Claimant v Veritas Technologies (UK) Ltd — 2021

Mr Daniel Johnston brought a single unlawful deduction from wages claim under section 13 of the Employment Rights Act 1996, contending that commission due on 28 February 2020 had been reduced by £273,558.43. The respondent said the correct commission position was governed by the FY20 Incentive Compensation General Terms and Conditions, the related policies, and the claimant’s individual compensation plan, and that the amount paid on 28 February 2020 was the amount properly payable.

The tribunal found that the claimant’s FY20 commission calculation had initially produced earnings of £505,564.78, of which £232,015.95 had been paid, leaving the balance claimed. It accepted the respondent’s evidence that the HSBC account had been materially undervalued in the original FY20 quota setting because the FY17 E-Flex value had not been taken into account, and that a review was triggered because the claimant’s earnings exceeded 250% of his on-target commission. The tribunal did not accept that the HSBC transaction was an unanticipated deal, or that the management involvement relied on by the respondent was itself unusual in the sense required by the windfall wording.

The tribunal nevertheless held that the respondent was not confined to the windfall route. It construed the FY20 terms as allowing quota to be adjusted where there had been an administrative error or unanticipated circumstance, and also where errors were made in quota setting, with appropriate review and approval. On the facts it found that the respondent had carried out a review, identified an error in the original HSBC quota, obtained the necessary approvals, and adopted a non-arbitrary and non-perverse method of adjusting the claimant’s quota by reference to the position that should have been adopted when the quota was first set.

Although the tribunal said the respondent had not followed the windfall procedure correctly in the sense of evaluating the claimant’s efforts toward exceeding target, it held that the alternative contractual clauses supported the retroactive quota adjustment that was made. For that reason the commission paid was the amount properly payable, there was no deduction from wages, and the claim was dismissed.