$6,000 penalty for non-payment of commission on time…

The Employment Relations Authority has upheld a claim for unjustified disadvantage brought by an employee who alleged that his commission payments were not paid.

The ERA found that no commission payments were made during the employee’s period of employment whereas they should have been paid quarterly.  The total fine which could have been imposed was $100,000 but the ERA decided that a penalty of $25,000 was appropriate.   However, it further reduced that to $6,000 because the amount of commission was small and the $25,000 penalty would have been out of proportion to the amount that was not paid on time.

In addition the ERA ordered the employer to recalculate the payment of commission because they had used an incorrect formula and to pay any unpaid balance immediately.

At the ERA hearing the employee tried to introduce a claim of unjustified dismissal claiming that he was constructively dismissed.  The ERA held that no personal grievance was raised within the 90 days and that there was no good reason to give the employee an extension to raise a grievance out of time.

If you do have a grievance you must raise it within 90 days of the instance giving rise to the grievance.  The best way to do this is in writing so that there is proof that the grievance has been raised and the grievance should state the reason for the grievance and what the employee wants done about it, such that the employer has fair notice of what the grievance is and what the employee wants.

Alan Knowsley

Employment Lawyer
Wellington