back to article Docking £500k commission from top SAS salesman was perfectly legal, rules judge

A salesman who claimed bosses at software biz SAS diddled him out of half a million pounds in commission had "no reasonable prospects" of successfully proving his case, an Employment Tribunal judge has ruled. The sales supremo had landed a $27m deal which ought to have netted him £801,583.74 in commission – but despite blaming …

  1. My-Handle Silver badge

    The following is my option, IANAL...

    But although this sounds like it's legally legit, it's a real dick move by SAP. The whole point of commission is to encourage your salesman to sell. If your salesman is under the impression he's going to get a hefty chunk of a big contract, and then you wave a get-out clause at him after he closes the deal, he's not going to try very hard any more, is he. Neither is the rest of your sales force, once they hear of it.

    I hope SAP are looking forward to having their sales capped at whatever point the commission runs out.

    1. Anonymous Coward
      Anonymous Coward

      "But although this sounds like it's legally legit, it's a real dick move by SAP."

      SAS not SAP.

      1. BillG
        Megaphone

        Satisfaction

        Many years ago I was an FAE and had brought in some significant semiconductor business where I was owed a sizable bonus. My U.K. boss just flat-out told me over the phone, very coldly "I know you're owed this bonus, but I'm just not going to pay you."

        I didn't not have the experience or the resources to fight the situation in court. Within a month I had secured a new job with a competitor which caused a panic with my boss who vaguely attacked me with non-specific threats. See, I had gotten those design-wins based on my personal relationships with the customer engineers who knew me from a previous employer. They knew I kept my promises and never once tried to B.S. them about the product's capabilities.

        Without me, my previous employer lost the business I had secured. It gave me some small satisfaction, but I would have much rather had the commission.

      2. My-Handle Silver badge

        Mea culpa. I mis-read the article. Went through the whole thing with "SAP" in my head.

    2. Edwin

      Typo aside

      Assuming the bonus depends on both revenue and margin, customers will be able to get quite nice pricing in future as sales no longer cares about high margin beyond a certain contract size :)

      So if you're a bigger customer for SAS, now is the time to renew :D

      1. Korev Silver badge

        Re: Typo aside

        > So if you're a bigger customer for SAS, now is the time to renew :D

        Or take some R courses?

    3. Jellied Eel Silver badge

      If your salesman is under the impression he's going to get a hefty chunk of a big contract, and then you wave a get-out clause at him after he closes the deal, he's not going to try very hard any more, is he.

      But he's a salesman. And he'd have read, agreed and signed his sales commission plan. Which said-

      Any payout over 300% of On Target Variable Pay is subject to review and approval by the Executive Vice President and Chief Sales Officer…

      Which IMHO is fairly common in sales, ie some form of capped commission to deal with bluebirds. Which also includes things like funnel reporting and forecasting, so it shouldn't have been a great suprise this deal landed. Which then gives sales management and the sales person a chance to negotiate.

      It can also be a bit of company self-defence mechanism given rules around revenue recognition and how easy (or hard) it would be for the customer to re-negotiate or terminate a contract, ie if they cancel after yr1, the deal isn't a 5yr deal any more, so commission on the whole thing gets risky. But I've also seen sales people get burned when companies cock up and sales lose the commission. Conversely, I've also seen situations where sales have offered very generous customer contracts because they've been commissioned on revenues, not margins.

      I hope SAS are looking forward to having their sales capped at whatever point the commission runs out.

      That's normal. So what to do if when a sales person hits their target early in the year. If that was because it was a star sales person, then it's in the companies interests to keep them happy.

      1. Rol Silver badge

        Commission could always be spread over a longer term, with incremental payments every quarter being issued to the salesperson on the proviso that the customer is still doing business with the firm.

        However it does stink, when on the rare occasion you hit the jackpot, only to find the boss is more than happy to redirect your earnings into his holiday home in the Bahamas and wave you goodbye.

        I suppose having hit your yearly target in one fell swoop, you could spend the rest of the year drawing your basic while tramping around your company's customer base selling a competitors product for full commission, and then burn his house down with him in it. I know. It'll take a lot of will power to resist the urge to kill him immediately, but you have to ask yourself - "What would Jesus do?" and yes, he would definitely have ruined his business first before taking an AK47 to him...or was that something I saw on Southpark... oh well. It's all fiction anyway.

        1. Jellied Eel Silver badge

          Commission could always be spread over a longer term, with incremental payments every quarter being issued to the salesperson on the proviso that the customer is still doing business with the firm.

          That's usually how I've seen it done on this kind of deal, and again should be spelled out in the commission plan. Which can also include provision for what happens if the sales person leaves the company, which may involve them forfeiting commisson, or it still being due.

          However it does stink, when on the rare occasion you hit the jackpot, only to find the boss is more than happy to redirect your earnings into his holiday home in the Bahamas and wave you goodbye.

          It's why it gets complicated. Country sales boss would have their own targets and incentive plans, then regional bosses all the way up. Plus other staff may get paid commission or bonuses based on their team or country number. Again that gets tricky with rules for revenue recognition vs when commission payments fall due, and if those are out of line, can end up with complicated restatements.

          But generally companies that tend to screw over their sales people tend to get screwed back, because the word would spread.

          If being short-changed two thirds of your earnings can in anyway be considered fair, then dictionaries the world over need a complete rewrite.

          Always read the contracts, especially if you'll have a part in creating them. So sales pay is base + commission with OTE being what you get, if you hit your target. Clause gave a capped commission of 300% of OTE (or the commission element) to reward performance. Slightly odd part was the company lopping £100k off, which presumably brought the commission down to the 300%, and gives you an idea what their OTE was.

          1. Lord Elpuss Silver badge

            To be a little pedantic; "Clause gave a capped commission of 300% of OTE" isn't accurate - commission wasn't capped at 300%, just that after that it was subject to review by PHBs.

            1. Jellied Eel Silver badge

              To be a little pedantic; "Clause gave a capped commission of 300% of OTE" isn't accurate - commission wasn't capped at 300%, just that after that it was subject to review by PHBs.

              True, and much of the decision revolved around that point, ie if the higher amount wasn't approved, it's hard to argue against in the face of that clause. Plaintiff seemed to have made the mistake of assuming a higher payout was due, and due immediately.

              They may also have been badly advised by their lawyer in not filing correct claims on other points, ie if the cap stood, they wanted the extra 100k as an option. But that was conditional on that offer being agreed and approved by both parties. Which it wasn't, so the salesperson was SOL.

              The ruling also brought up whether that offer was enforceable given it seemed to be based on retroactively changing the salesperson's targets. Judge pointed out that contractually, it'd still be based on the commission plan agreed at the time of the deal. That seemed a bit dubious to me both from a contractual and accounting POV.

              But such is sales. To me, this would have raised red flags to look at the deal more closely. So the salesperson wanted all the commission on a 5yr deal immediately. And if there were problems with that deal, clawbacks could have been tricky, especially if the salesperson had left the company. And to me, it's also a case study for sales people in how not to negotiate a deal, or read a contract, which are both rather important skills for sales. As the deal got closer to closing, negotiations regarding the commissions should also have been progressing.

              1. Valheru

                I really wonder about the communication here between the salesman and his leadership.

                Did he have an email assuring him the commission would be paid on contract signature?

          2. batfink Silver badge

            but it was also strange that the judge ruled that the "fairness" clause didn't apply.

        2. Alan Brown Silver badge

          What would Jesus do?"

          flipping tables and whipping merchants was definitely part of the bible stories (in the temple)

      2. amanfromMars 1 Silver badge

        IANAL either, however ..... the word in barrack rooms is .....

        But he's a salesman. And he'd have read, agreed and signed his sales commission plan. Which said-

        Any payout over 300% of On Target Variable Pay is subject to review and approval by the Executive Vice President and Chief Sales Officer… ...... Jellied Eel

        Is the fact that the commission plan doesn't clearly advise ........ Any payout over 300% of On Target Variable Pay is subject to review and disapproval by the Executive Vice President and Chief Sales Officer ...... a mistake/error/omission which would allow for a verdict and judgement in favour of full payment to the plaintiff/claimant/Mark Hanson?

        As has been a long time known, too oft is the law an ass

        1. NerryTutkins

          Re: IANAL either, however ..... the word in barrack rooms is .....

          My thoughts exactly. The clause is rather vague, and my feeling is if you're going to potentially take 100s of 1000s of pounds out of an employees pay packet, your contract should be pretty explicit.

          Saying merely it's "subject to review and approval" to me implies a formality that high commission would be looked at more closely to ensure the employee was not gaming the system (e.g. banking commission on orders that then get cancelled) or that it was not a miscalculation. But they would still need some reasonable basis not to pay.

        2. Dave314159ggggdffsdds Silver badge

          Re: IANAL either, however ..... the word in barrack rooms is .....

          What do you think 'subject to review' means? That the EVP or CSO gets to look at it, but has no say in the matter?

          As the judge said, it's pretty clear and definite. I expect there's caselaw on what the phrase means.

          1. Roland6 Silver badge

            Re: IANAL either, however ..... the word in barrack rooms is .....

            >What do you think 'subject to review' means? That the EVP or CSO gets to look at it, but has no say in the matter?

            As the judge said, it's pretty clear and definite. I expect there's caselaw on what the phrase means.

            Which probably isn't the case, given it would have been relevant and thus natural for the company's legal team to reference it. In fact they went nowhere near this and neither did the plantive, which is a bit odd.

            Given, from what we've been told the commission plan doesn't contain any statement that commission is "up to" etc. the "subject to review" means simply confirm all is in order and sign-off the payment plan.

            However, for some reason the judge decided that 'reasonableness' didn't apply to this specific contract clause...

            1. Annie26

              Re: IANAL either, however ..... the word in barrack rooms is .....

              Ridiculous .., of course reasonableness should be applied. It’s just a formality as should have been changed BEFORE he did the work if they were going to remove hundreds of thousands of earnings..

      3. Anonymous Coward
        Anonymous Coward

        That is a total load of enabling BS. Offering a reward you can't possibly pay out and have no intention of paying out, pretty much qualifies as a Dick Move.

      4. Torquemada_131

        "Bluebirds" are by definition, unexpected and not forecast,... But in this situation SAS were reliant on the Contacts which the salesperson had generated across his previous career,.. Which makes their decision stupid. I've been there, and suffered a very similar fate working for a Japanese company,.. Despite the fact that the deal was one of the largest in many previous years, the UK General Manager decided that I was the one who was getting stiffed... so I left. Despite the "win" there was no one to carry the three year deal through to full completion it fell apart before the end of year one.

        Shame.

    4. Anonymous Coward
      Anonymous Coward

      If your salesman is under the impression he's going to get a hefty chunk of a big contract

      It means he didn't read his own contract, the bit where it says deals of 300% over target are open to review.

      I can understand why he's unhappy, but contracts bind both parties, if he signed it without understanding it he really doesn't have a case.

      Capping payouts is pretty normal. They could have paid it, given him a target of 27m next year "you've shown you were capable of it", and then he would have earned no commission when he didn't meet it. Would that have been better?

      1. jmch Silver badge

        "It means he didn't read his own contract, the bit where it says deals of 300% over target are open to review."

        The contract also said that this clause would be interpreted with reasonable fairness. Of course that doesn't mean anything legally, but since he probably had some advance knowledge of the sale being made, he should have put out some feelers before, and pre-negotiated a fair compensation with his bosses. For example if immediate recognition of the bonus was a problem for SAS they could have arranged a staggered payment.

        1. Rol Silver badge

          Fairness?

          If being short-changed two thirds of your earnings can in anyway be considered fair, then dictionaries the world over need a complete rewrite.

          I can't help but feel the judge in this case was a bit miffed to discover there are people from absolutely average family backgrounds, earning more than he does.

        2. Jellied Eel Silver badge

          The contract also said that this clause would be interpreted with reasonable fairness. Of course that doesn't mean anything legally, but since he probably had some advance knowledge of the sale being made, he should have put out some feelers before, and pre-negotiated a fair compensation with his bosses.

          The ruling is interesting on that point, ie that clause wasn't really relevant when the key clause set the limit at 300%. The plaintiff tried to argue that point, along with introducing another SAS sales person who'd been paid more than 300%, but their payment was staged. The judge also cited other precedential cases where they explained it's hard to argue unreasonable.

          1. batfink Silver badge

            but there wasn't a "limit" - there was a threshold above which the payment would be "reviewed".

      2. Annie26

        No because that would be umm ... unfair ?

  2. Anonymous Coward
    Anonymous Coward

    Ouch

    I'm with sales on this one. They boy done well and should be paid accordingly.

    1. Anonymous Coward
      Anonymous Coward

      Re: Ouch

      Strange that piecework payments are frowned upon for the people that actually make something, yet are seen as fine for the people that persuade customers to buy.

    2. Dave314159ggggdffsdds Silver badge

      Re: Ouch

      You have no idea if he did well or badly. Maybe he was given a £25m+ lead, and £27m wasn't a particularly great result. Or maybe he brought in £27m of new business all by himself.

      1. Roland6 Silver badge

        Re: Ouch

        >You have no idea if he did well or badly.

        We do, as any sane company would have evidence about the lead etc. and would have brought it up at Tribunal - they didn't...

  3. msknight Silver badge

    It doesn't bode well for the customers

    Any customer or potential customer will now likely be very wary of them after this. If this is how they treat their sales people, then how do they treat their customers? This very much sets the tone that any customer can expect from them if things go wonky.

  4. Robin Bradshaw

    Doesn't this mean that their sales team are going to stop caring once a sale gets beyond ~9 million or so as they won't get any increase in comission beyond that?

    So difficult to negotiate £27 million contracts will become super easy to negotiate £10 million contracts? granted possibly not quite so extreme.

    1. Doctor Syntax Silver badge

      But none of the other sales staff and potential recruits will ever get to hear of this will they? What's that Ms Streissand?....

    2. Robert Carnegie Silver badge

      Isn't the salesman's bonus effectively paid by the customer? They pay £ X + Y, they get product and services worth £ X, the salesman gets £ Y. So, reducing £ Y should save the customer some money. It won't, of course, but it should.

      The other way around, sort of... selling the old family home, the agent offered to take a low fee plus a rather high proportionate commission compared to their usual terms. Collectively, we said yes. They and we did get a high price when it sold, but I wondered if they saw it, and us, coming.

  5. Sykowasp

    ... As the judge goes around SAS's MD for dinner later that same day.

    This is really dodgy, and I hope it backfires on SAS. It's clearly unfair, 'review' does not mean 'automatic cut to under half of what was expected, and then cut even further punitively'.

    Sure, spread the bonus out over three years (350/300/250 say) to reduce the effect on profits (but why? surely the company's profits are boosted by the deal more than the cost of the commission?).

    1. Ben Tasker Silver badge

      > to reduce the effect on profits (but why? surely the company's profits are boosted by the deal more than the cost of the commission?).

      This.

      Either SAS fucked up their commission structure, or the whole "but what about our profits" thing is a bit of a red herring - the sale price presumably included enough margin to cover the commission rate.

      It might have been legal, but it's also a damn good way to dissuade any (good) potential employees from bothering

    2. jdiebdhidbsusbvwbsidnsoskebid Bronze badge

      "surely the company's profits are boosted by the deal more than the cost of the commission?"

      Wouldn't be so sure about that. The article says that they made 4.2M profit on 121M turnover in 2019. That's only about 3.5%. This sales person makes a sale for £19.54M (according to the exchange rates quoted in the article), 3.5% of that is less than £700k. So £800k commission might have more than offset the profit.

      1. Anonymous Coward
        Anonymous Coward

        Another way to look at this is that about 12% of the entire division's profits came from one salesman's shortchanged commission, and since most manglement bonuses are based on net profit, they probably got to divide a good portion of that little clawback.

        1. Anonymous Coward
          Anonymous Coward

          Except for unprofitable companies, where management bonuses are based on EBITDA. Or user acquisition numbers. Or something.

      2. Roland6 Silver badge

        >The article says that they made 4.2M profit on 121M turnover in 2019. That's only about 3.5%.

        ...

        You are confusing matters.

        When I worked in IT sales, we regularly signed contracts with a gross margin at contract signature in excess of 40% - so I would expect the 'profit' from this single agreement to be in the region of £7.8M. (Which makes an £800K commission = 10% of gross margin, not unreasonable.)

        We only agreed to sign contracts with a lower margin if we were buying the business and expected to gain efficiencies of scale - in one case we signed a major deal at a loss, but this one deal enabled one business unit to invest and switch from being lossmaking to a market competitive player and profit centre.

        However, we expected margin erosion to occur - the extent of which was largely the domain of project managers, so at the end of a contract we anticipated a gross margin of 20~25%, once this had been fed into the company accounts etc. the company actually delivered a 9% margin before tax that was declared in the annual accounts.

    3. Nonymous Crowd Nerd

      "... As the judge goes around SAS's MD for dinner later that same day."

      Yep. That was my first thought. Especially as he was sitting alone instead of part of the usual tribunal. It all looks a bit fishy.

  6. RSW

    What's the betting his managers still got the full bonus?

    1. Roland6 Silver badge

      >What's the betting his managers still got the full bonus?

      And those bonus's totalling more than £800k and being paid in the same month...

  7. Marcelo Rodrigues
    Facepalm

    Bankrupcy is too good for them.

    He worked, he got paid. Easy.

    Hope the Streisand effect kicks in, and the company's reputation got damaged all over the world.

    1. CRConrad

      Re: Bankrupcy is too good for them.

      It's SAS. If they have any reputation (among people who work¹ with their products), it's already "Avoid that shit!". That's probably why they need (good or great) salesmen in the first place.

      ___

      1: I did, for years.

  8. Cederic Silver badge

    confused

    Failing at tribunal because the terms covered the company actions is unfortunate for him (although 800k for a single client sale would be excessive pay - IT salesmen get far too much anyway). What's confusing me though is the judge's reported comment on SAS profits.

    Yes, paying 800k in commission would hurt their profits. So what? The margin on that contract would cover the commission anyway, and if not they didn't have to sign and agree it.

    "I can't pay you because it would reduce company profits" just doesn't sound like a valid argument.

    1. Robert Carnegie Silver badge

      Re: confused

      I think I saw the argument recently in Dilbert, but it may have been an older one.

    2. Dave314159ggggdffsdds Silver badge

      Re: confused

      I think the argument is 'it's obviously not the meaning of a contract to pay someone that much for sales when your profits on the business they brought in aren't that high'. It's a reasonable principle in general - imagine a corner shop and a typo leading to a contract saying someone gets £100k a year instead of £10k; anyone can see that's a mistake. It wasn't a big factor here.

  9. Anonymous Coward
    Anonymous Coward

    "The judge also ruled that because Hanson's commission was payable as a lump sum, forcing SAS to pay him the £800k in one go would harm the company's profit margins"

    "There is nothing irrational or perverse in a commercial concern wishing to maximise its profits,"

    So to paraphrase the judge: "A company can screw someone over so their profits look better."

    Last I knew profits were determined after paying out your costs, i.e. what you agreed to pay someone (ignoring clause 6h)

    Seems to me like the judge has some bias going on here which could lead to their ruling on 6h being a proper term. Especially praising SAS's wisdom.

    1. batfink Silver badge

      "There is nothing irrational or perverse in a commercial concern wishing to maximise its profits"

      Ah, the old slavery argument...

  10. Why Not?

    Well let's hope the customer demands an 800K discount because the cost of the contract has fallen.

    I hope future SAS employees become aware of this and ask about it.

  11. anothercynic Silver badge

    Albeit legal for the company...

    ... It was a dick move. They could have negotiated a deal with the guy to pay the commission in instalments, instead they cut it in half, and then to a third of the original commission.

    To be fair to the judge, he has to consider the merits, the legalese in the guy's employment contract and T&Cs, and that's it. And the terms said "beyond 300% needs to be approved" (I paraphrase). If the approval was not granted, you take the 300% and move on. If you didn't read your T&Cs, more fool you.

    Life sucks. And sometimes it throws you lemons like this one to suck on.

  12. Roland6 Silver badge

    Looks like mistakes were made

    Para 26 a. "That there was a 300% cap"

    That isn't what clause 6(h) of its Sales Compensation Plan says. It merely gives a cap on what can be paid out without review and authorisation from specific members of senior management.

    The only question is about the intent of "subject to review and approval" in clause 6(h). ie. does it permit the reduction of commission due, at the whim of the senior management or does it permit payment to be linked to future performance etc.

    Interestingly, para 49 discusses whether "reasonability and fairness" could be applied to clause 6(h) and the judge decides it can't!

    Reading the judgement, it does seem the defendant didn't do themselves a service by not clearly presenting their case and the reasoned grounds for their complaint.

    It also doesn't paint the judge in a particularly good light, who in several places makes, in my opinion, basic mistakes eg. treating the 300% as a cap on payment and then siding with the employer - it is irrelevant that the deal was over 5 years (para 69(e) ), the presumption the Tribunal makes is based on conjecture and not either the Sales Compensation Plan (ie. there is no reference to the SCP and thus it is reasonable to conclude it is not mentioned.) or on a offer made to the salesman to pay commission over 300% in installments over the life of the contract...

    Takeaway: if going to tribunal, get your ducks in a row and carefully prepare your case.

    1. anothercynic Silver badge

      Re: Looks like mistakes were made

      Ideally, get a legal bod to set out your case before you rush off.

      1. Ben Tasker Silver badge

        Re: Looks like mistakes were made

        He who represents himself often has a fool for a client.

        Legal bods are expensive, but they're also objective in a way you simply can't be when it affects you. The bare minimum should always be getting them to review what you've put together and help you refine it.

    2. Dave314159ggggdffsdds Silver badge

      Re: Looks like mistakes were made

      Honestly, reading the judgment it's fairly clear the salesman was just trying it on. And why not, for half a million quid.

    3. Jellied Eel Silver badge

      Re: Looks like mistakes were made

      ...the presumption the Tribunal makes is based on conjecture and not either the Sales Compensation Plan (ie. there is no reference to the SCP and thus it is reasonable to conclude it is not mentioned.) or on a offer made to the salesman to pay commission over 300% in installments over the life of the contract...

      There are references to the plan(s), and presumably they'd be part of the documents submitted in the case bundles from plaintiff and defence. I think the cap is kind of presumptive, ie in the absence of approvals, the 300% cap stands. It seemed like there was an offer >300%, but rejected by the sales person. It'd have been interesting to see those documents as part of the fairness test, ie the management objectives. One challenge with deals like this is they can take a sales person away from generating new business & turn them into an account manager, spending the majority of their time making sure this deal is delivered and the customer stays happy.

      Takeaway: if going to tribunal, get your ducks in a row and carefully prepare your case

      Yup. But perhaps more importantly, if you're in sales, and have a deal like this on the horizon, get your case prepared and presented, if you're busting your cap. Which is (or should be) part of sales, ie it's an inside sales job to sell your commission to the business.

      1. Roland6 Silver badge

        Re: Looks like mistakes were made

        >I think the cap is kind of presumptive, ie in the absence of approvals, the 300% cap stands.

        This is why I find the lack of discussion about the meaning of "subject to review and approval" troubling. As surely, if this was the intent the wording would be more along the lines: Commission payments over £300k will be at the discretion of the Executive Vice President and Chief Sales Officer. ie. the cap is explicit.

        I would hope the salesman's legal team have lodged an appeal to the Employment Appeal Tribunal (they have 42 days from when the written employment tribunal decision was sent to the parties). As there are many grounds on which the Judge's decision is questionable.

  13. Anonymous Coward
    Anonymous Coward

    The sales bods (or Account Managers as they prefer to be called) where I work have some funny ideas about remuneration.

    The company pays commission based on revenue, quite rightly in my opinion. You don't get your commission based on the date of the sale. You get it when the company pays for the goods. So with a one off sale you will receive your percentage of that sale when the bill is settled. Sell a five year contract and you will receive your commission monthly or quarterly when that period's bill is settled.

    There are very sound business reasons for this. Imagine a five year contract to be paid monthly. Each monthly payment would be only 1.6666666% of the total. So imagine the company pays 5% of the total in commission. It would be four months of bills before the company got a single payment from the customer of which a single penny did not go direct to the sales bod.

    Imagine further that the customer went bust before the end of the contract. Why should the salesperson have received their 5% up front? Six months in and the customer goes bust. The salesperson has received 5% of the gross and the company has also only received 5% of the gross.

    Companies who pay commission up front are beyond foolish.

    We had a new sales person who started complaining about this arrangement about three months into his employment. He threatened the company with legal action. The sales director told him "You want your commission as a lump sum? You negotiate a contract where the customer pays for the service as a lump sum."

    1. Roland6 Silver badge

      >Companies who pay commission up front are beyond foolish.

      It is interesting how many of the mobile phone/contract resellers changed their commission/cashback schemes from payment upfront to one's where commission and cashback are paid after the contract has been in effect for some months. It is clear they took a hard lesson in cashflow management.

    2. Sykowasp

      Indeed this is even better for the sales bod, assuming they makes sales a few times a year, but not all the time. It smooths out the income (which may be good for tax purposes as well, if you have good years then bad years). Some upfront payment should be negotiated into the contract though, or bonus at some early point of the contract.

      Obviously you'd want a term in the contract about cashing in upon termination/quitting the role, or otherwise ensuring the money is paid over the time.

      The downside is if your own employer goes bust, you won't have that money - on the other had the client isn't going to be paying your bust employer either, so what can you do.

      1. Robert Carnegie Silver badge

        To me the complexity of this sounds like a way to not tell salespeople what their commission actually is, and to not pay them.

        The comedy sci fi novel "Cyberbooks" parodied that in the context of book authors. The premise is that an electronic book viewer was invented (before they actually were) and will revolutionise the publishing industry, but publishing fights back. A scene completely unrelated to this plot, as far as I could tell, has a publisher's accountant being scolded by their boss because their design of a legally required statement to an author would accidentally let the author do just a little maths on some of the numbers and work out how much money the author really should be getting. So the accountant is sent back to confuse it properly. (Something like that.)

        1. Anonymous Coward
          Anonymous Coward

          heir design of a legally required statement to an author would accidentally let the author do just a little maths on some of the numbers and work out how much money the author really should be getting. So the accountant is sent back to confuse it properly.

          That future is here already: that's how every (mobile) phone company works. In case you think it's a coincidence that you van never quite compare like for like with (mobile) phone contracts, I have news for you: it very much isn't. It's deliberate and they've been doing that for literally decades.

  14. vtcodger Silver badge

    Let's try this ...

    How about we capriciously and arbitrarily hold back Judge Holmes' salary for a few years and see if his views on fair and equitable treatment are altered?

    1. Dave314159ggggdffsdds Silver badge

      Re: Let's try this ...

      He's a judge. That means he used to be a _barrister_. They'll laugh at you if you complain about waiting years to be paid; that's standard for them.

  15. boblongii

    Hands up

    Anyone that believes that SAS have a 0.135% profit margin. Does anyone anywhere really think that the $27m contract netted the company a grand total of $36,500 profit? I smell KPMG accounting processes at work here.

    1. katrinab Silver badge
      Meh

      Re: Hands up

      The contract is over 5 years, so they will book $5.4m in income per year.

  16. Empire of the Pussycat
    Pint

    Tribunal?

    "... the judge, who heard the strike-out application alone and not as part of the usual three-member panel."

    This makes it an iBunal, explains everything.

  17. Anonymous Coward
    Anonymous Coward

    Sale away

    Never trust senior management.

    Never.

  18. Ashto5

    Torn Between ...

    A sales person NOT getting a ridiculous sum

    AND

    A company reneging on promises, by using the fine print.

    Judges, seem to fail in their role these days, they are supposed to use their judgement.

    From now on I will include a clause in my employee contracts, "The company will pay you at its discretion" as the judge praised the company in inserting this type of clause.

  19. diver_dave

    See it elsewhere

    I know a diving shop owner in Lanzarote who used to sell industrial air con.

    Pulled in a deal to supply, fit, comission and a service contract for Aldi Süd in Germany.

    Management baulked at paying his comission as he would have earned more than the CEO that year.

    He, along with the entire sale team walked. He's happy now doing something he loves but is still a little bitter about it.

    1. Jellied Eel Silver badge

      Re: See it elsewhere

      Management baulked at paying his comission as he would have earned more than the CEO that year.

      Sounds like very bad management. I'd expect a good sales person to be able to earn more than the CEO. Sales generates the companies money, most of the rest of the business is just overhead.

  20. MarkElmes

    I would have just taken the 300k offered, still an obscene amount and better than nothing!

  21. Christoph

    If you're looking for a sales job, don't go to work for SAS.

    If you already work for them, don't bother going after the big contracts.

  22. AndyMulhearn

    Smells of fish then it’s probably fishy...

    So let me understand this, there was no 300% cap just referral to higher authorities at which point questions would be asked about why targets weren’t set higher. Sounds like it has more to do with embarrassment of the local management than anything else to do with the actual sale.

    Then on top of that we have the question of OTE for the salesman and his targets being set too low. The deal is worth approximately £5m per annum on a turnover of £121m so his contribution in year one on this one deal alone is around 4% of annual turnover. Not having been in a sales position myself I can’t assess how rational it is to have one person set sales targets of 4% of total revenue in a year? So what questions would be coming back about setting his targets too low? And that’s without considering contribution to annual sales rather than just revenue.

    Agree with all the other comments though, the Judge should not be considering profitability of the employer just whether the contract was complied with and if they didn’t refer to US management as stated then that should have been more of a consideration.

    1. Dave314159ggggdffsdds Silver badge

      Re: Smells of fish then it’s probably fishy...

      I get the strong impression from the case documents that the guy was a relatively low-level salesman who was handed a readymade deal to get across the line, and that he was taking the piss trying to get the full commission having been told up-front that he wouldn't.

      1. Roland6 Silver badge

        Re: Smells of fish then it’s probably fishy...

        >I get the strong impression from the case documents that the guy was a relatively low-level salesman who was handed a readymade deal to get across the line, and that he was taking the piss trying to get the full commission having been told up-front that he wouldn't.

        If that was the case, the company would have provided such evidence to show a reduced commission was agreed, however, the Tribunal record shows they didn't....

        The only defence the company mounted against paying the full commission was saving the face of UK management, nowhere did they disupt the headline commission figure, nor did they give any substantive reason for the capricious and clearly punative (ie. unreasonable) reductions. What is clear is that they convinced the judge that commission was capped at £300k to the extent that he didn't ask the company about the other salesperson who had received more (ie. he didn't ask a basic question: have you paid other salespeople more than the £300k cap.) and thus confirm that £300k wasn't a cap on monies actually paid out.

  23. FlamingDeath Silver badge

    “I like Money”

    - Frito

    Its sales, who cares, bumch of wide boys

    99% of the time

  24. arachnoid2 Bronze badge

    "Imagine further that the customer went bust before the end of the contract. Why should the salesperson have received their 5% up front? "

    It is not part of the deal with his employer that the viability of a customers company affects bonuses unless its specifically written in the contract which would seem rather strange. Yes spread the payments but be they go bust or not, the commission is payable on the signed deal not the ability of the customer to pay.

  25. Anonymous Coward
    Anonymous Coward

    As a customer I'm looking at this thinking if these lads are going to shaft their own people like that they are definitely going to bend me over a barrel. I'm out!

  26. Mike Friedman

    Whether it's legally allowed and whether the company SHOULD do something are two very different things. Sure sounds like a way to discourage your sales reps from pursuing big deals.

    Why would a sales person go out of their way to land the big sale if the company's going to nickel and dime them on the commission? It's penny wise and pound foolish.

  27. onemark03 Bronze badge

    Docking £500k commission from top SAS salesman was perfectly legal

    The salesman got screwed, no question, but might this be a case where the salesman should have consulted his own (employment) lawyer before signing the employment agreement?

  28. Johan Bastiaansen

    You worry that I make too much money.

    So I worry that you make too much money.

    Now no neither of us won't.

    Happy now?

  29. Johan Bastiaansen

    Judge Holmes wouldn't recognize "wisdom" if it bit him in the pussy.

  30. Colin Bain

    Certainly uncertain

    The judge denied saying that the clause was certainty.

    Except that the certainty is uncertain from the sales persons point of view. And proven by this case. The calculation was correct, the payment proved to be uncertain. Worth an appeal if available on the basis of logic.

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