Extraordinary solutions

Is an employee entitled to commission earned after resignation?

Principle – In the absence of a contractual term that employees forfeit any claim to commission when
they have left employment, the employee's consent is required for any forfeiture of remuneration earned.

In the matter of Redelinghuys v Adapt IT (Pty) Ltd (C199/2019) [2023] ZALCCT 10 the following
happened:

An employee who was employed on a salary and commission basis resigned from her employment. She
was then informed for the first time that resignation triggered forfeiture of commission on deals already
sold, but which had revenue flow after the employee's departure.

She referred her dispute to the Labour Court which has jurisdiction in this matter in terms of s77(3) of the
BCEA to determine any matter that concerns a contract of employment, irrespective of whether any basic
conditions of employment are implicated. The employee argued that commission is not discretionary
(unlike a bonus), and the sale had to meet predetermined criteria to be claimed. She argued that
commission is also earned per deal and not accumulated during the year to be paid at the end of the
year. A deal done or a sale concluded during the time of employment cannot be forfeited.

The Labour Court found that there was no forfeiture rule in the Employee Handbook. The court said it
was clear that commission determined by gross profit sold was earned by the employee when she
concluded a deal. It only became payable once the revenue started to flow. It stood to reason that in
respect of some deals, that might occur after an employee left the firm's employment. The court was
satisfied that the employee had established that the contractual terms governing her entitlement to
commission entitled her to payment of the 4.5 % of the revenue generated by new sales deals she
concluded. This was due and payable from the first quarter after revenue from the deal started to flow.

Therefore it is imperative that there should be a clause in the Employee’s employment contract which
clearly stipulates that upon resignation the Employee will forfeit commission on deals concluded and
where the revenue flow after the employee’s departure. Should there be no clause in the Employee’s
contract of employment., then you will need to get an agreement in place with the employee before
he/she leaves your employment.