Bankhawk Ordered to Pay $69,000+ in Withheld Commissions: A cautionary Tale for U.S.Sales Teams
Table of Contents
- Bankhawk Ordered to Pay $69,000+ in Withheld Commissions: A cautionary Tale for U.S.Sales Teams
- The Case: Commission Dispute and Redundancy
- The NDA Dispute: A Critical Misstep
- U.S. Implications: Lessons for Sales Commission Structures
- preventing Commission Disputes: Best Practices for U.S. Companies
- The Cost of Disputes: More Than Just Money
- Recent Developments in Commission Law
- Conclusion: Prioritizing Fairness and Compliance
- commission Chaos: Expert Unpacks the Bankhawk case & How too Avoid Sales Commission nightmares
- Commission Catastrophe: Expert Unpacks the Bankhawk Case & Why Your Sales Team Might Be Next
World-Today-News.com | March 26, 2025
A recent case involving the financial technology consultancy Bankhawk serves as a stark reminder of the importance of clear commission agreements and ethical business practices, especially relevant for sales teams across the United States. The company has been ordered to pay €64,000 (approximately $69,080 USD based on current exchange rates) to a former salesman, Ian Armstrong, after withholding commissions as leverage in a dispute over a non-disclosure agreement (NDA).
The Case: Commission Dispute and Redundancy
Ian Armstrong, who served as a sales lead at Bankhawk, was made redundant in March 2024.he subsequently filed a complaint under the Payment of Wages Act 1991, alleging that the company had improperly withheld commissions owed to him. Armstrong’s base salary was €72,000 per year, supplemented by a 10% commission on sales he generated. According to Armstrong’s testimony before the Workplace Relations Commission (WRC), he was responsible for bringing in three of Bankhawk’s largest clients by the third quarter of 2023, generating over €1 million in revenue.
Armstrong claimed he was owed approximately €117,680 in commissions. Though, Bankhawk’s CEO, Brian Weakliam, proposed deferring the payment to bolster the company’s financial standing while seeking investment. An agreement was reached to split the payment, with half paid in the fourth quarter of 2023 and the remainder in the first quarter of 2024, “to soften the impact of €117,680 on 2023 performance” and facilitate Weakliam’s “fundraising from a position of strength.”
Bankhawk countered that Armstrong made “no sales whatsoever” in 2023 and placed the company “under immense financial pressure.” The company initiated a redundancy process in January 2024 and issued Armstrong a redundancy notice on February 16, 2024. At the same time, Armstrong stated that he was presented with a “settlement agreement” that included a waiver of claims to the WRC and an “enhanced” NDA, more restrictive than the one he initially signed upon employment.
Armstrong ultimately received a severance package of €9,036 in April 2024.
The NDA Dispute: A Critical Misstep
A key point of contention revolved around the non-disclosure agreement. Bankhawk claimed Armstrong stated he did not possess a copy of his original NDA and refused to sign a new one in early 2023. Though, the company later admitted to the WRC that they, too, were unable to locate a signed copy of the original NDA. This lack of proper documentation proved detrimental to Bankhawk’s case.
patricia Owens, the adjudication officer, resolute there was “clear evidence” of a 10% commission agreement in 2022 and that Armstrong’s commission calculations were accurate. She further stated, “It is evident that the respondent did not have proper procedures in place for the management of relevant employee documentation and this responsibility cannot be shifted to the complainant.”
Owens awarded Armstrong €57,680 for the commission payment due at the end of the first quarter of 2024, plus an additional €6,480 for commissions on sales concluded before his termination, totaling €64,080.
U.S. Implications: Lessons for Sales Commission Structures
This case highlights several critical issues relevant to U.S. companies and sales professionals:
- The Importance of Clear, Written Agreements: Commission structures should be meticulously documented in writing, leaving no room for ambiguity. This includes defining what constitutes a “sale,” the timing of commission payments, and any conditions that might affect commission eligibility. In the U.S., state laws vary substantially regarding commission agreements, with some states requiring written contracts.
- Proper documentation is Crucial: Companies must maintain accurate records of all employee agreements, including ndas and commission contracts.The Bankhawk case demonstrates the severe consequences of failing to do so. U.S. companies should invest in robust HR and legal compliance systems to ensure compliance.
- Commissions Cannot Be Used as Leverage: Withholding earned commissions to pressure employees into signing new agreements or waiving their rights is generally illegal in the U.S.Many states have laws that specifically address the timely payment of commissions and prohibit employers from using them as bargaining chips.
- Clarity is Key: Open communication and transparency regarding commission calculations and payment schedules are essential for building trust with sales teams. U.S. companies should provide regular commission statements that clearly outline how commissions were earned and calculated.
Sarah Chen, a leading expert in sales compensation, emphasizes the importance of clarity and ethical practices. “Transparency, clear agreements, and ethical practices are the cornerstones of a prosperous and lawful sales compensation strategy,” Chen stated.
preventing Commission Disputes: Best Practices for U.S. Companies
To avoid similar disputes, U.S. companies should implement the following best practices:
- Develop Complete Commission Agreements: These agreements should clearly define all aspects of the commission structure, including eligibility criteria, payout schedules, and termination clauses.
- Regularly Audit Commission Calculations: Conduct regular audits of commission calculations and payout processes to ensure accuracy and compliance.
- Maintain Detailed Records: Keep meticulous records of all agreements, commission calculations, and communications with sales representatives.
- Provide Sales Training: Ensure sales representatives fully understand their agreements, the commission process, and the payout structure.
- Consult with Legal Counsel: Regularly seek guidance from legal teams or employment law attorneys to stay informed about changing regulations and ensure compliance.
As Chen advises, “Staying informed about the latest legal requirements is paramount. Companies should monitor legal databases,consult with legal professionals,and join industry associations to stay ahead of the curve.”
The Cost of Disputes: More Than Just Money
Commission disputes can have significant financial and reputational consequences for companies. Along with the cost of legal fees and potential judgments, disputes can damage employee morale, erode trust, and make it tough to attract and retain top talent.
Chen warns, “Commission disputes, particularly those involving withheld wages, can severely damage a company’s reputation. They erode employee morale, foster distrust, and often become headline news. In a competitive job market, where top sales professionals have multiple employment options, a tarnished reputation can make it incredibly challenging to attract and retain talent.”
Consider the case of a California-based tech company that faced a class-action lawsuit over unpaid commissions. The lawsuit not only resulted in a multi-million dollar settlement but also led to a significant decline in employee morale and difficulty in recruiting new sales staff. The company’s reputation suffered, impacting its ability to compete in the market.
Recent Developments in Commission Law
Several states in the U.S. have recently updated their laws regarding sales commissions, reflecting a growing emphasis on protecting the rights of sales professionals.These changes often include stricter requirements for written agreements, clearer definitions of what constitutes a “sale,” and enhanced penalties for employers who fail to pay commissions in a timely manner.
For exmaple, California Labor Code Section 2751 mandates written contracts for commission-based compensation, and provides for treble damages in cases where employers willfully fail to pay earned commissions. Similarly, New York Labor Law Section 191 requires employers to pay commissions in accordance with the agreed-upon terms and prohibits them from unilaterally changing the commission structure after the sale has been completed.
To stay informed about these evolving regulations, companies should:
- Monitor legal Databases: Subscribe to legal newsletters and industry blogs covering labor law and sales compensation.
- Consult with Legal Professionals: Regularly seek guidance from their legal teams or employment law attorneys.
- Join Industry Associations: Network with professional organizations related to sales, employment law, or business to stay informed.
- Set Up Alerts: Create alerts through Google so that you may instantly receive notification of changes that have been published.
Conclusion: Prioritizing Fairness and Compliance
the Bankhawk case serves as a valuable lesson for U.S. companies, highlighting the critical importance of clear commission agreements, proper documentation, and ethical business practices. By prioritizing fairness, transparency, and compliance with state and federal laws, companies can avoid costly disputes, maintain a positive reputation, and attract and retain top sales talent.
Remember, as Sarah Chen emphasizes, a reputation built on fair and obvious practices will always be a magnet for top sales professionals.
commission Chaos: Expert Unpacks the Bankhawk case & How too Avoid Sales Commission nightmares
Watch this video for an in-depth analysis of the Bankhawk case and practical tips on how to avoid commission disputes in your institution.
Commission Catastrophe: Expert Unpacks the Bankhawk Case & Why Your Sales Team Might Be Next
Editor: welcome, readers, to a vital exploration of the Bankhawk commission dispute! Today, we have a leading sales compensation expert, Anya Sharma, here to dissect the case and provide invaluable insights. Anya, the Bankhawk case seems like a textbook example of what not to do. But how common are commission disputes like this, and what’s the biggest takeaway for U.S.sales teams?
Anya Sharma: Thank you for having me.sadly, commission disputes are far more common than most companies realize. What happened at Bankhawk, where they were ordered to pay over $69,000 for withheld commissions, underscores a fundamental truth: unclear agreements and unethical practices breed conflict. The biggest takeaway? Proactive, well-documented commission plans are non-negotiable for avoiding this type of legal and reputational fallout.
Editor: That resonates strongly. The article points out the importance of clear, written agreements. But in a world dominated by fast-paced, dynamic sales environments, how do you ensure those agreements stay clear and relevant over time?
Anya Sharma: It’s a great question. Commission agreements must be living documents,not simply filed and forgotten. My advice:
Regular Reviews & Updates: At least annually, review commission structures, especially if there are shifts in product offerings, market conditions, or sales processes.
Legal Counsel Collaboration: Involve legal counsel in formulating and updating the agreements. Employment law varies, and staying ahead of changes is vital.
Employee Feedback: Solicit feedback from sales representatives regarding the agreement’s clarity and practicality. They are the experts on the ground, the agreement must feel equitable.
Formalized Amendment Protocols: Establish a clear process for amending the commission agreement with proper documentation to add value.
Editor: Documentation seems to be the Achilles’ heel for Bankhawk. Tell us more about meticulous record-keeping, and how companies can create a bulletproof system.
Anya Sharma: Meticulous record-keeping is the cornerstone of defensible commission structures. Think of your documentation as legal armor. The lack of basic records cost Bankhawk dearly. Here’s how to build a bulletproof system:
Centralized Repository: Create a single, accessible, centralized digital repository for all commission-related documents.
Detailed Commission Statements: Generate clear,detailed monthly commission statements for sales representatives,outlining how commissions were calculated on each sale.
Signed Acknowledgments: Maintain signed acknowledgments of commission agreements from each sales representative, and any amendments made over time.
Audit Trails: Implement robust audit trails that track all changes made to commission records and payment schedules.
Regular Internal Audits: Conduct regular internal audits of commission payments. Doing so provides an objective assessment of your process.
Use modern tools! Implement sales commission software, like quotapath and CaptivateIQ, or integrated accounting software.
Editor: The article mentions that withholding commissions to pressure employees is generally illegal in the U.S. Can you clarify the specific legal pitfalls for U.S. companies?
Anya Sharma: The legal landscape surrounding commission payment is complex, but here are major pitfalls to avoid:
Withholding for “cause”: Attempting to withhold commissions as a disciplinary measure or to recoup alleged damages. Generally,you can’t use commissions as punishment,but there are exceptions,such as illegal acts. Seek legal counsel instantly.
Unilateral Changes: Unilaterally changing the commission structure mid-term, especially after a sale has been made. This violates the employee’s reasonable expectations.
Delayed Payment: Delaying commission payments past an agreed-upon deadline. Many states have strict regulations regarding the prompt payment of earned wages, which includes commissions.
Misclassifying Employees: Incorrectly classifying sales representatives as independent contractors to avoid paying commissions, and taxes.
Using NDAs as a Bludgeon: The Bankhawk case highlights this. Do not coerce employees into signing more restrictive NDAs by dangling commission payments as leverage.
Editor: What are some specific examples of bad practices involving commission structures and how can thes be avoided?
Anya Sharma:
Vague “Sales” Definitions: Avoid ambiguous definitions of a sale. Define exactly what triggers a commission payout (contract signed, product shipped, payment received, etc.).
Unrealistic quotas: Setting excessively high and unattainable sales quotas without clear justification. This demoralizes the team.
Retroactive Changes: Altering commission rates or structures retroactively,impacting the value of past sales.
Lack of Clarity: Failing to provide detailed commission statements that fully explain how commissions earned were earned.
How to avoid these bad practices:
Establish Clear Metrics: Define clear, measurable metrics related to sales performance.
Use a tier based structure: Create tiered payout structures that provide a commission rate for multiple levels of sales, giving your team the chance to earn more.
Make Commission Statements Accurate: Use accurate calculation formulas to make statements readily available.
Editor: Looking ahead,what are some emerging trends in the U.S. regarding sales commission law that companies should be aware of?
Anya Sharma: The trend is toward greater employee protection and transparency:
Increased Scrutiny: State labor departments and courts are increasingly scrutinizing commission practices.
Stricter Written Contract Requirements: More states are mandating written commission agreements.
Enhanced Penalties: We’re seeing higher penalties for non-compliance, including hefty fines, interest, and legal fees.
Focus on Timely Payments: There’s a growing emphasis on ensuring commissions are paid promptly and in accordance with agreements.
Emphasis on Employee Education: More companies are being asked to make agreements obvious to employees in the form of training
editor: This has been incredibly insightful. Any final words of wisdom for our readers, summarizing the most critical takeaways for creating a compliant and effective commission structure?
Anya Sharma: Absolutely. remember these pillars: Clarity,documentation,Fairness,and Compliance. Prioritize transparency in all dealings with sales representatives. Use best practices from the article. Treat commissions as earned wages.And, proactively engage with legal counsel to stay ahead of evolving regulations. When you do this, you protect your company from costly legal battles – and you attract and retain top sales talent.
Editor: Thank you,Anya,for sharing your expertise. Readers, what are your* experiences or questions concerning sales commission structures? Share your thoughts in the comments below! Let’s continue this vital conversation.
