The claimant was employed as an estate agent. The good work relationship that existed between the claimant and the respondent led to an agreement that the former would be entitled to receive 20% of the annual profits after tax.  The agreement was committed to writing, albeit only on an unsigned sheet of paper, but both parties accepted the validity of the document.

The claimant argued that the agreement ought to be viewed as a term of the employment contract whereas the respondent contended that it merely had the status of an informal arrangement. The respondent also asserted that payment of the profit share was subject to the claimant being employed for the whole financial year although he accepted that the claimant had never been made aware of any such condition. Further, the respondent argued that the claim for a share of the profits was outside the jurisdiction of the tribunal, since it was for an ‘unliquidated sum’.

The tribunal held that there was a contractual right to 20% of the annual profits, that such right was not dependent upon working for a full year, and that the respondent was in breach of that contractual term by refusing to pay any or all of that share.

Practical Lessons

There are clear lessons here concerning the need for clear communication when agreeing to variation of contractual terms. But perhaps more interesting is the tribunal’s rejection of the argument that the claimant was seeking an ‘unliquidated sum’. The case of Coors Brewers Ltd -v- Adcock [2007] EWCA Civ 19 held that claims for unspecified amounts of money are not able to be heard by any tribunal but rather by the County Court.

In the present case, the tribunal accepted that since the claimant left his employment before the end of the financial year then the pro rata calculation of the profits was not straightforward. However, the amount was still technically calculable and did not frustrate the claim. Therefore, where an amount claimed is not readily apparent but can be calculated without a detailed investigation the tribunal will assert jurisdiction. If, for example, the claimant’s share was to be discretionary upon the health of the final financial figures then this would have complicated matters and the claim may have been rejected as per the Coors decision.
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