Can commission count towards minimum wage?

[OldLadyKnowsNothing]

DS (aged 23) is about to start a new job, in sales. He was told that his basic salary is £12k and that he'd be expected to sell 3 - 4 items a week, with commission of £40 on each sale. No mention of hours was made, but we did the sums and figured he'd be doing about 37.5, as that number fits with the £12k and minimum wage.

However, he has just discovered that he's expected to be in work 60 hours a week and he has to sell 3 - 4 items a week (3 one week, 4 the other) just to earn minimum wage for each of those 60 hours.

Can this be right?

I am not sure legally, but if ds has accepted the job on that basis then he has accepted it, also if you get 12k a year but have no set hours does it work both ways, ( if he acheives targets on 12 hrs a week he doesn't have to work any more hours?)

I'm not sure if he's signed anything yet. But no, it was made quite clear that he's to be in the workplace 60 hours a week, no matter how many items he sells; the 3 - 4 is a minimum target, I imagine that if he falls below that they'll just let him go. But then he won't have received NMW, so...

It's such a shame, he was so excited. He has a wee boy he'll hardly get to see. :(

Yes, I think it does count suggests on a month to month basis (or weekly if thats what hes paid) he needs to average NMW.

Have a look at working hours tho -think there is a 48 hr max???

Might be worth accepting, and keeping looking for something else - its easier to get a job when you have a job.

Britain has opted out of the working time directive so if employee agrees they can be worked for however long the employer wants.

Thanks for that nextphase, so they can do it. :( He'll take the job anyway, he resigned from the (5 hours a week contract) previous one and needs the money. And yes, you can "choose" to opt-out of the maximum working time agreement, I had to chose to do that years back as an agency worker. They can work you into the ground.

On the plus side, if he hits his targets or more, he'll be earning decent money and have no time or energy to spend it.

Hi

Yes it does count and the rules are a little complicated. You need to watch that they don't do double counting. If he is paid monthly as nextphase says he has to earn the the NMW as an average over that month. He might however not get paid that money that month. So if he earned commission just before pay day (say pay day is today) that would count for that period but get paid next month. Of course the money that is then paid next month from the June commission does not count towards NMW for July. Hence he needs to watch they do not double count.

Thanks, honestpoint, I'll warn him to watch out for that, but I think they're an "honest" company, iykwim? It's not a fly-by-night operation, they've been around for about 15 years so I'd hope they have that sort of thing sorted out. Then again...

Will he have to make extra sales to cover his holidays, do you think? It seems awfully complicated.

I don't think it is legal tbh. I work in target based sales and receive min wage with the possibility of a bonus by competing against other sales people. Trust me, if the company I work for could get away with it any other way, they would!!!

There was an outcry in London a couple of years ago where my local restaurants had to stop seeing tips as part of the minimum wage. I get your son to check this situation out.

Sadly, the link nextphase provided shows it is legal; we both (ds and I) thought it was the same set-up you have, but no. You're right about tips, though, not really sure why they're different but hey ho.

I think Fackinell that most employers pay at least NMW plus commission is that it is easy to get it wrong and not pay NMW.

OldLaday the difference is that the Court of Appeal in Annabels (Berkeley Square) Ltd v Revenue and Customs Comrs [2009] EWCA Civ361 (www.bailii.org/ew/cases/EWCA/Civ/2009/361.html) held that service charge paid by the customer to an employer but then given to a troncmaster for independent distribution under the tronc system was not 'paid by the employer' and so did not count towards the employer's NMW obligation. Clearly commission is paid by the Employer so counts.

In terms of holidays no he will not have to make extra sales. Of course if he has a really good two weeks of commission at the beginning of the month (or pay period) it may cover him but if not they still have to pay NMW.

I should add it is Reg 30 of the NMW Regs 1999 that allow the payment of commission towards NMW to be legal.

"The total of remuneration in a pay reference period shall be calculated by adding together?

(a) all money payments paid by the employer to the worker in the pay reference period;

(b) any money payments paid by the employer to the worker in the following pay reference period in respect of the pay reference period (whether in respect of work or not);"

Thanks, honestpoint, that's really clear. Let's hope he's a good salesman!

most welcome my lady and I am sure he will be!