Employer insists misconduct, but workers say practice widely accepted
The Fair Work Commission recently dealt with the unfair dismissal claim of three employees who were fired because they shared and transferred sales credits.
The employer claimed that this was a prohibited company practice, but the employees argued that there was no such rule and that it was widely “accepted” in the workplace, especially by management.
On April 4, 2023, the workers, Mary Phillipe, Joel Lewin, and Benjamin Comer, filed individual applications with the FWC, claiming they were unfairly dismissed by Rentokil Initial Pty Ltd, their employer.
The employer, in this case, is involved in providing residential and commercial pest control and extermination services. Their work can be categorized into contracted projects, where they serve clients over an extended period, and ad hoc tasks, which involve one-time pest control treatments.
The said employees were part of the Pest Commercial Sales Team at the time their employment was terminated. They received fixed annual salaries, disbursed monthly. Additionally, they had the opportunity to earn monthly commissions through a Commission Plan, contingent on meeting monthly sales targets set by the employer.
Sharing sales credits under Commission Plan
The workers were all dismissed for their participation in the practice of sharing sales credits under the Commission Plan with other work colleagues.
The employer said the practice in question and the workers’ activities was “misconduct” and constituted “a breach of company policy” and its Code of Conduct.
The workers argued there was no misconduct, and each denied an awareness of any policy prohibiting the practice.
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They “maintained that the transfer of sales credits was a longstanding practice that was well known to and condoned by management,” and added “that if there had been a change to policy underpinning the practice, they had not been made aware of it.”
The disputed ‘Commission plan’
Under the Commission Plan, employees had the opportunity to earn a monthly commission by achieving specific sales targets for that month. These targets varied among employees, as did the commission amounts paid when these targets were met. The commission payments, when applicable, were typically disbursed alongside the employees’ regular monthly salaries.
Sales transactions were documented in the Master File, which was regularly updated as sales were confirmed. Monthly progress in relation to the sales targets was a topic of discussion during routine sales meetings. Generally, sales were credited to the employee responsible for the geographic area where the customer was located.
The employer argued that they had valid reasons for terminating the employment of each of the workers in February 2023. These reasons are linked to the conduct of each worker, both individually and collectively, in relation to the Commission Plan that the employer had implemented for its sales staff.
An ‘accepted company practice’
The workers argued that there was a well-established practice and culture of sharing sales credits. One of them explained that when a colleague substantially contributed to a sale or provided assistance, it was common to adjust the Master File to transfer the sales credit from the originally assigned person to the one who had contributed significantly.
This transfer of credits required the involvement of the employer’s sales coordinator. While the details in the Master File were accessible to everyone, only the sales coordinator and a select group of management personnel had the authority to officially change the assignment of a sale.
They also said that transferring sales credits was “openly discussed” during office meetings, internal chat platforms, and through emails.
The worker said that two previous managers taught him how to do it, since they had requested him to postpone reporting certain sales and then transfer them to the following month, especially when "the team" had already achieved the monthly sales target.
They also said that one of the employer’s sales managers engaged in this practice, recalling an instance when they moved sales from December 2021 to January 2022, to ensure the team met its Key Performance Indicator (KPI) in the latter month. They said that this practice was commonly referred to as “sand bagging.”
On the other hand, the employer argued that participants in the Commission Plan were "not permitted to unilaterally swap or share sales credits" and that only certain management members were authorised to change sales data or credits, including any transfer.
Were the employees validly dismissed?
In this case, the employer said “that there was a deliberate attempt on the part of the [employees] to manipulate the Commission Plan in order for some of them to obtain a financial benefit that they were not otherwise entitled to.”
It said that their conduct was” a breach of the Code and the obligation to act with honesty and to ensure the accuracy of sales records.” It added that it was “open to each of the [employees] to seek and obtain managerial approval for the transfers and that each of them elected not to do so.”
Despite the company’s position, the FWC found that it was “more likely than not that the practice of transferring sales credits was something that was engaged in with the knowledge and acceptance of previous managers of the employer.”
It also considered the employees’ evidence that other co-workers “had engaged in the practice of transferring sales without managerial approval with no apparent consequences.”
“A clear policy and an explicit requirement for management authorisation before sales could be transferred would have avoided any doubts of the kind that arose in this case,” the Commission said.
Thus, it ruled that the employees’ dismissal was harsh and unreasonable. It then made an order to restore their lost pay.