Grievance for salesperson with commission cut
In this example, an English sales manager within an American software sales company has had his commission structure completely changed without any discussion. With the help of this grievance he managed to negotiate a very favourable exit package, and he even had a job lined up to go to. Bonus!
Copy and paste this grievance letter template onto a Word document and adapt it for use in your own UK workplace dispute. Best used if you want to leave your job with a decent settlement agreement exit package. Technically, the types of possible claims here would be breach of contract, constructive dismissal & nationality discrimination.
Ref No: TBC
IN THE [LOCATION] OFFICE
The Claimant is employed by the Respondent as manager of the sales team at the Respondent’s ‘EMEA’ (Europe, Middle East & Africa) office in London. The Respondent is a software company based in the USA.
The Claimant commenced employment in January 2010, working under a contractual commission scheme. The commission was calculated purely by reference to the performance of the Claimant’s sales team, with there being no personal target for the Claimant to hit. In breach of Section 1 Employment Rights Act 1996, the Claimant was not provided with a contract of employment, but only with an offer letter.
Unfavourable treatment and breaches of contract regarding commission
On 19 May 2011, the Claimant received an email from [name], director of the Respondent, which read
Per our discussion today, I’d like for you to provide me with your plan to hit $50K USD in new bookings by July. The way I see it the only way to even remotely get close to the number prior to the Summer months (using those months to fill the funnel for Aug) would be to have you as an individual contributor and carrying your own quota.
The rationale for doing so is as follows:
- We’re down a few salespeople (e.g. Miles’ departure and France coverage)
- Europe Summer Season is coming – need to fill the pipe fast and now
- Ramp up time for new Sales Execs will take 3-4 months
- You are a senior salesman, and know our products and train our guys. You should be able to help fill the pipe such that we have immediate results.
I’d like the following from you to help determine my final decision:
1. Your plan if we move forward with making you an individual contributor. Quota amount and how you would segment accounts between you, Maurizio, and Michael. I don’t want you taking over existing accounts/opportunities, but hunting new ones.
2. Your plan to hit the new booking targets if we keep your R&R as is. Keep in mind, we’re not going to purchase or hire any 3rd parties to build the funnel.
My current thinking is to put 50% of your commission based on individual contributions and quota of $10K USD/mo. The remaining 50% will be based on your cumulative achievement of your team (not including yourself). Unless you provide a satisfactory alternative, we’ll move forward with it effective June 1.
Thus the Respondent unilaterally restructured the Claimant’s commission as follows:-
a) The Claimant would be set a personal target of £10k MRR (‘monthly retained revenue’);
b) The Claimant would not be permitted to take existing accounts for himself regarding his new target (therefore his lead time would be 3-4 months with no commission);
c) 50% of the Claimant’s commission would be based on his personal target, the other 50% on his team’s performance;
d) The Claimant’s individual performance would not be counted towards his team’s performance;
e) The Claimant would have to find, train, mentor and shadow 3 new team members, in addition to the existing 3 team members (one of which is being dismissed totalling 5 members);
f) The individual target of the Claimant’s staff would be rasied from £7.5k MRR to £10k MRR;
g) The new team of 5 would have only 5 weeks to hit a team MRR of £10k each (rather than the usual 4 – 6 months to hit £7.5k MRR each);
h) The Claimant had previously secured a budget of £5k per month for an outsourcing company to book appointments – this would now be taken away from him;
On 27 May 2011, the Respondent unilaterally issued a document entitled ‘Commission Plan…Effective 01 May 2011”, thus backdating a commission structure, with no consultation. The new structure provides that, in addition to the above breaches, the Claimant receives 0.75% of turnover value of team revenue, which is a huge reduction on his contractual commission plan. If his existing 2 staff hit 100% of their target, he will receive $3,600 under the new plan, compared to $15,000 under the old plan.
In summary of the above, the Claimant would now be judged not only by the success of the team which he was in charge of, but he would also be given a brand new role as a salesman himself. At the same time all targets were being increased, and no allowances were being made for these changes. So in effect the Claimant is receiving a significant pay cut as well as being given an extra job to do.
Unfavourable treatment and breaches of contract regarding management
In addition to the unilateral changes to commission outlined above, the Claimant has also suffered unilateral changes in relation to his management powers, which also reduce his income even further. These changes can be split broadly into two categories: ‘strategy’ and ‘process’ changes.
The process changes have come about whereby people in the USA now make the decisions which were in the Claimant’s job description. Because they make these decision based on the paperwork rather than being on the ground at the EMEA office, they are losing business. The decisions are set out in attached document but have been in place informally for the last 3 months. Examples include:-
a) Deciding which leads to pursue;
b) Post-qualifying of leads;
c) Deciding which leads to go to trial after technical review;
d) Deciding on prospects, trialling and customers;
The strategy decision making has changed as followed:-
a) Changing the company focus to enterprise (global rather than local clients) from February 2011;
b) Not bringing in specialist enterprise salespeople, but using existing salespeople instead;
c) Not adjusting targets to allow for the increased lead time in enterprise of 6-12 months.
The above changes to the management process have severely diminished the pipeline business whereby the Claimant’s income will be reduced even further in the coming months. Not only have his targets been raised and his workload increased, but he has also been stripped of the powers necessary for him to optimise efficiency and ROI at the EMEA office. The Claimant is upset that the Respondent has decided to slowly strangle itself in this way, but he cannot stand by and allow the Respondent to take him down with it.
Discrimination based on Nationality
The Claimant has been informed that in order to get ahead in the Respondent it is necessary to be based in San Jose in the USA. This criteria applies an unfair disadvantage to British nationals, which cannot be justified in light of the location of the EMEA office being in London, England.
By June 2010, the EMEA office was outstripping the USA office in terms of new business revenue, despite having a market around 4 times smaller. In around February 2011, the Claimant’s old boss Robert Gribnau left the Respondent. Based on performance, the obvious choice to replace him was the Claimant. But the Claimant was not even interviewed for the post, which was unfairly given to a vice president (VP) in the USA, who then became VP of EMEA on top of his USA vice presidency. (There is not one VP in EMEA).
In April 2011 that VP left the Respondent, and again the Claimant was passed over regarding promotion, and again the post was awarded to a USA VP without even considering the Claimant. It is of note that the Claimant set up the EMEA office in the first place and propelled it to a winning position, and so would have been the natural choice for promotion, on a level playing field.
The Claimant claims that the Respondent has applied a criteria to job selection whereby any VP must be based in the USA. This criteria indirectly discriminates against the Respondent in respect of his nationality. In the alternative, the Respondent has directly discriminated against the Claimant on the same grounds, contrary to the Equality Act 2010.
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