent a valid, lawful debt of Participant to the Company.’

I accept the figure of €12,348.61, provided and explained by the CFO as being correct, having regard to the ‘on ramp’ applicable to Q1.

I find that this complaint is well founded and I direct the Respondent to pay the Complainant in the amount of is €12,348.61 within 42 days of the date of this decision.

Dismissal for no reason; Less than 12 months’ service; No allegation of misconduct; No fair procedures; No challenge to notice period; Can commissions earned when in employment become ‘properly payable’ subsequent to the termination of employment?;