Is my employer entitled to do this?

  • Thread starter stressedout
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stressedout

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Hi there,

I wonder if anyone can offer some advice on the following. I work in office sales and therefore part of my salary is commission based. As per my contract, once I have received in a purchase order, I have been paid commission on that at the end of the quarter.
My boss casually mentioned by email today that from now on this would only be paid when the money have been received in by the company. This collection is not my responsibility and can sometimes take several months.

My contract clearly states that commission is payable for the quarter when the revenue is recognized by the business as per standard accounting practices. To the best of my knowledge this happens when the PO is received not when revenue is collected.

Can anyone clarify this? I have requested a meeting with my boss, but don't really know where I stand on this. Is my employer entitled to do this or is he sneakly trying to redefine my contract terms?

Yours sincererly,

Stressedout
 
ummmmmm!!

Hi Stressed out,

I am not really sure what is meant by "as per standard accounting practices" however I can say that the Labour Court would normally view that under the term "custom and practice" such a change cannot be implemented without some form of negotiation. Typically companies would look to pay some form of compensation to buyout or amend a contractual arrangment.

In the worst case situation a person could claim to have been unfairly dismissed because their terms and conditions had been changed to their detriment without agreement.

Can anyone provide some definition as per the acoounting bodies SSAPS if the term "per standard accounting practices" means based on origination of P.O. or payment?

MAC
 
Re: ummmmmm!!

In general, standard accounting practice would see income and expenses recognised in the period in which they are incurred, ie. if a company's year end balance sheet date is 31/12/03 and it sells something on the 30/12/03 and sends the appropriate invoice etc but isn't paid until 10/01/04 then this would be included in their accounts for 31/12/03 the date of receipt of payment is pretty much irrelevant in terms of recognising it as income in the accounts. I hope that clarifies it somewhat.
 
..

Employment Law supercedes accounting practices IMHO.
If your employer is operating in clear breach of your agreed contract, you would appear to have a strong case.

Contact the Labour Relations Commission for advice. "lrc.ie"
 
thanks

thanks for the assistance everyone - much appreciated
 
Re: thanks

I once worked for a company where the reps had to get all their sales by a particular annual publishing deadline. It was quite common for some reps to 'mis-understand' a customers wishes. I had to ring the customers looking for the money and would get quite an earful on occasion.

Maybe in your company, some reps had overbooked orders to get a big bonus and then left. Or maybe the company is having cash flow problems. Having said that, it's unfair if you have to wait months to get paid.

Sluice
 
Re: thanks

If your contract says that you will be paid when revenue is recognized, then the revenue should only be recognized when the goods or services are delivered. The order would be irrelevant. This would certainly stop phoney orders being put through to get commission.

Sit down with your boss and find out why he has introduced this system. If it is to combat some abuse which you or your colleagues have been involved in, then I imagine that the Labour Court would support him.

What happens if you make a sale and the debt is subsequently written off? Is your commission reduced accordingly?

Brendan
 
.

Some sales people will do anything to maximise their commission..
Do you get deductions from your commission for previously paid commission, where a credit note is raised against the previous order..
If not I wouldn't raise too much a fuss..
 
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