In common with many families this year, my youngest son left university and started looking for work. He was amazed to get an interview quite rapidly. After a day’s assessment he was offered a job on a commission-only basis.
The job involved four hours a day ‘administration’, when no commission could be earned. There was no guaranteed minimum for pay, and most of the employees he spoke to worked 13 hour days six days a week. He turned the job down, but lots of people were working there.
Young workers who do not have employment law specialists as their parents don’t always know what their legal entitlements are. But when it comes to commission work, here is how it goes.
1) Whatever the rate of commission, pay must not fall below National Minimum wage for the hours worked (eg there is always a ‘floor’)
2) If you are over 21 the minimum hourly rate is £6.31. It will go up in October 2013. For other rates click here:
3) Wages are calculated within a reference period – normally the pay interval, which would usually be weekly or monthly.
4) All the hours you are at work (except when on breaks away from work and the workplace) are part of the calculation – if you are in a telephone bank and ‘on call’, it is not just the time you spend on the phone that counts, but all the time you are sitting there waiting to answer a phone.
5) If you work in an office to do your commission based work, you are on a ‘time base’ – click here for how to calculate your hourly rates on line.
6) You take the number of hours worked (so it is important to keep a proper record) and the commission earned, and divide the hours into the commission to get the hourly rate. For example for a weekly paid worker:
Commission £80/Hours worked: 40 hours this week = Hourly rate £2 per hour
7) The fact you agreed to a lower rate, or signed a contract, or didn’t get one is not relevant to your entitlement to minimum wage – if you are an employee or a worker (eg not running your own business but working for them) then this entitlement exists. If they tell you are self-employed this doesn’t change anything.
8) If you have been underpaid National Minimum Wage, you can get back pay for up to three years to bring you up to the right rate. You can get free help from the Workers Rights helpline 0800 917 2368, who specialise in this area.
9) You can make an anonymous complaint online to HMRC –your boss does not have to know it was you who complained click here for the form to start things off
So if you are offered a commission-only job ask your employer:
- What is the period of calculation for commissions (eg weekly, monthly, quarterly, annually)
- What is the pay period (weekly, monthly)
- What happens if for some reason my commission falls below minimum wage
You need to keep proper records from the start of:
- How many hours you worked
- How much you were paid
- Any advances against commission (they do not count towards minimum wage)
- Keep copies of the advertisement, job offer letter, contract – don’t lose them
And you need to check your payslip and commission statements to make sure your gross pay (before tax and national insurance) tallies with your records. We spend a lot of time getting commission for workers who have simply not been paid it.
While some employers do make mistakes, and there is the odd one who really doesn’t understand minimum wage, in the main employers who do not honour minimum wage or pay the proper amount of commission are not for the long term. You should be job hunting for something better.
If you are boss reading this, then you can find some proper Commission Only contracts that take account of minimum wage (and statutory holiday and more) click here.
We run regular free dial in sessions on Commission based workers/employees and their rights. They are one hour by phone. To find the next free event click here
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Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060 Website : www.irenicon.co.uk
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