{"id":4900,"date":"2016-09-27T20:28:14","date_gmt":"2016-09-27T20:28:14","guid":{"rendered":"https:\/\/simplylaw.waydevelopers.com\/england-wales\/wiki\/hills-v-niksun\/"},"modified":"2023-11-04T13:12:06","modified_gmt":"2023-11-04T13:12:06","slug":"hills-v-niksun","status":"publish","type":"articles","link":"https:\/\/simply.law\/england-wales\/articles\/hills-v-niksun\/","title":{"rendered":"Slicing up the pie&#8230;"},"content":{"rendered":"<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">In Hills v <g class=\"gr_ gr_42 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"42\" data-gr-id=\"42\">Niksun<\/g> the Court of Appeal has upheld the decision of the High Court to take the unusual step of interfering with an employer&#8217;s assessment of the commission entitlement of one of its employees.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><b><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">Facts<\/span><\/span><\/span><\/b><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">Mr Hills was employed by <g data-gr-id=\"41\" id=\"41\" class=\"gr_ gr_41 gr-alert gr_spell gr_disable_anim_appear ContextualSpelling ins-del multiReplace\">Niksun<\/g> as a regional sales manager. A large part of his remuneration consisted of commission. The rules of the commission scheme were set out in both his contract of employment and a number of ancillary documents.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">The dispute centred around a significant deal negotiated by Mr Hills with Credit Suisse London in respect of the sale of <g class=\"gr_ gr_43 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"43\" data-gr-id=\"43\">Niksun&#8217;s<\/g> software for the Asian and Pacific market.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">The US office of <g class=\"gr_ gr_44 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"44\" data-gr-id=\"44\">Niksun<\/g> had some involvement in these negotiations and <g class=\"gr_ gr_45 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"45\" data-gr-id=\"45\">Niksun<\/g> determined that <g class=\"gr_ gr_98 gr-alert gr_gramm gr_run_anim Punctuation multiReplace\" id=\"98\" data-gr-id=\"98\">as a result<\/g> the US was the \u2018point of influence\u2019 for the sale under the commission scheme. This was defined under the scheme as the location where major account control resided, including where the contract was negotiated and managed.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">The upshot of <g class=\"gr_ gr_40 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"40\" data-gr-id=\"40\">Niksun\u2019s<\/g> determination was that only 48% of the commission for the deal was allocated to the UK office and, in turn, Mr Hills. This cost Mr Hills some \u00a36,701 in commission.\u00a0<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">Mr Hills brought a claim for breach of contract, alleging that the commission should have been allocated 100% to the UK office and that, accordingly, he had been <g class=\"gr_ gr_106 gr-alert gr_gramm gr_run_anim Grammar only-ins doubleReplace replaceWithoutSep\" id=\"106\" data-gr-id=\"106\">underpaid<\/g> commission.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">The High Court decided that the UK <g class=\"gr_ gr_183 gr-alert gr_gramm gr_run_anim Punctuation replaceWithoutSep\" id=\"183\" data-gr-id=\"183\">was in fact<\/g> the point of influence and that, accordingly, a 48% allocation of <g class=\"gr_ gr_107 gr-alert gr_gramm gr_run_anim Grammar only-ins doubleReplace replaceWithoutSep\" id=\"107\" data-gr-id=\"107\">commission<\/g> was not fair and reasonable. It substituted a figure of two-thirds, having regard to the evidence it heard. The court concluded that &#8220;in a world where split commissions were common&#8221; an award of less than two-thirds was &#8220;quite simply outside the bracket of what [was] fair and reasonable under the circumstances&#8221;.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">Niksun appealed to the Court of Appeal but the appeal was dismissed.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">In particular, the Court of Appeal rejected the arguments that the wording of the scheme (which attempted to reserve an extremely wide discretion to <g class=\"gr_ gr_46 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"46\" data-gr-id=\"46\">Niksun<\/g> as to how <g class=\"gr_ gr_116 gr-alert gr_gramm gr_run_anim Grammar only-ins replaceWithoutSep\" id=\"116\" data-gr-id=\"116\">commission<\/g> would be calculated) meant that its discretion was broad and unfettered. The plan set out a detailed process for the award of <g class=\"gr_ gr_118 gr-alert gr_gramm gr_run_anim Grammar only-ins doubleReplace replaceWithoutSep\" id=\"118\" data-gr-id=\"118\">commission<\/g> which <g class=\"gr_ gr_47 gr-alert gr_spell gr_run_anim ContextualSpelling ins-del multiReplace\" id=\"47\" data-gr-id=\"47\">Niksun<\/g> was obliged to follow. Any discretion had to be exercised in accordance with the detailed terms of the plan.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><b><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">Comment<\/span><\/span><\/span><\/b><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">It would be wrong to take from this case that employers now have the burden of proving that any decisions rooted in discretion are reasonable, or that they must adduce evidence of their decision-making process in order to avoid a finding of irrationality. However, it does set a precedent for arguments of this sort to be made in similar cases. The test remains that any exercise of discretion in such cases will only be overturned if it is shown to be perverse or irrational.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">The case is, however, a useful reminder that broad statements of discretion in <g class=\"gr_ gr_92 gr-alert gr_gramm gr_run_anim Grammar only-ins replaceWithoutSep\" id=\"92\" data-gr-id=\"92\">contractual<\/g> documentation for bonus or commission schemes will be of limited influence and will be treated with caution by the courts.<\/span><\/span><\/span><\/p>\n<p align=\"justify\"><i><span><span size=\"2\" style=\"font-size: small;\"><span face=\"Arial\" style=\"font-family: Arial;\">Hills v Niksun Inc [2016] EWCA Civ 115, 1 March 2016 (Bailii)<\/span><\/span><\/span><\/i>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Court of Appeal has upheld the decision of the High Court to interfere with the commission entitlement of a Niksun employee.<\/p>\n","protected":false},"author":1,"featured_media":7975,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"_acf_changed":false,"_joinchat":[],"footnotes":""},"categories":[12331,12329],"tags":[11545,11546,11547,11548,8898,11544],"class_list":{"0":"post-4900","1":"articles","2":"type-articles","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-employment-law-for-employees","8":"category-employment-law-for-employers","9":"tag-commision","10":"tag-commission-schemes","11":"tag-contractual-documentation","12":"tag-credit-suisse-london","13":"tag-high-court","14":"tag-hills-v-niksun"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Slicing up the pie... - Simply Law England Wales<\/title>\n<meta name=\"description\" content=\"&quot;Explore our comprehensive collection of legal articles covering various topics to help you navigate the complexities of the law. 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