Brand v Compro Computer Services Ltd

Commission earned on sales before termination does not ordinarily cease to be payable merely because the contractual machinery fixes payment after employment ends. A term requiring full-time employment at all relevant times will not override accrued commission unless clear words make entitlement conditional on employment at the payment date. The date of payroll is a payment date, not necessarily the date on which entitlement arises. Contractual documents are construed objectively from their language and the background known to both parties. One party’s subjective intention is irrelevant, and business common sense cannot support a harsh forfeiture which the words do not clearly require.

Nicholas Brand, a contract sales consultant, claimed commission under his employment contract and compensation plan after Compro Computer Services Ltd summarily dismissed him for redundancy. The Employment Tribunal held that commission was payable only if he remained employed until the relevant payment dates, but awarded damages for commission that would have crystallised during his notice period. It dismissed Compro’s counterclaim for previously paid commission.

The Employment Appeal Tribunal dismissed Mr Brand’s appeal and Compro’s cross-appeal. The central issue before the Court of Appeal was whether commission on pre-termination sales had accrued before dismissal, or was lost because payment fell due after employment ended. The court also considered the statutory limit on an Employment Tribunal’s breach-of-contract award.

1. Appeal allowed. Peter Gibson LJ delivered the leading judgment, with Laws LJ and Longmore LJ agreeing. The order of the Employment Appeal Tribunal was set aside. The Employment Tribunal’s award was increased from £19,500.48 to the jurisdictional maximum of £25,000, with appeal costs of £2,279.50.
2. Contractual documents are construed objectively. The court identifies the parties’ intention from the language used against the background facts known to both parties. Compro’s subjective intention, and evidence of its own perception of the commercial purpose of the clause, could not determine the construction.
3. Under clause 4.1 of the compensation plan, commission was earned when Compro possessed signed contractor time sheets. The provision that commission was calculated monthly and paid in the next payroll identified the payment date. It did not impose a further condition that the employee remained employed when payment was made. Commission on sales before dismissal therefore accrued even where the relevant payroll date followed dismissal.
4. Clause 6(1), stating that the plan assumed full-time employment at all times, did not clearly deprive an employee of accrued commission. Properly construed, it addressed the employee’s full-time status at times relevant to earning commission and confirmed an implicit condition already arising from the employment relationship. Clearer words would have been required to make accrued commission dependent on employment at the payment date. A harsh and one-sided result was inconsistent with the plan’s purpose of rewarding achieved targets.
5. The court expressly left open whether commission could remain payable where signed time sheets were received after employment had ceased. On the parties’ agreed position concerning the jurisdictional limit under paragraph 10 of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, no remission was necessary because the maximum award was substituted directly.

• Court of Appeal (Civil Division): In [2004] EWCA Civ 204, the appeal was allowed. The EAT’s order was set aside and £25,000 was substituted for the Employment Tribunal’s breach-of-contract award.
• Employment Appeal Tribunal: On 30 April 2003, the EAT dismissed Mr Brand’s appeal from the Employment Tribunal’s decision and dismissed Compro’s cross-appeal.
• Employment Tribunal, Watford: In a decision promulgated on 11 July 2002, the tribunal rejected the commission claim as framed, but awarded damages for commission that would have crystallised during the contractual notice period. It also dismissed Compro’s counterclaim.