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Baggott

Comment: You now have a duty to pay commission in furloughed staff’s wages

Time 1 year ago

I’ve received a steady stream of emails from salespeople since the news broke on Saturday that some dealerships are still refusing to include commission in furloughed staff’s wages.

New guidelines were issued by the government on Saturday which stated that contracted commissions, those agreed in advance with salespeople, could be included when calculating furloughed staff’s wages.

For clarification, for anyone still unclear of the rules, commissions paid to car sales staff – i.e I will pay you £X if you sell that car for £X – be those verbally or written are contracted. 

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They can – and should – be included when calculating a sales person’s furlough payment. And that’s not me just saying that, it’s the experts.

One salesman contacted me to say his dealership group ‘did not believe that was the case’, despite several motor trade accountants firms confirming it was.

Now I know cash flow is tight for many businesses, but right now we must stick by our hard working staff. 

The government furlough rules say that if someone’s basic wage means they fall under the minimum wage at 80 per cent payment then that doesn’t matter – as it’s a subsidy, not pay.

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However, that doesn’t mean it is right to let your staff live off less than the minimum wage for the next three months. 

The government will pay 80 per cent up to £2,500 a month – and it costs you as a business the National Insurance contribution. This is the country’s money NOT YOURS.

Yes, you might still have to make that person redundant in three months time, but right now that cushion of cash will help them through one of the hardest times this country has ever seen.

It is your DUTY to look after these people. You’ve heard it said many times – we are all in this together – and that means looking after each other now.

One salesman told me he wanted to question his dealership bosses’ decision not to pay commission in his furloughed wages – because their ‘legal advice’ said otherwise. However, he feared for his job if he did.

No one right now deserves to be treated like that.

When we come out of this you’ll need good staff more than ever and those treated like this will leave your business faster than you can say ‘coronavirus’. 

And I don’t blame them.

I asked Mike Jones, chairman of the accounts firm ASE Global, what employees can do if their dealership decides to hold back commission from their furloughed payments.

He told me it was a ‘tricky one’. Despite the fact he, and many others experts, think it is safe for dealer bosses to include commission in furlough payments – he still said the employer needs to make the ultimate decision and justify it.

It is them, he said, who may be tested by the HMRC in the future. He thinks there may be further guidance to come – unlikely, he predicts, considering this only came out on Saturday April 4 – but welcome if it does. However, right now he is confident that dealers can include the commission.

If you’re unclear of how and why, read our post here that fully explains it.

‘I expect there to be mass staff departures when all this is over,’ he told me.

And I agree with him. If the guidance and the experts believe it should be paid, and you still don’t, why not agree a compromise with your staff that if – and only if – a challenge ever does come from the HMRC over the commission portion of the furlough payment, that the sales person agrees to pay it back.


That way, low basic paid sales people will be able to pay their bills, put food on their table and survive the next three months and you’ll know you are protected.

Most businesses have agreed to pay it. Most are looking after their staff in their hours of need. And I applaud them for that.

Now is the time to stand up and be counted – look after your people and they will appreciate it long after the dust has settled on this crisis. 

Penny pinch now, especially when everyone knows it’s the government who is putting their hand in their pocket to pay your staff’s wages, and that will never, ever be forgotten.

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Do the right thing. Pay your sales staff. And look after each other.

More: Commission can be included in furloughed staff’s wages

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James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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