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IMDA celebrates inclusion of commission pay in Government Job Retention Scheme

The Independent Motor Dealers Association (IMDA) has celebrated the inclusion of regular commission payments in the calculation of car retail workers' incomes as part of revisions to the Government’s Job Retention Scheme.

Under changes to the scheme announced on Saturday (April 4) car retail businesses are among those who can include any regular payments they are obliged to pay their employees – including wages, past overtime, fees and compulsory commission payments – in the 80% of wages (up to a £2,500 monthly limit) they can reclaim from Government.

The publication of the new guidance comes a week after the IMDA started a petition demanding the changes be made in order to help heavily commission-based sales staff who had been hard hit financially when “furloughed” by their employer.

To date, over 27,000 people had signed the IMDA’s petition.

Scottish independent car retailer, Jim Reid, the owner of Jim Reid Vehicle Sales, was behind the petition. Following Saturday’s news, he said: “I’m not sure if our petition had any bearing on the decision but it’s the result that counts.”

The National Franchised Dealers Association (NFDA), which had written to Kemi Badenoch MP, Exchequer Secretary to the Treasury, to seek clarification on the Coronavirus Job Retention Scheme, also celebrated the changes to the Government Job Retention Scheme this week.

“Following our lobbying efforts, it is extremely positive that the Government has released further details about its Job Retention Scheme,” said Sue Robinson, director of the NFDA.

“NFDA has repeatedly highlighted to the Treasury how critical it is to include commissions and bonuses in the scheme as the majority of people employed in the automotive sector rely on these regular earnings in addition to their basic salary.

“It is encouraging to see that the Government is listening to our concerns and taking action to support businesses and the thousands of people employed in our sector".

Also among the clarification offered by Government regarding its Job Retention Scheme, were the below points:

  • Dealers can claim for any regular payments they are obliged to pay their employees. This includes wages, past overtime, fees and compulsory commission payments.
  • Both the Apprenticeship Levy and Student Loans should continue to be paid as usual as the grants from the scheme do not cover these.
  • Any employees that dealers place on furlough must be furloughed for a minimum period of three consecutive weeks. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of three consecutive weeks.
  • If contractually allowed, employees can work for another employer whilst the dealer has placed them on furlough.

Speaking to AM today, Nigel Morris, employment tax director at MHA MacIntyre Hudson, said there would still be "winners and losers" in the revised version of the salary scheme, but concluded that the outcome was fairer to all.

Morris told AM that the Furlough claim from the Government for a salaried employee is based on what they received in February 2020 in order to "avoid fraud", adding that the concern centred around the potential of someone could inflate the March 2020 pay to claim more than the norm. 

He suggested that the safetest way to calculate commission payment's to Furloughed employees would be to use regular commission payments made in that month, but added that further clarification from Government may yet see a 2019 average monthly commission be permissible. 

He said: "We will continue to ask the Government which is the correct methodology.

"For now, using February might be the safest way to proceed from an employer's point of view.

"There will be winners and losers, but February is a fairly ‘fair’ period to use."

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