Commission threshold raised to counter wage increase?

[Turkish91]

I’m pretty sure I know the answer to this however I thought I’d seek some advice on here.

Mrs Turkish91 works for a large, UK chain that sell kitchens. She’s paid near enough minimum wage but most of her earnings are down to commission, as per most retail/sales roles.

Last April, alongside an essentially forced payrise due to the minimum wage increase, they increased the commission threshold (as in they have to sell this amount of kitchens for the company first before they earn any commission, minus VAT as well) from £12.5k to £17k. At the time I did the maths and worked out that if someone sold £25k of kitchens in a month or £100k worth, the employee was always about £40pm worse off than before. So essentially, a pay cut rather than a pay rise

This April, they’ve done it again… Now from £17k to £22k! Haven’t done the maths yet but guessing as it’s another £5k-ish increase it’s going to be another £40 or so.

My question is, have any employment laws been broken? I’d guess not as the company in question is huge, and pretty savvy… I’d be really surprised if they had. Morally however… what a way to inspire your workforce!

[Pieman68]

As a rule (in my experience) commission tends to be discretionary rather than contractual - first port of call would be to check wording in their contract

[deja.vu]

Pieman68 said:

As a rule (in my experience) commission tends to be discretionary rather than contractual - first port of call would be to check wording in their contract

Not exactly.
The commission plan will be contractual however the goal sheet isn’t.
Goals are set for a period (monthly, quarter, annually etc), that goal will vary and the amount wont be contractual.
My goal’s up 32% this year.

[darreni]

Sales targets always increase year on year, it’s no surprise.

[vaud]

darreni said:

Sales targets always increase year on year, it’s no surprise.

Pretty big rise though... and in a squeezed economy.

[deja.vu]

vaud said:

darreni said:

Sales targets always increase year on year, it’s no surprise.

Pretty big rise though... and in a squeezed economy.

However, does it break any laws?

[Sy1441]

deja.vu said:

Not exactly.
The commission plan will be contractual however the goal sheet isn’t.
Goals are set for a period (monthly, quarter, annually etc), that goal will vary and the amount wont be contractual.
My goal’s up 32% this year.

Disagree. Have worked in retail sales for 15 years and own a large franchise currently. I've never seen a contractual commission scheme in all my time in the sector.

It's a strange ploy making people worse off, something I just wouldn't do but it could well be the finances of the company necessitate it with the increase to the basic pay. For example our utilities costs have increased by 400% and payroll by 11% within the last year on the same revenue, other businesses may not be able to absorb this cost so need to rationalise costs. You can either reduce headcount or earnings in an attempt to increase "productivity" unless increasing revenue is possible.

Edited by Sy1441 on Thursday 27th April 08:41

Edited by Sy1441 on Thursday 27th April 08:42

[deja.vu]

Sy1441 said:

deja.vu said:

Not exactly.
The commission plan will be contractual however the goal sheet isn’t.
Goals are set for a period (monthly, quarter, annually etc), that goal will vary and the amount wont be contractual.
My goal’s up 32% this year.

Disagree. Have worked in retail sales for 15 years and own a large franchise currently. I've never seen a contractual commission scheme in all my time in the sector.

It's a strange ploy making people worse off, something I just wouldn't do but it could well be the finances of the company necessitate it with the increase to the basic pay. For example our utilities costs have increased by 400% and payroll by 11% within the last year on the same revenue, other businesses may not be able to absorb this cost so need to rationalise costs. You can either reduce headcount or earnings in an attempt to increase "productivity" unless increasing revenue is possible.

Edited by Sy1441 on Thursday 27th April 08:41

Edited by Sy1441 on Thursday 27th April 08:42

Other experiences may vary.
I guess only the OP can say what is in his wife's contract and what isn't.

In large business, putting up sales targets is pretty common.

[IJWS15]

How much have the companies list prices risen in the same period?

i.e. does she have to sell more units to achieve the bonus?

[blue_haddock]

IJWS15 said:

How much have the companies list prices risen in the same period?

i.e. does she have to sell more units to achieve the bonus?

Thats a good point, if the average kitchen used to be 10K but a like for like kitchen has now risen to £12.5k its not really a rise in target just realigning to the new costs.

If the average value had risen but targets stayed the same it could be argued that the target had been reduced.

[Turkish91]

blue_haddock said:

IJWS15 said:

How much have the companies list prices risen in the same period?

i.e. does she have to sell more units to achieve the bonus?

Thats a good point, if the average kitchen used to be 10K but a like for like kitchen has now risen to £12.5k its not really a rise in target just realigning to the new costs.

If the average value had risen but targets stayed the same it could be argued that the target had been reduced.

I agree totallly, they have gone up but not to the same tune as this commission rise. I would guess that a £10k kitchen in early 2021 is now £13 or £14k today.