Case No. 09/26
THE EMPLOYMENT TRIBUNAL
BETWEEN:
Respondent:
Claimant:
Bedouin Management limited
Gary Ramsden
DECISION OF THE EMPLOYMENT TRIBUNAL
ON: 5'h February 2010
HELD AT:
Douglas
CHAIRPERSON:
Dr Sharon Roberts sitting alone
REPRESENTATION
The Claimant was not represented. The Respondent was represented by Ms Elizabeth
Grayton.
DECISION of the Tribunal on a preliminary issue
namely;
whether the wording of the Appendix to the Contract of Employment entered into by the
Claimant and Respondent on the 11th February 2008 provides that the Commission claimed
by the Claimant in the matter is payable after the 12th February 2009 when all other
contractual relations between the Claimant and Respondent had ended.
Background
1.
The Claimant commenced employment with the Respondent on the 11 'h February
2008 as an Operations Manager.
2.
The wages for the Claimant were part basic wage but mainly Commission based. In
his claim form the Claimant said that he was to receive Commission in respect of
clients introduced by him for such time as such clients were employees of the
Respondent and "the Respondent was still invoicing them through the Respondent"
3.
It should be explained that the nature of the business of the Respondent concerns
contracts pertaining to salaries.
In essence, persons (invariably those with a high
income) enter into contract with the Respondent whereby their salary from a third
party is channelled [tribunal terminology] through the Respondent and paid out to
such persons in a more tax efficient manner.
For providing such '''channelling'' the
Respondent extracts a fee from the salary. The Claimant indicated he was entitled to
a percentage (generally 2.5% and in some cases 1%) of an element of the payment
within the "channelling process" ("the Percentage").
4.
There was no dispute between the parties as to the calculations of the Percentage for
the Claimant. The dispute centres on when those payments cease to be payable to
the Claimant.
5.
The Claimant had a written Contract of Employment with the Respondent. It is dated
the
11'" February 2008 ("the Contract").
Clause 5 of the Contract states the basic salary to be £20,000 per annum ("Clause
5.1 ").
Clause 5.2 states:
"Your basic salary will be revised on an annual basis or at some other time
agreed between yourself and the Directors.
However we bring to your
attention the schedule attached to and forming part of this contract" C'Clause
5.2'')
6.
It is the aforesaid schedule \'the Schedule") which concerns us now and is the subject
of this preliminary issue.
The Schedule is dated the
7'h
February 2008 but the
Contract is dated the 11th February 2008. 1 think this was an oversight and neither
party sought to take issue with it.
7.
1 have used the term "the Contract" to refer to the main body of the Contract and
"The Schedule" to refer to the Schedule for ease of reference but this is not to be
taken as an indication that they are not part and parcel of one whole Contract.
8.
The Schedule sets out the additional financial reward that the Claimant will receive for
business he introduces or, he together with any other employee, introduces to the
Respondent. The Claimant refers to this as his Commission and henceforth it will be
referred to as such in this decision.
9.
The Schedule sets out the calculation for the CommiSSion which is qUite complicated
but does not concern the Tribunal in relation to the preliminary issue save to say that
the Commission is paid at regular intervals to the Claimant so long as the introduced
persons remain contracted to the Respondent. In other words it is not a "one off"
"introduction Commission" to the Claimant but rather an ongoing regular Commission
which continues so long as the introduced person continues the contract with the
Respondent (the issue of when the payment to the Claimant ceases is of course the
nub of the preliminary question).
10.
It is worth repeating here the Clause of the Schedule which is relevant to the
preliminary issue:
"Your reward for business introduced, which you may split with Gareth Burge
or such other party or parties as you may work with from time to time in the
future at your discretion.
Where you work with such established and
disclosed counterparties you will be paid 2.5% of gross contract value per
period after deduction of Bedouin direct costs related to the % payable
(defined below) for employees introduced to Bedouin whilst they remain
employed and paid by Bedouin Management Limited. "
11.
The Claimant argues that his Contract with the Respondent provides he is to continue
to receive Commission even after he is no longer employed by or indeed associated
with the Respondent ("The Argument of the Claimant").
He assured this Tribunal
before the commencement of this hearing that he was absolutely certain he could
prove The Argument of the Claimant solely by reference to the wording in the
Schedule and that he wishes the Tribunal to make a decision on the Argument of the
Claimant on that basis.
The Argument presented at the Preliminary Hearing
12.
The Claimant referred to Paragraph 3 of the Schedule and says it is self explanatory.
It states that the Commission continues to be paid "whilst they [the clients introduced
to the Respondent by the Claimant] remain employed and paid by Bedouin
Management Limited" ("Paragraph 3 of the Schedule"). In other words, he states, so
long as the people he introduces remain as clients of the Respondent he continues to
get the Commission. It is not linked to any requirement on the part of the Claimant to
remain in the employment or otherwise in a contracted relationship with the
Respondent. The stream of Commission only ceases when the people introduced to
the Respondent stop their Contract with the Respondent.
13.
The Respondent referred to Clauses 5.1 and 5.2 of the Contract. Strictly speaking this
falls outside the scope of this Preliminary Hearing which was to be limited to the
wording of the Schedule but the Claimant raised no objection to this which I believe
was sensible bearing in mind what is next written herein. Clause 5.2 states that the
schedule "forms part of this Contract". Additionally, the wording in the Schedule is
referred to. This states that "As well as your basic salary you will be paid an additional
amount based on the following: ....... " ("Paragraph One") which, the Respondent
argued, means that the Schedule is an indivisible part of the Contract.
Once the
Contract ends so does the arrangement contained in the Schedule. In other words,
the Commission stops when the Contract stops.
14.
The Claimant indicated that the last basic salary payment he received from the
Respondent was at the end of January 2009.
This was not disputed by the
Respondent. He said he had agreed a different relationship with Mr Powell the new
Managing Director of the Respondent thereafter that he would no longer be paid a
basic salary but would work as a Commission-only Salesman and that Mr Powell had
indicated in writing that he (Mr Powell) would honour the Commission arrangement meaning, said the Claimant, the arrangement in the Schedule.
The Decision
15.
It was agreed that the preliminary issue was to deal solely with the wording of the
Schedule and then only insofar as a decision as to the termination date for the
payment of Commission was concerned.
As stated previously, the Respondent
expanded the focus by reference to the Contract and the Claimant did not object. No
evidence was submitted at the hearing as none was required in relation to the terms
of reference aforesaid. The contents of the preceding paragraph therefore cannot be
considered and in any event are not evidence. However it makes little difference as
even if the Claimant was a Commission-only Salesman with effect from the 31 st
January 2009 that alleged variation of Contract of Employment ended on the 12th
February 2009.
16.
The issue for decision is whether Commission continued to be payable after any
contractual relationship between Claimant and Respondent ended (save for alleged
ongoing Commission payments).
17.
It is understandable how the Claimant has come to
the conclusion that the
Commission is still payable to him after the 12th February 2009 and indeed he alleges
is still continuing until the persons he introduced cease their contractual relationships
with the Respondent. The wording of the end of Paragraph 3 of the Schedule does
say that the Commission is to be so paid.
However those words must be viewed
contextually.
18.
The Schedule cannot be read in isolation.
Clause 5.2 of the Contract links the
Schedule to the Employment Contract. It says that the Schedule "forms part of this
Contract". There is nothing in the Schedule which makes the Schedule divisible from
the Contract or capable of being separated from it.
On the contrary it states at
Paragraph One as follows:
"As well as your basic salary you will be paid an additional amount based on
the following: ..... " [The Commission).
The basic salary is set out in the Contract. This is a further link between the Contract
and the Schedule.
19.
Paragraph 3 ofthe Schedule is very poorly worded. It would have been better had it
also had the following words at the end:
"and whilst you remain employed by Bedouin"
had that been the intention.
20.
No doubt the Claimant would seek to argue that the absence of those suggested
words means that the Commission does not stop when his employment stops but I
cannot agree with that. As I said Paragraph 3 is poorly worded. Had it intended that
the Commission was to continue after termination of employment one would have
expected words to that end such as:
"irrespective of whether you are employed by Bedouin"
21.
However, even if those words had been added it is questionable whether such a
clause would be enforceable ad infinitum. One might question whether there would
need to be a date when the obligation came to an end.
It may be void for
uncertainty .
22.
Paragraph 3 of the Schedule did not contain either words limiting its time span or
expanding it.
23.
Given that the Contract is inarguably linked to the Schedule at Clause 5.2 and that the
Schedule is inarguably linked to the Contract at Paragraph One and there is no
provision for severance of the Contract from the Schedule, I find that given the
Contract has come to an end so has the obligation to pay any further Commission to
the Claimant.
24.
It would be unlikely the position would be different in the event there was a further
Contract or variation of the Contract between the parties after the 31 st January 2009.
The Claimant avers his employer said it would "honour" the Commission agreement in
the Schedule, when he became Commission·based-only Salesman. As I have found
that the Commission ceases to be paid when the Contract ends - that is, the
employment relationship then, just so, absent any other eVidence, the Commission
would also cease after the Commission-only Salesman Contract ended.
Signed:
Dr Sharon Roberts - Chairperson
Date:,Q1.Fehm~":?,Qlo.",,
Sent to parties on: .........9.9...R.kru.~ .. :?-.Qf.Q•.•
Entered in Register; ..... .t?':!...
&.!:?t'Y.P.-g ...:?,R.(g ....
Clerk to the Tribunal: .. Q;'l.£~~~
.............. .