HP loses attempt to deny colossal commission to star sales staffer

Contract was clear and trying to backdate changes was naughty, rules Australian court

HP’s Australia tentacle has lost an appeal in which it sought to deny a top salesperson a colossal commission.

The case of Hewlett Packard Pty Ltd v Subasic [2021] ACTCA 3 (February 19, 2021) concerns an Australian salesperson who, three years after leaving pre-split HP, claimed she had been short-changed AU$309,750 (US$247,000, £175,000) in commissions.

HP did not contest that the salesperson in question, Melinda Subasic, achieved over 500 per cent of her budgeted sales target. According to HP’s incentive scheme of the time, 2009 to 2010, that performance should have resulted in a payment of AU$446,250.39 (US$356,000, £252,000).

Subasic was instead paid AU$136,500 (US$109,000, £77,000). When Subasic asked why she’d been paid that sum, she was told that HP retrospectively capped incentive payments.

The first trial in the matter saw a judge rule that HP breached its employment contract. HP appealed, though the Oz courts again found Subasic was owed the full payment.

One element of the case that three judges of the Supreme Court of the Australian Capital Territory considered was that, in 2007, HP reduced base pay for its sales team and made the removal of caps on incentive payments a positive incentive.

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“The new sales plan rewards strong sales performance. By moving more money into variable pay, which unlike base pay, can be multiplied by the accelerator, higher payouts are possible for over-performers,” read an HP document explaining the base pay reductions.

Sales staff were also told: “HP has eliminated the use of pay plan caps under the new plan. However, there will be a management review process for exceptionally high performance.”

That review process became important, because HP used it to review performance of eleven salespeople and decided that it would reimpose a cap on incentive payments for those staffers.

But the court found the cap was re-imposed after the sales had been made and incentives earned, so HP breached its contract and Subasic should get her cash and AU$61,568 of interest.

Which is a nice outcome, but not the win Subasic wanted as she cross-appealed because the first judge to hear the case calculated interest from the start of proceedings in 2016 rather than starting from her departure from HP in 2010. The appeal denied her the AU$130,000 in interest that Subasic’s preferred timeframe would have delivered.

Cases like this are not unusual. Oracle has denied allegations of systematic commission-snipping, and even ditched a staffer who disputed commission payments. And IBM recently fought a claim for over US$1.4m of commission. ®

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