1. Introduction
Commission is a frequent source of Payment of Wages complaints. Commission schemes vary widely in their terms: some are wholly discretionary, others are payable on completion of defined milestones, and many are subject to claw-back or forfeiture clauses on termination.
This article considers how the WRC analyses commission disputes, applying the Balans framework, and the particular issues that arise where commission is earned before termination but payable afterwards.
2. Legislation and Case Law
Section 1 of the Payment of Wages Act 1991 expressly includes commission in the definition of “wages”. Commission earned but not paid will give rise to a Payment of Wages complaint where it is properly payable.
The Court of Appeal in Connolly v Brio v Aer Lingus Cargo [2018] IECA 145 confirmed that commission terms must be construed in accordance with the ordinary principles of contract interpretation, with particular regard to the commercial context.
In Aon Insurance Managers (Dublin) Limited v Aon Risk Services Australia Limited [2017] IEHC 619, the High Court considered whether commission was earned on the date of contract or the date of payment, holding that the contractual language was determinative.
Forfeiture clauses that operate on termination may be enforceable where they are clear and unambiguous, but the courts will not readily imply such a forfeiture in the absence of express provision.
3. Decision
Applying the Balans framework, the WRC will first identify when commission was earned in accordance with the scheme rules. If commission was earned during employment, it is generally properly payable, even if payment was scheduled for a later date.
Where a forfeiture clause is relied upon by the employer, the WRC will examine whether the clause is clear, whether it has been operated consistently, and whether it is consistent with the implied duty of trust and confidence.
Compensation under Section 5 covers the value of the unpaid commission, subject to the six-month cognisable period under Section 41 of the Workplace Relations Act 2015.
4. Takeaway
Employers should ensure that commission schemes are documented in writing with clear rules on when commission is earned, when it is payable, and the circumstances in which it may be withheld or clawed back.
Employees should retain copies of commission scheme documents, sales records and pipeline reports, particularly where they are considering leaving the employment and have unpaid commission outstanding.
5. Further information
This article was prepared for informational purposes only. For further advice, please email enquiries@crushell.ie or contact the offices of Crushell & Co Solicitors.
6. About Crushell & Co
Crushell & Co is a specialist law firm focused on protecting and advancing the rights of employees in Ireland. We offer a nationwide service, advising individuals on a wide range of legal and regulatory issues arising at work, including employment law, employment immigration and workplace accidents and injuries.
We help employees understand their position and options by translating complex legal issues into clear, practical advice. Our approach is tailored to each client, ensuring that our strategy is aligned with their personal and professional circumstances.
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