The claimant, a salesperson, worked for the respondent on a commission only basis: he was not paid a salary. The commission he received was paid in 2 tranches: one payment upon placing of an order by the client and the second after the payment of the invoice. There was a time lag between the 2 payments, which meant that the effects on commission payments were not felt until several months after the work of securing the order had been done. The claimant left the employment of the respondent and lost his claims of unfair dismissal and breach of contract. The ET also dismissed his claim for unpaid commission after the termination of his employment which is the subject of this appeal. The issue before the ET was whether the claimant was entitled, by way of commission, to receive payment for work which he had undertaken and orders which he had obtained prior to the termination of his employment. They looked carefully at the contract of employment, and found that, on the balance of probabilities, the claimant was given the contract, did not like what he read, that he detached the commission structure from it and signed the remainder of the contract. The significant clause in the contract stated that if the employee left the company, all outstanding commission payments would be terminated. The ET found that both parts of the contract of employment were one document and binding upon the claimant, thus the claimant was bound by this clause and any outstanding commission payment at the date of his dismissal no longer fell to be paid. The respondent conceded that a sum of over £7,000 would have been due to be paid had the claimant not been bound by this clause. The claimant appealed.

The claimant argued that the respondent, on a number of occasions, the most important of which was the ET3, conceded that it owed him the sum of £7,000 and that the ET had misunderstood or ignored that concession. The EAT rejected this argument and said that the ET had properly considered all the relevant issues and was entitled to reach the decision it did.

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Appeal No UKEAT/0239/10/JOJ

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 25 November 2010

Before

HIS HONOUR JUDGE BIRTLES

MS B SWITZER

MR B WARMAN

MR M BRILL (APPELLANT)

INTERACTIVE BUSINESS COMMUNICATIONS LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR M BRILL (The Appellant in Person)

For the Respondent
MR L WILSON (of Counsel)
Instructed by:
Messrs Curwens LLP Solicitors
Crossfield House
Gladbeck Way
Enfield
EN2 7HT

CONTRACT OF EMPLOYMENT – Damages for breach of contract

Appeal on the construction of the Claimant's contract of employment in relation to the payment of commission arising before termination. Held on a proper construction of the contract of employment that such commissions were not payable after termination. The Employment Tribunal had properly considered all relevant issues and was entitled to reach the decision it did. Appeal dismissed.

1. This is an appeal from an Employment Tribunal sitting at Watford on 12-14 January 2009. The appeal has a chequered history; suffice it to say this appeal is concerned now only with one issue. That is the effect of the order made by Slade J on 6 May 2010. Paragraph 2 of the order made by Slade J says this:

"This appeal be set down for a full hearing solely on the 'Claimant's commission' ground of appeal (Ground 3) contained in the Fresh Notice of Appeal dated 25 June 2009."

1. The Fresh Notice of Appeal is so-called because there was an original Notice of Appeal, the Fresh Notice of Appeal, then after the hearing before Slade J, a Re-Amended Notice of Appeal. However, it is paragraph 3 of the Fresh Notice of Appeal which is the relevant one in front of us. That says this:

"Ground 3 - the Claimant's commission

9. In the ET3 the Respondent accepted that it owed the Appellant £7,052.98 together with 9 weeks' notice pay. In the Respondent's opening skeleton submissions it is set out at paragraph 13 that

'As regards the period prior to termination, the issue is between a sum of £7,052.98 as contended by the Respondent and £7,550.68 as contended by the Claimant.'

10. It did not state that the issue was that the commission was not due to the Appellant.

11. The Appellant's skeleton argument also set out that the Respondent 'conceded' that the Appellant was owed £7,052.98. Further, within the skeleton, reference was made to all the other times that this was conceded. Notwithstanding this, and contrary to the above, the Tribunal found that the Appellant was not entitled to any compensation.

12. At paragraph 6.15 the Tribunal concluded that the Appellant was bound by the term in the contract which it was accepted by the Appellant had never been signed and the effect of which was contrary to the Appellant's witnesses. The Tribunal did so without any reference to the concession or basis on which it was entitled to go behind that concession. Again, in so doing the Tribunal fundamentally erred.

13. The only signed document was the commission document which set out that commission was due to the Appellant on completion of all sales. Further, this was confirmed by the above listed witnesses, who were denied the right to give evidence."

1. There is a paragraph 14 but it is agreed I think by both parties, and certainly this Tribunal finds, it is not relevant. Indeed paragraphs 12 and 13 of Ground 3 in the Fresh Grounds of Appeal are also not material because the Tribunal found as a matter of fact and law that both parts of the contract of employment which were in the bundle before it and indeed are in our bundle were one document and binding upon the Appellant. There is no ground of appeal extant before us against that finding. The sole issue is to the amount of commission owing, if any.

1. Today Mr Melvyn Brill has represented himself; he was the Claimant below and the Appellant here. At the hearing before the Employment Tribunal he was represented by Mr Duncan Kennedy from the Free Representation Unit. Mr Lachlan Wilson appears for the Respondent here; he appeared for the Respondent below. We are grateful to both of them for their cogent submissions.

1. The Employment Tribunal dismissed all of the claims which were brought before it. They were for (1) unfair dismissal; (2) breach of contract of employment by dismissal without notice; (3) the claim for unauthorised deductions for wages by not paying Mr Brill commission after the termination of his employment; (3) in addition there was a Respondent's counter-claim which was also dismissed.

1. I take these from the judgment of the Employment Tribunal only insofar as they are relevant to the sole issue before us. I emphasise that we do not have any of the Employment Judge's notes of evidence or indeed of submissions. They have not been requested and are not before us. We are not prepared to speculate about submissions that were or were not made before the Tribunal. The relevant paragraphs of the Employment Tribunal judgment on this issue of commission seem to us to be the following: paragraphs 3.10 and 3.11.

"3.10 What was the Claimant entitled to by way of commission from work which he had undertaken and orders which he had obtained prior to the termination of his employment.

3.11 What did he receive."

1. Those are the two relevant issues. Normally and we have no reason to believe otherwise – in this case those issues are decided by the Tribunal at the beginning of a hearing after hearing any submissions made by the representatives.

1. In paragraph 4.4 the Tribunal deal with an earlier contract of employment. In paragraph 4.5 it set out the commission structure and in 4.6 say this:

"4.6 The commission system operated on the following basis. When a client places an order a preliminary commission called the 'pop' becomes payable on the publication of each of the issues booked by the client. Again there is a disagreement as to whether this was in the sum of 12% as the Claimant argues or 10% as the Respondents say. It is common ground that the balance of the commission becomes payable when the client settles the invoice.

4.7 It is, therefore, inherent in this scheme that commissions payable to sales persons like Mr Brill have certain characteristics. The first is that the amount of commission grows year on year as the number of clients will provide repeat business which continues to count for commission. The second is that there will be a time lag for a payment of the first part of commission payments which are effectively staggered over the period of the advertising campaign. The third is that the second part of the commission payment, the balance, is also unpredictable and often delayed with the settlement of invoices. Thus, as the Respondents have it, the effects on commission payments are not felt until several months after the work of securing the order is done."

1. In the next section of its findings of fact the Tribunal deal with the contractual documents in this case. There was quite clearly a conflict between the Claimant on the one hand and the Respondent on the other as to what the true contractual terms were and indeed whether there was a term in Mr Brill's contract of employment that stopped the payment of any commission payments after the employment was terminated. We note that Mr Brill was not paid a salary but his income was entirely derived from commission.

1. Having considered the matter at length in paragraphs 4.8 through to 4.18, the Tribunal came to this conclusion at paragraph 4.18:

"Having regard to the assessment of that evidence, the Tribunal also considered the following to be material in determining what happened in relation to the document purporting to be the Claimant's contract. The contract documents are a whole, they refer to something being attached to the first three pages - a separate agreement regarding commission. Significantly, the Claimant admitted that he had been presented at some time with a document containing a contract which he did not like and that it was a contract of a length not dissimilar to that now produced. The space provided for signature suggests that it is one document comprised in two parts. The Tribunal therefore found on the balance of probabilities that Mr Brill was given this contract, he did not like what he read, he detached the commission structure from it and handed that back and retained the remainder of the contract document."

1. That is relevant because the contract of employment in the EAT bundle for Mr Brill is at pages 90-94. Clause 15 of the contract of employment at page 92 says this:

"15. Employment Termination

If you decide to leave the company or you are dismissed, all outstanding commission payments will be terminated."

The effect of the Tribunal's finding that Mr Brill signed the whole of the contract at pages 90-94 is that he is bound by Clause 15, and it follows that any outstanding commission payments at the date of his dismissal no longer fall to be paid. The Tribunal's factual finding on the commission payments is at paragraph 4.57. It says this:

"4.57 In the pleadings the Claimant referred to a number of accounts that he said were secured by him in respect of which he has not received commission or not received the full commission due. He repeated that assertion in his evidence but did not refer to particular invoices or records to show what amounts were due or had been received from those clients, nor did he produce records of what commissions had not been included in his salary payments. The Respondents acknowledged that payments made in May and June represented commissions due up to the date of termination and conceded that the sum of £7,052.98 was the amount that would have been due to the Claimant had he been entitled to be paid commissions generated by his work before he left but which did not actually fall to be paid until after the dismissal but which fell foul of the clause in the Claimant's contract to the effect that the Claimant's commissions were not payable after termination."

1. The Employment Tribunal go on to set out the law relating to unfair dismissal and its conclusions begin at paragraph 6 of its judgment. Its conclusion in respect of the contractual situation is set out at paragraphs 6.1 to 6.3. It finds as I have indicated that Mr Brill was bound by the contract of employment which is contained in the appeal bundle at pages 90-94. At paragraph 6.15 the Tribunal reach its conclusion on commissions. It says this:

"6.15 In relation to the claim for payment for commissions for orders taken prior to the Claimant's termination the contract of employment is very clear and says that his entitlement to these commissions terminates if he is dismissed or leaves the Respondent's employment. The Claimant is bound by that term and therefore is not entitled to be paid for commissions once he is dismissed or leaves the Respondent's employment. That claim also fails."

1. The judgment of the Tribunal is elaborated in a letter to the EAT dated 14 September (EAT bundle page 144). The letter is written on behalf of Mr G Pettigrew who was the Employment Judge chairing the panel that heard this case. It says this:

"Dear Sir or Madam

I refer to your letter of 26 August to Messrs Duncan Lewis and Co. Solicitors for the appellant and in particular the question posed at page 2 of that letter.

Employment Judge Pettigrew has considered this question and answers as follows:-

At the outset of the hearing it was agreed with the parties what the issues were for determination by the tribunal and this included, in relation to commission, the question of what the claimant was entitled to as set out in paragraph 3.10 of the judgment.

The tribunal did not specifically consider the concession made by the respondents in the ET3 but instead considered the claimant's skeleton argument which at paragraph 9 says:

*

"Within the respondent's form ET3 response it is conceded that the claimant is owed wages. However, the amount of wages owed is a point of contention. The respondents concede that they owe the claimant £7,052.98. However, they state that the commission for work which reached fruition after the claimant's termination of employment is not owed to the claimant in accordance with Clause 15 of the claimant's contract of employment."*

At 4.57 of the judgment the concession of £7,052.98 is referred to and that question is dealt with at paragraph 6.15 of the judgment."

1. I have already referred to the Notice of Appeal and the relevant part being section 3. A Re-Amended Notice of Appeal was filed following the hearing before Slade J. Paragraph 4 of that order makes provision for a Re-Amended Notice of Appeal. The Re-Amended Notice of Appeal appears in the EAT bundle at pages 14a to 14e.

1. This morning as I have said, Mr Brill represents himself. He relies on the Re-Amended Notice of Appeal. He has provided us with a skeleton argument and he has made oral submissions. In essence his submission is that there were on a number of occasions, of which the most important is probably the form ET3, where the Respondent conceded that it owed the sum of £7,000-odd to him and the Employment Tribunal has misunderstood or ignored that concession. The Respondent's submission made by Mr Lachlan Wilson in his skeleton argument and in his oral submissions this morning is that in fact there was a mistake by the solicitor drafting the ET3 but there are other passages in the ET3 which indicate clearly what the Respondent's position was, which was that there was a valid written contract of employment signed by Mr Brill, and Clause 15 prevented Mr Brill recovering anything. He refers us in particular to the ET3 at EAT bundle page 74; the Respondent's Further and Better Particulars at page 79; the letter from Curwens Solicitors acting for the Respondent at page 102; and the witness statement of Mr Dean Berry for the Respondent at paragraph 56, page 122. These he say make it quite clear that the concession was a concession which was in effect conditional upon Mr Brill not being bound by Clause 15 of the contract of employment.

1. We agree with Mr Wilson. The Employment Tribunal found that the relevant contractual provision applicable to Mr Brill was the contract at pages 90-94 of the EAT bundle dated 16 June 2004. That decision is not open to challenge before us today as a result of the order made by Slade J. It follows it must be applied to the facts of this case and the Tribunal was correct to make the finding that it did. The Employment Tribunal's conclusion in relation to commission was as I have said at paragraph 4.57, which I have already read and do not propose to repeat. In his submissions this morning, Mr Brill sought to show us by reference to documents in the EAT bundle that some of the invoices could only possibly have referred to commissions which he was due before his employment was terminated. It is not open to us on an appeal to go back through the evidence which was or should have been put before the Tribunal. Mr Wilson drew our attention to what the Tribunal said in paragraph 4.57. It said this:

"He [Mr Brill] repeated that assertion [that he had not received commission] in his evidence but did not refer to particular invoices or records to show what amounts were due or had been received from those clients, nor did he produce records of what commissions had not been included in his salary payments."

1. In the light of that finding and in the absence of any notes of evidence, we are bound by it. The Tribunal is quite clearly saying there that it was not persuaded by what Mr Brill said in his oral evidence that he was owed any part of that sum of £7,052.98 prior to his dismissal.

1. In our judgment the way the Employment Tribunal approached this case on the material heard was correct. As is clear from the letter from the Employment Judge, dated 14 September (EAT bundle page 144), there clearly was a dispute which opened up as the case progressed and it was a live dispute at the end of the hearing. The issue was whether any part of the sum owing of £7,052.98 was owing once Mr Brill had been dismissed. That is the effect of Clause 15 of the contract of employment. The Tribunal's findings of fact were quite clearly that it was not persuaded that any part of that sum of £7,052.98 was due and owing. It was not persuaded by the evidence that was put in front of it or to which its attention was drawn. In our judgment there was quite clearly a live issue throughout the case and right through to the end; it was a live issue which the Tribunal had to deal with.

1. We say this about pleadings. While pleadings are important in an Employment Tribunal in giving the parties a clear understanding of what the issues are before it, and it might in the circumstances of this case have been better if the Respondent had applied to amend any particular passage in its form ET3 which it felt was either unclear or inaccurate. The fact of the matter is that the Employment Tribunal correctly identified the issues in relation to commission which were before it at the beginning of the hearing (paragraphs 3.10-11); went on to consider the contractual provisions (and of course if Mr Brill had been right Clause 15 would not have applied to him in any event); considered the evidence in respect of the assertion that some or all of these payments were due prior to his dismissal and found against him on that fact. It seems to us that those were the real issues before the Tribunal in this case and this Employment Tribunal went through each of those issues in turn and dealt with them. Whether another Tribunal would have made the same findings or not is immaterial.

1. Although not specifically pleaded we want to make it quite clear that this was not a perverse conclusion on the evidence. This case does not begin to reach the high hurdle raised by Yeboah v Crofton [2002] IRLR 324. We add that, although as we have made clear, an allegation of perversity is not in fact strictly speaking before us.

1. For those reasons the appeal will be dismissed.