Daniel Johnston v Veritas Technologies (UK) Limited

In an unlawful-deduction claim, the tribunal must first determine whether the worker had a legal entitlement to the sum claimed. Only a sum properly payable can found a deduction under section 13 of the Employment Rights Act 1996.

Where a contractual commission plan makes earnings above a stated threshold subject to approval, the commission does not become properly payable unless that condition is met. This is so even where the employer’s review process was defective and the high calculation resulted from an error in setting quota.

The appellant was employed under a contractual commission plan. After a new HSBC contract produced commission calculated at more than 600% of his on-target commission, the respondent reviewed the quota and paid £232,015.95 rather than the further commission claimed.

The Employment Tribunal dismissed his claim under sections 13 and 23 of the Employment Rights Act 1996. It found that the respondent could retrospectively adjust the quota under other provisions of the plan, although it had not properly operated the plan’s windfall process.

The appellant appealed. The respondent cross-appealed against the Tribunal’s reasoning, contending that no commission above the amount paid had ever become properly payable because the required approval for earnings above 250% of on-target commission had not been obtained.

1. Appeal refused. The Tribunal reached the correct result: the appellant had received all wages properly payable, so there was no deduction under section 13 of the Employment Rights Act 1996.

2. The proper sequence under section 13 is first to determine whether a sum is legally due. Only if it is due does the question arise whether the employer deducted it, and whether any deduction was authorised. The court applied New Century Cleaning Co Ltd v Church, [2000] IRLR 27, and Hellewell v Axa Services, [2011] ICR D29.

3. The contractual approval condition applied whenever calculated commission exceeded 250% of on-target commission. It was not confined to a completed windfall review. Its purpose extended to senior scrutiny of unexpectedly high earnings, including earnings generated by quota-setting errors, systems errors or credit errors.

4. The condition had not been satisfied on the Tribunal’s findings. Therefore commission above 250% of on-target commission never became properly payable. A failure properly to operate the windfall review might found another remedy, but could not make that unpaid commission recoverable as an unlawful deduction.

5. The cross-appeal challenged only the Tribunal’s reasoning, not its operative conclusion. It was dismissed as unnecessary.

• Employment Appeal Tribunal: Appeal against the Employment Tribunal’s dismissal of the unlawful-deduction claim refused; the respondent’s cross-appeal was dismissed as unnecessary.
• Employment Tribunal: Held that the claimant received the wages properly payable on 28 February 2020 and that no deduction arose under section 13 of the Employment Rights Act 1996.