APS campaigns on sales pay during Covid-19 crisis
23 April 2020
Thursday 23 April, 2020
A leading MP is joining the campaign by the Association of Professional Sales (APS) to protect the pay of sellers across the UK during the Covid-19 crisis.
The head of the influential parliamentary group for professional sales is backing the APS to ask for clarity on whether sellers paid on commission are eligible for the government’s furlough scheme.
Mark Pawsey MP, the chair of the All-Party Parliamentary Group for Professional Sales, said he was pleased to back the APS campaign on the issue: “Salespeople deserve to know how much of their income will be paid by the government’s furlough scheme, and I fully support the APS in calling for clarity."
The MP, who is also a member of the powerful Business, Energy and Industrial Strategy select committee, added: “As a former salesman I used to rely on commissions and bonuses, and my business employed professional salespeople on the same terms. Bonuses are set to motivate a sales team and get them working hard. They are an integral part of the way salespeople are rewarded.”
On Monday, 20 April, HM Revenue and Customs confirmed that “non-discretionary” commission payments and fees can be claimed. The news was a relief for sellers and employers who have been in suspense since the job retention scheme was announced by the Chancellor on March 20. But, in guidance issued to employers, HMRC goes on to warn that “discretionary” commission and bonuses should not be included.
“The APS welcomes the government’s decision to include commission in the furlough payment scheme, but the details are still unclear and we will continue to investigate," commented Andrew Hough, CEO and director of the APS, the professional body for the sales industry.
“Sellers need clarity right now, particularly those in the first part of their careers on lower basic pay and higher commission. Employers need to know what is covered so they can calculate how much to claim for their staff.”
Remuneration contracts for salespeople are often complex with a variety of incentive schemes, including a combination of basic pay, commission, bonuses, management objectives and guarantees. HMRC has given no further guidance on where to draw the line between discretionary and non-discretionary pay.
“The vast majority of salespeople will have a commission plan that is part of their employment; its a contract between them and their employer on how they will be paid,” said Guy Lloyd, chairman of the APS advisory board and former sales director at Microsoft UK.
“Within this commission plan, there is often a portion called Management (By) Objectives, or Incentives. As payment for achieving these objectives forms part of the On Target Earnings, they are part of the contract and a salesperson has to be given a fair opportunity to earn them, or else there is a breach of contract. Thus, even though these incentives may not be set at the start of the year, they are non-discretionary in the sense that an opportunity to earn them must be made.”
The furlough scheme opened for claims on April 20, and saw 140,000 applications lodged by employers in the first 24 hours, for the government to pay the salaries of 1 million workers, at a cost of more than £1 billion. All claims for individual employees are capped at 80% of earnings or £2,500 a month, whichever is lower.
Support is available for the period from March 1 to the end of June. The payments are taxable, and do not cover pension contributions or benefits in kind such as a company car.
Andrew Hough added: “Businesses cannot survive without selling, so sellers are crucial to the UK economy, now more than ever. Their skills and resilience will be increasingly important as we come through this crisis."
Watch the APS news blog and social media feeds for more news on the furlough scheme for sellers.
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You can read the HMRC guidance on furlough here: https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme.