Employment contract: ET did not interpret key clause correctly
A City law firm has won its appeal against an employment tribunal (ET) decision that it pay a newly qualified solicitor nearly £8,000 in commission he said he was owed.
Andrew Burns KC, sitting as a deputy High Court judge in the Employment Appeal Tribunal, held that Judge Sullivan in London had not interpreted the key clause in Billy Rashbrook’s contract “according to the natural and ordinary meaning”.
Judge Burns did not need to remit the case back to the tribunal as Mr Rashbrook “could not realistically have generated sufficient profit costs in respect of his work as a solicitor to exceed the commission threshold in his first year of practice”.
Mr Rashbrook qualified at Raymound Saul & Co in September 2021 and was put on a salary of £38,000. His contract provided that, if he billed more than three times his salary (ie, £114,000) in the year to 31 August and the money was paid by the clients, he would receive commission of 20% of the excess.
He left the firm on 1 November 2022, at which point the commission had not been paid or agreed. Two years ago, Judge Sullivan accepted [1] the solicitor’s contention that he was owed commission of £7,866
On appeal, Raymond Saul & Co argued that the contract required the commission calculation to be based on work Mr Rashbrook had actually done, pointing out that it was not his case that he did all the work on the files he billed.
Judge Burns held [2] that the ET did not interpret the clause “according to the natural and ordinary meaning”.
This was that any amounts billed which “were not in respect of work carried out by him” would not count towards his commission – the tribunal was wrong to find the contract contained no mention of apportionment of fees between different fee-earners, he said.
This was also “a commercial and common sense interpretation”, the judge went on, especially given that, as a newly qualified solicitor working under the supervision of partners and supported by others, Mr Rashbrook “would be highly unlikely to reach the threshold of billing more than three times his own salary early in his commission year, if at all”.
Judge Burns found the ET was also wrong to find no evidence of the law firm keeping the necessary records to apportion the work done on files.
“It was perverse for the ET to say that it had no evidence of the respondent keeping the necessary records when it was undisputed evidence before the ET that the respondent had a time recording system.”
Judge Burns decided he did not need to remit the case to the tribunal. It was “fanciful” to think Mr Rashbrook “would be able to satisfy any reasonable ET that he did sufficient work during the commission year in order to cross the commission threshold.
“When the supervision and contribution of partners, other fee-earners and trainees are taken into account (as they must because that was undisputed) there is no reasonable prospect of him showing that he did the vast majority of the work on all of these other files in the very first year of his practice…
“Once the correct interpretation of the contract is employed there is only one answer, which is that the claim must be dismissed.”