Modification of the commission plan: Legal obligations

As provided for by law, an employee's commission remuneration (individual and/or collective) and all the parameters governing it must be included in the employment contract at the time of recruitment. Indeed, under no circumstances can commission pay and its conditions be the subject of a verbal agreement.

However, once written into the employment contract of each beneficiary, can the commission remuneration and the various criteria surrounding it be modified?

Without suspense and without surprise, the answer is yes. In fact, there are many reasons why a company might change its commission pay plan.

And the proof is in the pudding:

• 46% believe that their scheme is unlikely to retain the best talent. (Primeum, commentremunerer.com and MeteoJob survey)
• 2/3 of salespeople do not meet their annual sales targets. (Aberdeen Group study)
• 88% of respondents think that the commission pay system should be improved. (Primeum, commentremunerer.com and MeteoJob survey)

However, what about the procedure for changing a commission pay plan? What situations allow this? 

In order to answer this question, the experts at Qobra have come together and listed all the mandatory and necessary steps to achieve this. In the course of the article, they also discuss the various risks to which the company is exposed if it does not follow these steps, but also the possibilities that employees have in the event of disagreement with the changes made.

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1. When can a commission pay plan be changed?

Previously, a company was not allowed to change the commission pay of its beneficiaries without their agreement. This is because commission pay is considered an element of the employment contract.

However, the situation has changed, and it is now possible, as the contract clause so provides, for the employer to change the commission pay targets, provided that these are : 

• Achievable
• Fixed and known to the employee at the beginning of the financial year

In other words, a company cannot ask its employees to accept changes to their commission pay in advance and without knowing them.

However, in the situation where the employment contract stipulates that any change requires the agreement of both the employee and the company, the company cannot decide on its own to change the objectives, even if they are achievable, set and known at the beginning of the year.

📌 Please note:

‍If an employment contract provides for commission pay without setting the terms, any change requires the employee's agreement.

In accordance with the above rules, here are some situations in which a company may have to modify the commission plan of its employees:

Reorganisation of a team

The commission remuneration part of an employment contract may be reviewed when the reorganization of a division affects the commissions of its members, without guaranteeing the continuation of the amount of their salary.

Internal mobility

An amendment may be made to the employment contracts of employees who are to move internally to a new location with a turnover lower or higher than that to which their current commission pay plan is allocated.

Market developments

Provided it has the agreement of its employees and provides details, a company can consider changing their commission pay in line with market developments. However, without their agreement, the company cannot change the commission pay plan in line with this criterion.

📌 Please note:

It is possible for the employer to pay these employees what are known as voluntary bonuses. This means that, provided the company can justify it, a company can pay a bonus without having to write it into the employment contract, amend it or draw up a rider.

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2. Modification of the commission remuneration plan: What are the risks in case of non-compliance with legal obligations?

If a company modifies the objectives of a commission remuneration plan without these being achievable, and if they were fixed and known to the employee at the beginning of the year, it is not complying with the law and is therefore exposed to risks. 

In practice, such an act may lead to the termination of the employment contract of the employee(s) concerned by the employer's fault. The company is also exposed to a reimbursement of the commission remuneration for the amount paid in previous years or the maximum amount, but also to other heavy compensation.

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3. Changing commission pay: the steps to follow

If the employer wishes to change the commission remuneration of his employees, he must inform them at the beginning of the financial year and respect the principle that these are feasible.

These changes should lead to a modification of the employment contracts for the next employees joining the company (only those with a commission remuneration component).

As regards the modification of commission pay for current employees, it is up to the company to draw up an amendment and have it signed by all the beneficiaries.

📌 Please note: 

An employee has the right to refuse to sign an amendment modifying his commission pay. This means that the employee continues to benefit from the previous commission pay system. Although this does not constitute grounds for dismissal for the employer, the latter is able to take legal action.

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4. Changes to the commission pay plan: what are the possible reactions as an employee?

Insofar as the employer does not follow the previously stated rules, an employee can take legal action. 

Indeed, if the changes in commission pay have an adverse effect on the employee's remuneration, the employee has the possibility to : 

• Take the case to the industrial tribunal to ask for the reinstatement of her original salary. 
• To take notice of the termination of the employment contract or to request judicial termination of the contract.

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The final word...

A company is therefore able to modify a commission pay plan as long as the new targets set are achievable and are announced to employees at the beginning of the year.

For this new commission pay to be valid in the eyes of the law, and for the company to be covered from any legal problems, it must be accepted by its beneficiaries through the signing of an amendment.