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Docking £500k commission from top SAS salesman was perfectly legal, rules judge
Chap brought in $27m deal – so bosses withheld two-thirds of his pay
A salesman who claimed bosses at software biz SAS diddled him out of half a million pounds in commission had "no reasonable prospects" of successfully proving his case, an Employment Tribunal judge has ruled.
The sales supremo had landed a $27m deal which ought to have netted him £801,583.74 in commission – but despite blaming chief sales officer Riad Gydien for unlawfully withholding £500k from him, Mark Hanson lost his case.
Striking out Hanson's claim, Employment Judge Paul Holmes ruled at the end of March that "the contractual position is clear, and the claimant has not begun to establish a prima facie factual case that affords him any prospects of success."
The judge also ruled that because Hanson's commission was payable as a lump sum, forcing SAS to pay him the £800k in one go would harm the company's profit margins. SAS Software Ltd (the UK arm) posted pre-tax profits of £4.2m in fiscal 2019 from revenues of £121m. The privately owned group reported $3.1bn in global revenue in 2019.
"There is nothing irrational or perverse in a commercial concern wishing to maximise its profits," said the judge, who heard the strike-out application alone and not as part of the usual three-member panel.
We can move the goalposts after you score
After landing the $27m deal for SAS ("roughly £19.54m at today's rates," said the judgment) Hanson expected to receive £801,584 in commission based on his employment contract and SAS's Sales Compensation Plan, a company-wide document. Unfortunately for the strategic account client manager, that plan contained what Judge Holmes referred to as a "safety net clause" in SAS's favour.
When Hanson landed the $27m five-year deal in 2019, bosses baulked at the thought of paying him £800k on top of his regular salary. Although the salesman punched through all of his annual targets with this sale alone, SAS enteprise business unit director Simon Overton told Hanson the company wouldn't be paying the full commission. If they did pay, Overton said, "senior management in North Carolina" would start asking UK management why they had set Hanson's sales targets so low – and that simply wouldn't do.
Overton proposed retrospectively jacking up Hanson's targets to halve his commission and making even that £400k payout dependent on him reaching new "management by objective" targets. Unsurprisingly, the salesman refused. SAS retaliated by telling him he'd get £300k and be grateful for it, docking a further £100k from Hanson's disputed package in August 2020.
Hanson complained but both SAS's chief sales officer and VP of sales operations stood by the decision to retrospectively dock him of almost two-thirds of his commission. Left with no other option, he filed an employment tribunal case.
SAS succeeded in having Hanson's claim thrown out by pointing to clause 6(h) of its Sales Compensation Plan. This said:
Any payout over 300% of On Target Variable Pay is subject to review and approval by the Executive Vice President and Chief Sales Officer…
Hanson's legal arguments that this clause was "improper" failed, ruled Judge Holmes, throwing it out despite clause 6(a) of the same document stating SAS would "use its best efforts to administer changes reasonably and fairly."
"Why then should such a term then be subject to any reasonableness or fairness limitation?" asked Judge Holmes with reference to clause 6(h) as he praised SAS's "wisdom" for inserting the clause into the compensation plan. "Certainty is a contractual requirement. This clause is certain."
Hanson's case was struck out. ®
You can peruse the judgment in Mr M Hanson v SAS Software Ltd (England and Wales : Unlawful Deduction from Wages) yourself, here.