The Independent Motor Dealers Association has written to its 555 members and urged them ‘to do the right thing’ and ensure they pay sales staff commission when on furlough leave.
The IMDA set up a petition for the government to have commissions included and alongside other dealer associations were pleased to see a clarification from the government last weekend that compulsory commission could be paid to sales staff.
Now, the IMDA is encouraging its members to make the payments.
In a statement, the IMDA said: ‘Although we have not received any reports that any of our members have advised their staff that they won’t receive their commission as part of the furlough leave calculations, we felt that as an association it was important to remind our members of their responsibilities to pay all their staff including sales staff during this crisis.’
In the government documentation, released on April 4, it says that if an employee has been employed for 12 months or more, companies can claim for the higher of either:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year
It adds that if an employee has been with the firm for less than 12 months, companies can claim for 80 per cent of their average monthly earnings since they started work.
And if the employee only started in February 2020, they can work out a pro-rata for their earnings so far, and then claim 80 per cent of that.
Specifically, the guidance around bonuses says:
‘You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.’
Commissions paid to salespeople for selling cars and aftersales products are classed as compulsory.
The IMDA statement added: ‘It is very disappointing to read some of the emails we have received from salespeople of companies who have received emails stating that they won’t be paid 80 per cent of their commissions which is blatantly ignoring the recent update.
‘Despite these emails not coming from employees of IMDA members we feel that it is important that we are clear that all staff members including salespeople should be paid what they are entitled to.’
IMDA chairman Umesh Samani – who will be talking to Car Dealer Live at midday on Wednesday – said dealers should pay up.
He said: ‘Dealerships need to step up and pay what is due, it is as simple as that. Now that employers have received reassurance that they will manage to reclaim commissions up to 80 per cent it is their responsibility not only to reassure their salespeople, but also to pay out what they are due through the scheme.’
The IMDA added that it felt those employers who completely ignore this and refuse to pay salespeople should be ‘named and shamed ‘ and held to account.
HMRC confirmed via Twitter that compulsory commission – those contracted monthly to be paid to salespeople – could be included for furloughed sales staff’s wages last week.
Confirming to Lawgistics solicitor Nona Bowkis via Twitter, the official channel of HMRC Customer Support, said that dealers should work out the amount of commission to be paid during furlough leave akin to the way they would usually work out annual leave payments.
So that includes any commission usually paid to sales staff including that for selling cars and aftersales products. The test here is commission paid to staff ‘in normal trading conditions’ and contracted. A contract can be verbal.
Watch accountants and legal experts discus all you need to know about furlough payments and commissions in this week’s Car Dealer Live broadcast below