Employer changing commission rules after earning

This is a question that comes up frequently and the answer depends on several factors, but the general legal position is reasonably clear.

Legal position:

Once commission has been earned under the terms of your contract, it becomes a debt owed to you. Your employer cannot retrospectively change the rules to reduce or remove commission you have already earned. That would amount to an unlawful deduction from wages under Part II of the Employment Rights Act 1996, and potentially a breach of contract.

The key question is always: at what point was the commission "earned"? This depends entirely on the wording of your contract, any commission scheme document, and any relevant custom and practice. Common trigger points include when a sale is made, when a contract is signed by the customer, when payment is received, or when a particular target is hit. Once whatever trigger has been met, the commission crystallises as a contractual entitlement.

Where it gets more complicated:

1. If the commission scheme expressly reserves the employer's right to amend or withdraw the scheme at any time, this may allow changes going forward, but even then it is very difficult for an employer to justify clawing back commission already earned. Courts have generally been reluctant to allow employers to rely on wide discretionary powers to defeat accrued entitlements.

2. If the scheme is described as "discretionary," the position is slightly different. A truly discretionary bonus can in principle be varied or withheld, but even here the employer must exercise its discretion rationally and in good faith. The longer and more consistently commission has been paid on the same basis, the stronger the argument that it has become a contractual entitlement through custom and practice regardless of the label.

3. If the employer is trying to change the rules for future commission, that is a different matter. They may be able to do so with reasonable notice, depending on the terms of the scheme. But if the change is significant and imposed unilaterally without agreement, it could amount to a breach of contract or, in a serious case, give rise to a constructive dismissal claim.

What to look at:

Your written contract of employment, any separate commission plan or handbook, any emails or communications about how commission is calculated, and the history of how commission has actually been paid in practice. These documents together define your entitlement.

Practical steps:

1. Gather all documents relating to your commission scheme, including your contract, any commission plan, and any recent communications from your employer about the change.

2. Work out whether the commission you believe you have earned had already crystallised under the terms of the scheme before the rule change was announced.

3. If it had, raise a written grievance with your employer making clear that you consider the commission to have been earned and that withholding or reducing it would be an unlawful deduction from wages.

4. If the employer refuses to pay, you have the option of bringing a claim in the employment tribunal for unlawful deduction from wages under section 13 of the Employment Rights Act 1996. The time limit is three months less one day from the date the deduction was made or, if there is a series of deductions, from the last one.

5. Alternatively, or in addition, you could bring a breach of contract claim, either in the county court or, if your employment has ended, in the employment tribunal.

The strength of your position depends heavily on the precise wording of the scheme and the facts, but as a general principle, earned commission is your money. An employer cannot rewrite history to avoid paying what is owed.

If you can share the relevant wording from your contract or commission scheme, I can give you a much more specific view of where you stand.