James Ritchie Robertson v Blackstone Franks Investment Management Limited

Commissions earned through work performed before termination remain wages even where they become payable after the contract ends. The statutory definition focuses on whether the payment is connected with employment and represents consideration for work done under the employment contract.

Under section 5(6) of the Wages Act 1986, a tribunal must consider payments made before the date of its order. An advance paid before an unauthorised deduction may therefore reduce the amount recoverable, where it was paid in respect of the same commission.

Mr Robertson provided investment-related services to Blackstone under a contract described as a contract of services. After termination, commissions became payable on business introduced by him and completed later. He complained to an Industrial Tribunal under the Wages Act 1986.

The Industrial Tribunal held that he was a worker, that the commissions were wages, and ordered payment of £14,126.50. The Employment Appeal Tribunal upheld the wages finding but set off a £10,500 advance, substituting £3,626.50. The appeal concerned whether post-termination commissions were wages and whether section 5(6) permitted that set-off.

1. Appeal dismissed unanimously. Lord Justice Mummery gave the judgment, with Lord Justices Potter and Nourse agreeing. The Employment Appeal Tribunal correctly reduced the award to £3,626.50.
2. Mr Robertson was a worker under sections 7 and 8 of the Wages Act 1986. The commissions were sums payable by his employer in connection with his employment and were therefore wages within section 7(1).
3. The statutory definition is wide. It is not limited by the date on which the payment becomes payable or is made. The relevant question is whether the payment has the essential characteristic of wages: consideration for work done or to be done under the contract.
4. Commissions relating to services rendered and business introduced before termination retain their character as wages when paid afterwards. They are distinct from a payment made in respect of termination itself. The court applied the reasoning in Delaney v Staples [1992] ICR 483.
5. Section 5(6) prohibited the Industrial Tribunal from ordering payment of any amount which, at the date of the order, the employer had already paid to the worker in respect of the deduction. The word “already” covers payments made at any time before the order, including payments made before the unauthorised deduction.
6. The £10,500 advance was paid against future commissions and was no longer retainable after 10 January 1996. It was therefore an amount already paid in respect of the commissions later deducted. The Chairman erred in failing to take it into account.
7. The court considered, but did not finally decide, Blackstone’s alternative argument concerning the scope of section 5(7). Its decision rested on section 5(6), consistently with the statutory purpose of ensuring that workers receive their wages in full without receiving more than the wages due.

• Court of Appeal (Civil Division): [1998] EWCA Civ 654. Appeal dismissed with costs provisionally.
• Employment Appeal Tribunal: On 10 October 1996, Blackstone’s appeal was allowed to the extent of substituting an award of £3,626.50 for £14,126.50.
• Industrial Tribunal: On 18 March 1996, Mr Robertson’s complaint was held partly well founded and Blackstone was ordered to pay £14,126.50.