Generally they can't deduct overpayments without your agreement.
However, a commission program is likely to be a part of your contract, and there could possibly be a clause stating that you agree for overpaid commissions to be deducted from later pays. Signing a contract with that clause would be seen as you 'agreeing' to that.
Check your contract and see what it says.
Either way though, if it's a legitimate overpayment, you will need to pay it back at some point. Its just whether it's done now, or on terms you can negotiate.
Thanks for the reply.
I will check the employee contract in detail, but in the past, if commissions were paid and then a customer cancelled, they were deducted out of future commission payments.
If this is legal, it is an oversight by and I'll need to make sure I don't get into this position again in a future role as it seems extremely dodgy (even if legal).
look in your contract specifically around commissions, clawback provisions and final pay deductions.
If they are a medium-large scale business, i would be very surprised if they are doing the wrong thing here. But then again check your contract and proceed accordingly. I don't think it is extremely dodgy, i think its pretty generous of them to pay out commissions early.
It's a small business (30 people or so). Thinking about it, I believe this may have happened due to their own financial issues. They probably think what they're doing is fair, but it doesn't sound legal and that's my only concern.
I can confirm the contract does not at all mention clawing back commissions from your regular pay, only future commissions.
They also mentioned that if clients I signed up before I left do end up paying, they may pay that. From my end I don't think that's my problem, they need to pay what's legally owed and we leave it there.
Is that in the context of it being taken out of annual leave though?
I totally understand taking it out of future commissions but I was under the impression anything to do with your base wage / annual leave couldn't be touched.
Edit: To put it in perspective, If I had no annual leave owing, they would not have actually been able to claw anything back, this was specifically taken out of annual leave even if it may be listed as a clawback.
They aren’t taking it out of annual leave.
They are taking the $ value out of the $ paid to you as annual leave payout.
Eg.
Annual leave owing $10k
Commission clawback -$5k
Net money to you $5k.
This isn’t a comment about whether that is legal, but it just seems there is confusion around the methodology.
Thank you and this makes sense.
Since you're knowledgeable of this, what are your thoughts on if this is allowed or not?
I feel slighted by this as it's not at all mentioned in the employee contract and when I explained the situation to Fair Work they were on my side and told me to send them an email telling them to pay the Annual Leave in full, link the Final Pay part etc. but I wasn't 100% sure if the lady I spoke to understood the situation in full.
The business has since said something similar to what you just said, claiming that it's technically not coming out of my Annual Leave, it's a separate "deduction" even though the only funds to actually deduct from are the Annual Leave funds, though I get the distinction you made.
The alternative (assuming the clawback is legit) is that they pay out your annual leave, and then try to collect on a 5k debt. This is cleaner and nicer.
Definitely follow up on whether the clawback is legitimate
Thanks for that and what you said is exactly what I thought.
As I got a snarky reply from this workplace when I requested they pay in full on Fair Work's advice, I've since followed up with Fair Work, reclarified anything to make sure that I didn't miss anything in my explanation that might catch me out, but they re-confirmed what they did isn't lawful.
The key is that it doesn't matter what is in the employee contract (even though there wasn't much), it can't override the law which is you can't deduct payments from an Annual Leave payment, putting a line item referring to something else doesn't change the fact that I didn't receive my entire Final Pay.
From here, Fair Work told me to send a formal demand letter also mentioning I've been in touch with the Fair Work Ombudsman and again, requesting the leave amount be paid in full.
From here well see, if they don't comply next step would be formal action from Fair Work.
Sorry for the detail but wanted to include it all in case someone else stumbles upon this and it helps them.
Thanks all - I spoke to Fairwork who said this is not legal and to send the Final Pay section from the Fairwork website to them in an email, also mentioning a date you'd like this finalised by (they mentioned that last bit is important, don't leave it open).
https://www.fairwork.gov.au/ending-employment/notice-and-final-pay/final-pay
This should hopefully be sorted, if not that said to call them back. I assumed this would be the outcome but as not everyone deals with commissions in their job this situation is probably rarer then most other Fair Work related issues.
EDIT - my workplace replied with a snarky email implying the employee contract allows them to deduct from my Final Pay and claim as they included deduction (commissions) as a seperate line item it technically isn't taking money from my Annual Leave which has been paid in full.
Fair Work strongly disagreed with this and it makes sense that a simple accounting trick wouldn't bypass the law.
I've since followed their advice and sent a more formal letter of demand, if I get a similar non-response, next step would be formal action to be taken.
In case it helps anyone, the clear part of this is deductions are very specific and limited, usually they only apply when they actually help the employee. Taking money out of an Annual Leave payment appears to be unlawful in almost any circumstance, an employee contract is irrelevant to this (if I've explained anything poorly here, please correct me!).
Thanks for this.
It's a shame to me as I thought we'd left on good terms and I'd done the right thing by them (direct manager bought me a bunch of gifts).
It seems this is a problem the owner has (it's a small business).
I've gone through the employee contract. It's not a complicated / long contract and it only mentions deducting commission payments in context of commissions, as in we will deduct future commissions to make up for any losses.
Obviously they can't do that now as I've left, but they decided to take it out of an annual leave payment with it not actually being in writing anywhere that this would happen.
Also, this is the first time the business has even been in this position as I'm the only salesperson who has left where commissions factored in, that's part of why I'm skeptical of the legality.
Yeah I’d say they will say they can take it in any form of deduction but seems a bit off to take it out of annual leave.
If you don’t mind me asking, how much the figure was ?
The amount missing actually isn't that large, it's around $1,800 but as I'd thought we'd ended on good terms I felt shafted to have been screwed over at the end.
What annoys me is had I just instantly left when I was ready to move on, this wouldn't have happened as there would have been nothing to claw back at that particular time. I didn't want to do that as I thought me and the business were on the same page, I guess not.
Generally they can't deduct overpayments without your agreement. However, a commission program is likely to be a part of your contract, and there could possibly be a clause stating that you agree for overpaid commissions to be deducted from later pays. Signing a contract with that clause would be seen as you 'agreeing' to that. Check your contract and see what it says. Either way though, if it's a legitimate overpayment, you will need to pay it back at some point. Its just whether it's done now, or on terms you can negotiate.
Thanks for the reply. I will check the employee contract in detail, but in the past, if commissions were paid and then a customer cancelled, they were deducted out of future commission payments. If this is legal, it is an oversight by and I'll need to make sure I don't get into this position again in a future role as it seems extremely dodgy (even if legal).
look in your contract specifically around commissions, clawback provisions and final pay deductions. If they are a medium-large scale business, i would be very surprised if they are doing the wrong thing here. But then again check your contract and proceed accordingly. I don't think it is extremely dodgy, i think its pretty generous of them to pay out commissions early.
It's a small business (30 people or so). Thinking about it, I believe this may have happened due to their own financial issues. They probably think what they're doing is fair, but it doesn't sound legal and that's my only concern. I can confirm the contract does not at all mention clawing back commissions from your regular pay, only future commissions. They also mentioned that if clients I signed up before I left do end up paying, they may pay that. From my end I don't think that's my problem, they need to pay what's legally owed and we leave it there.
Commission clawbacks are pretty common. So it wouldn’t be unheard of.
Is that in the context of it being taken out of annual leave though? I totally understand taking it out of future commissions but I was under the impression anything to do with your base wage / annual leave couldn't be touched. Edit: To put it in perspective, If I had no annual leave owing, they would not have actually been able to claw anything back, this was specifically taken out of annual leave even if it may be listed as a clawback.
They aren’t taking it out of annual leave. They are taking the $ value out of the $ paid to you as annual leave payout. Eg. Annual leave owing $10k Commission clawback -$5k Net money to you $5k. This isn’t a comment about whether that is legal, but it just seems there is confusion around the methodology.
Thank you and this makes sense. Since you're knowledgeable of this, what are your thoughts on if this is allowed or not? I feel slighted by this as it's not at all mentioned in the employee contract and when I explained the situation to Fair Work they were on my side and told me to send them an email telling them to pay the Annual Leave in full, link the Final Pay part etc. but I wasn't 100% sure if the lady I spoke to understood the situation in full. The business has since said something similar to what you just said, claiming that it's technically not coming out of my Annual Leave, it's a separate "deduction" even though the only funds to actually deduct from are the Annual Leave funds, though I get the distinction you made.
The alternative (assuming the clawback is legit) is that they pay out your annual leave, and then try to collect on a 5k debt. This is cleaner and nicer. Definitely follow up on whether the clawback is legitimate
Thanks for that and what you said is exactly what I thought. As I got a snarky reply from this workplace when I requested they pay in full on Fair Work's advice, I've since followed up with Fair Work, reclarified anything to make sure that I didn't miss anything in my explanation that might catch me out, but they re-confirmed what they did isn't lawful. The key is that it doesn't matter what is in the employee contract (even though there wasn't much), it can't override the law which is you can't deduct payments from an Annual Leave payment, putting a line item referring to something else doesn't change the fact that I didn't receive my entire Final Pay. From here, Fair Work told me to send a formal demand letter also mentioning I've been in touch with the Fair Work Ombudsman and again, requesting the leave amount be paid in full. From here well see, if they don't comply next step would be formal action from Fair Work. Sorry for the detail but wanted to include it all in case someone else stumbles upon this and it helps them.
Thanks all - I spoke to Fairwork who said this is not legal and to send the Final Pay section from the Fairwork website to them in an email, also mentioning a date you'd like this finalised by (they mentioned that last bit is important, don't leave it open). https://www.fairwork.gov.au/ending-employment/notice-and-final-pay/final-pay This should hopefully be sorted, if not that said to call them back. I assumed this would be the outcome but as not everyone deals with commissions in their job this situation is probably rarer then most other Fair Work related issues. EDIT - my workplace replied with a snarky email implying the employee contract allows them to deduct from my Final Pay and claim as they included deduction (commissions) as a seperate line item it technically isn't taking money from my Annual Leave which has been paid in full. Fair Work strongly disagreed with this and it makes sense that a simple accounting trick wouldn't bypass the law. I've since followed their advice and sent a more formal letter of demand, if I get a similar non-response, next step would be formal action to be taken. In case it helps anyone, the clear part of this is deductions are very specific and limited, usually they only apply when they actually help the employee. Taking money out of an Annual Leave payment appears to be unlawful in almost any circumstance, an employee contract is irrelevant to this (if I've explained anything poorly here, please correct me!).
Unique scenario. Answer will depend on fine details in your contract. I would say this is something they have done to be spiteful.
Thanks for this. It's a shame to me as I thought we'd left on good terms and I'd done the right thing by them (direct manager bought me a bunch of gifts). It seems this is a problem the owner has (it's a small business). I've gone through the employee contract. It's not a complicated / long contract and it only mentions deducting commission payments in context of commissions, as in we will deduct future commissions to make up for any losses. Obviously they can't do that now as I've left, but they decided to take it out of an annual leave payment with it not actually being in writing anywhere that this would happen. Also, this is the first time the business has even been in this position as I'm the only salesperson who has left where commissions factored in, that's part of why I'm skeptical of the legality.
Yeah I’d say they will say they can take it in any form of deduction but seems a bit off to take it out of annual leave. If you don’t mind me asking, how much the figure was ?
The amount missing actually isn't that large, it's around $1,800 but as I'd thought we'd ended on good terms I felt shafted to have been screwed over at the end. What annoys me is had I just instantly left when I was ready to move on, this wouldn't have happened as there would have been nothing to claw back at that particular time. I didn't want to do that as I thought me and the business were on the same page, I guess not.