Minimum wage with commission. Over how long it is
Discussion
Talking with one my team yesterday, her son is having a problem related to the minimum wage, and I wasn't sure of the law.
He started work 12 months ago working as a trainee estate agent (yes, I know...). He is now 22 and this was his first "proper" job since graduating.
The remuneration was a combination of very low basic salary plus commission. The company would specify each week the number of hours they needed him in the office. One week it might 0900 to 1900, 6 days a week. Another week it might be a normal 37 hour week.
The promised "OTE" was implied to be quite high. In reality he has actually been earning around the minimum wage, which is where the problem comes in...
In any given month, the company calculate his hours worked and, if his earnings, including commission, is below the minimum wage, he receives a top up in his pay check.
However, if in the following month he receives a bit more commission that takes him over the equivalent of the minimum wage for that month, the company than claw back the top up he received from the previous month.
So, averaged say over a 3 month period, he ends up earning the minimum wage. But he isn't able to get above the minimum wage in practise with his commission as, if he has a "good month", he just has to repay the top up money he received previously.
Personally, I think it is a shoddy way of employing somebody, but regardless of my own opinion, I'm wondering if their approach is legal?
He started work 12 months ago working as a trainee estate agent (yes, I know...). He is now 22 and this was his first "proper" job since graduating.
The remuneration was a combination of very low basic salary plus commission. The company would specify each week the number of hours they needed him in the office. One week it might 0900 to 1900, 6 days a week. Another week it might be a normal 37 hour week.
The promised "OTE" was implied to be quite high. In reality he has actually been earning around the minimum wage, which is where the problem comes in...
In any given month, the company calculate his hours worked and, if his earnings, including commission, is below the minimum wage, he receives a top up in his pay check.
However, if in the following month he receives a bit more commission that takes him over the equivalent of the minimum wage for that month, the company than claw back the top up he received from the previous month.
So, averaged say over a 3 month period, he ends up earning the minimum wage. But he isn't able to get above the minimum wage in practise with his commission as, if he has a "good month", he just has to repay the top up money he received previously.
Personally, I think it is a shoddy way of employing somebody, but regardless of my own opinion, I'm wondering if their approach is legal?
regardless if its legal or not it sounds like a s
t arrangement, if he doesn't love it he should go and do something else. forcing them to pay a few quid more wont do much to change what sounds like a toxic employer, they will just find an alternative way to shaft him.
really it is all the fault of the people who work under abusive conditions, if people plod on under abusive conditions and dont leave the employer will never change, if enough people leave to affect the business they will soon change.
t arrangement, if he doesn't love it he should go and do something else. forcing them to pay a few quid more wont do much to change what sounds like a toxic employer, they will just find an alternative way to shaft him.really it is all the fault of the people who work under abusive conditions, if people plod on under abusive conditions and dont leave the employer will never change, if enough people leave to affect the business they will soon change.
OldGermanHeaps said:
regardless if its legal or not it sounds like a st arrangement, if he doesn't love it he should go and do something else. forcing them to pay a few quid more wont do much to change what sounds like a toxic employer, they will just find an alternative way to shaft him.
really it is all the fault of the people who work under abusive conditions, if people plod on under abusive conditions and dont leave the employer will never change, if enough people leave to affect the business they will soon change.
I quite agree. If it were one of my sons, I'd be advising exactly that.t arrangement, if he doesn't love it he should go and do something else. forcing them to pay a few quid more wont do much to change what sounds like a toxic employer, they will just find an alternative way to shaft him.really it is all the fault of the people who work under abusive conditions, if people plod on under abusive conditions and dont leave the employer will never change, if enough people leave to affect the business they will soon change.
But if it is curious problem in terms of the law; is the minimum wage based on a given week, given month, or can it be averaged out over a period of several months?
dont know how accurate this is, but here you go.
https://www.xperthr.co.uk/faq/where-sales-people-a...
regardless of a result on this matter i'd be telling him to find another job pronto. he's young hopefully with very few hard commitments, that is exactly the time to job hop until he finds something that both excites him and rewards him, he'll be a long time regretting it if he's still in a st job when he has kids a wife and a mortgage, thats when its a lot harder and a lot more stressful to switch.
once he gets a better job he could take them to a tribunal to get backpay for all the months they shafted him.
tbh i wish I fked off my first proper through the books job sooner but my parents pressured me to stick it, unpaid overtime expected 5 days a week on a £3000 salary. it was only '97 as well not as if it was the 80s.
I earned more in a weekend washing commercial vehicles back when I was 14 than I did working a full week at that job.
https://www.xperthr.co.uk/faq/where-sales-people-a...
regardless of a result on this matter i'd be telling him to find another job pronto. he's young hopefully with very few hard commitments, that is exactly the time to job hop until he finds something that both excites him and rewards him, he'll be a long time regretting it if he's still in a s
t job when he has kids a wife and a mortgage, thats when its a lot harder and a lot more stressful to switch.once he gets a better job he could take them to a tribunal to get backpay for all the months they shafted him.
tbh i wish I f
ked off my first proper through the books job sooner but my parents pressured me to stick it, unpaid overtime expected 5 days a week on a £3000 salary. it was only '97 as well not as if it was the 80s.I earned more in a weekend washing commercial vehicles back when I was 14 than I did working a full week at that job.
Edited by OldGermanHeaps on Saturday 2nd February 14:15
OldGermanHeaps said:
That's a very good link as it seems to answer the question directly.It says there is a principle of a 'pay reference period' over which a person's average pay must be at least the minimum wage. It also says the reference period cannot be longer than one calendar month. So on that basis the employer is breaking the law.
That's very helpful - I will certainly pass that on so it gets acted upon.
EddieSteadyGo said:
I'll pass your comment onto his Mum. I'm sure she would appreciate it.
Nothing wrong with either path, but if he wanted to be an estate agent why not simply do your A levels and then become a trainee ea. And if the answer is that he can’t find work, what was the point of Uni?Disclaimer: Left school at 16, didn’t do uni as i was too thick. Got a job and bought a house. I met my first Uni student at the age of 22 in the back room of the Ministry of sound, got chatting - I asked what he was studying, said something like sociology - i asked why, he said because it’s easy.
eliot said:
EddieSteadyGo said:
I'll pass your comment onto his Mum. I'm sure she would appreciate it.
Nothing wrong with either path, but if he wanted to be an estate agent why not simply do your A levels and then become a trainee ea. And if the answer is that he can’t find work, what was the point of Uni?TBH I don't like to judge, as the people involved already know this is far from an ideal job. My reason for posting was just regarding the legal position, as that could perhaps help him recover some back pay whilst he looks for a new job and tries to figure out where his skills are best utilised.
EddieSteadyGo said:
I don't know all the details, but I believe he went to uni mainly due to weight of family expectation. And I suspect he doesn't have a clear path as to what he wants to do. So taking an estate agent job and working for the minimum wage probably wasn't on his original career pathway.
TBH I don't like to judge, as the people involved already know this is far from an ideal job. My reason for posting was just regarding the legal position, as that could perhaps help him recover some back pay whilst he looks for a new job and tries to figure out where his skills are best utilised.
Fair enough.TBH I don't like to judge, as the people involved already know this is far from an ideal job. My reason for posting was just regarding the legal position, as that could perhaps help him recover some back pay whilst he looks for a new job and tries to figure out where his skills are best utilised.
Legally, NMW MUST be paid without exception of course.
Beyond that, there’s vast scope to do whatever. It must however, be clearly outlined in writing. Is he working under an employment contract? Might be worth checking it matches reality?
As others have said, I’d forget it and change job pronto.
Beyond that, there’s vast scope to do whatever. It must however, be clearly outlined in writing. Is he working under an employment contract? Might be worth checking it matches reality?
As others have said, I’d forget it and change job pronto.
My wife is an estate agent an has been for over 12 years now. It is quite normal that new starters will be on minimum wage and a decent commission structure. Bear in mind though that commission is only paid on completion of the house sale. This can take anything from 6 weeks to many, many months.
If he sticks with it the wages will increase as he gets better at his job and sells more houses. At the moment the company he is working for are doing the right thing by upping his monthly wages to ensure he is at least earning minimum wage.
If he sticks with it the wages will increase as he gets better at his job and sells more houses. At the moment the company he is working for are doing the right thing by upping his monthly wages to ensure he is at least earning minimum wage.
They appear to be breaking the law by using a longer 'pay reference period than the maximum allowed 1 month.
That exposes the company to the risk of an industrial tribunal brought by the individual, the probability of a large fine, the high chance of large number of claims for NMW back pay made by previous employees, and the reputation damage if it gets into the media.
So the employer isn't "doing the right thing" and they aren't being "more than reasonable". They are breaking the law, and the management is being negligent by exposing the company to a set of unnecessary risks.
That exposes the company to the risk of an industrial tribunal brought by the individual, the probability of a large fine, the high chance of large number of claims for NMW back pay made by previous employees, and the reputation damage if it gets into the media.
So the employer isn't "doing the right thing" and they aren't being "more than reasonable". They are breaking the law, and the management is being negligent by exposing the company to a set of unnecessary risks.
anonymous said:
[redacted]
Let's assume a simple 2 month example; Month 1 he receives no commission. So the company top up his pay to meet the NMW requirement by £300.
Month 2 he receives £300 commission. The company then claw back the £300 paid previously in month 1 to top up his wage.
Over the 2 month period he has received the NMW. But in fact his pay for 1 month was below the minimum wage and month 2 was just above it.
So the company are effectively using a longer pay reference period to average out his pay, than the 1 month which is allowable.
eliot said:
EddieSteadyGo said:
I'll pass your comment onto his Mum. I'm sure she would appreciate it.
Nothing wrong with either path, but if he wanted to be an estate agent why not simply do your A levels and then become a trainee ea. And if the answer is that he can’t find work, what was the point of Uni?Disclaimer: Left school at 16, didn’t do uni as i was too thick. Got a job and bought a house. I met my first Uni student at the age of 22 in the back room of the Ministry of sound, got chatting - I asked what he was studying, said something like sociology - i asked why, he said because it’s easy.
This can put a lot of pressure on kids to pick any course they can get into and apply to it, something of a form of academic peer pressure. It's a huge problem in my opinion.
anonymous said:
[redacted]
Just for the record, he isn't my son (wouldn't want a son of mine trying to become an estate agent 
).Nevertheless, from one perspective, you are right, he is receiving the minimum wage each month.
Except that, in month 2, the company are effectively asking him to use his commission paid in month 2 to claw back the top up received in month 1.
That clearly is extending the pay reference period to greater than 1 month, and so would be illegal.
anonymous said:
[redacted]
We'll see who is wrong. Since I originally posted I've been told the son has now resigned. His family have written a letter to the employer over the weekend advising them of their belief their employment practises are illegal and advising them they will take the matter to a tribunal unless his pay over the last 12 months is corrected. Total amount is back pay is circa £3000 for the year.So it looks like in the next few weeks we will find out how confident the company is their practises are legal.
Shady, exploitative practises by employers maybe commonplace in low pay roles, but it doesn't make them right.
l post an update once it gets decided one way of the other.
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