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Hi All,
I am hoping that someone may be able to offer advice as to the latest (and still confusing) explanation by HMRC as to 'discretionary' or 'non-discretionary' payments which are allowable under the CJRS.
I have been 'furloughed' since 24 March and am grateful to the Government for the 80% subsidy which helps me greatly during this period. But I have been attempting to gain clarification from our Company Accountant as to whether or not he may include my commission payments (as up to now he has refused to do so, on the basis that it is 'discretionary' in nature.
However, the way I read the latest update on 14 May, would suggest that he could do so.
My job consists of a basic salary, car allowance and commission on sales. I have received commission on a regular monthly basis for the last 3.5 years.My actual contract of employment states:
"Your annual basic salary will consist of £xx,000 plus £x,000 car allowance with ADDITIONAL COMMISSION ATTACHED"
However, the next paragraph of my Contract (under the heading of 'Commission') then states:
"We may, at our absolute discretion, from time to time operate a commission scheme and invite you to participate in it subject to the rules of the commission scheme. Participation in the Commission Scheme shall be entirely at the discretion of the (Employer) and you shall have no contractual or moral right to participate or continue to participate in it. The loss of any benefit under the Commission Scheme shall be disregarded for the purposes of calculating any claim arising out of the termination of your employment."
This clause, clearly is the 'bone of contention' and is that upon which our Accountant is basing non-payment of commission. This, despite the fact that I have continuously received commission from my very first month and 3.5 years have since lapsed.
Here is the appropriate extract from the CJRS:
Guidance for Coronavirus Job Retention Scheme
You cannot include the following when calculating wages:
payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
any tips, including those distributed through troncs
discretionary bonuses
discretionary commission payments
non-cash payments
non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay
(The following paragraph was updated on 14 May 2020 to further clarify non-discretionary payments)
Non-discretionary payments
When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee had an enforceable right.
When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.
What are your thoughts please? Do I have a contractual right for commission due to it's regular payment (i.e. implied) even though like most contracts it has the 'discretionary' clause, and if so, would it be allowable under the rules?
Any help/advice would be greatly appreciated.
I am hoping that someone may be able to offer advice as to the latest (and still confusing) explanation by HMRC as to 'discretionary' or 'non-discretionary' payments which are allowable under the CJRS.
I have been 'furloughed' since 24 March and am grateful to the Government for the 80% subsidy which helps me greatly during this period. But I have been attempting to gain clarification from our Company Accountant as to whether or not he may include my commission payments (as up to now he has refused to do so, on the basis that it is 'discretionary' in nature.
However, the way I read the latest update on 14 May, would suggest that he could do so.
My job consists of a basic salary, car allowance and commission on sales. I have received commission on a regular monthly basis for the last 3.5 years.My actual contract of employment states:
"Your annual basic salary will consist of £xx,000 plus £x,000 car allowance with ADDITIONAL COMMISSION ATTACHED"
However, the next paragraph of my Contract (under the heading of 'Commission') then states:
"We may, at our absolute discretion, from time to time operate a commission scheme and invite you to participate in it subject to the rules of the commission scheme. Participation in the Commission Scheme shall be entirely at the discretion of the (Employer) and you shall have no contractual or moral right to participate or continue to participate in it. The loss of any benefit under the Commission Scheme shall be disregarded for the purposes of calculating any claim arising out of the termination of your employment."
This clause, clearly is the 'bone of contention' and is that upon which our Accountant is basing non-payment of commission. This, despite the fact that I have continuously received commission from my very first month and 3.5 years have since lapsed.
Here is the appropriate extract from the CJRS:
Guidance for Coronavirus Job Retention Scheme
You cannot include the following when calculating wages:
payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
any tips, including those distributed through troncs
discretionary bonuses
discretionary commission payments
non-cash payments
non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay
(The following paragraph was updated on 14 May 2020 to further clarify non-discretionary payments)
Non-discretionary payments
When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee had an enforceable right.
When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.
What are your thoughts please? Do I have a contractual right for commission due to it's regular payment (i.e. implied) even though like most contracts it has the 'discretionary' clause, and if so, would it be allowable under the rules?
Any help/advice would be greatly appreciated.
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