labor law: Commission Chargebacks

[MrMike]

I have a group of employees complaining to the labor board because of the following situation:

They make sales based on a subscription service, the deal is that they get an upfont commission with a chargeback period of 6 months. (If the customer cancels the service within six months we withhold a similar commission from future payment to compensate)

They claim that I cannot assess chargebacks like that but I have heard various things from different lawyers, I am prety sure that all call centers do this, its a central part of many programs, the commission is there to incent the agent to sell, and the chargeback is there to incent the agent to provide quality sales.

[Robert]

Originally Posted by MrMike

I have a group of employees complaining to the labor board because of the following situation:

They make sales based on a subscription service, the deal is that they get an upfont commission with a chargeback period of 6 months. (If the customer cancels the service within six months we withhold a similar commission from future payment to compensate)

They claim that I cannot assess chargebacks like that but I have heard various things from different lawyers, I am prety sure that all call centers do this, its a central part of many programs, the commission is there to incent the agent to sell, and the chargeback is there to incent the agent to provide quality sales.

Do you want RD$100 cash today or a RD$500 check tomorrow? I'll take the check!

The problem is Mike, your dealing with the dark ages here.

I guarantee you that 95% of Dominicans have no idea what a charge back is or what it relates to. Most have never been exposed to these types of transactions, hence the ignorance. My guess is that your better off keeping it KISS.

Pay lower commissions and build the charge back rate into your numbers.
Or pay an additional commission once the customer had surpassed the 6 month mark.

What happens if someones makes 50 sales, get's paid and then leaves.
Who absorbs any future charge backs on those sales?

[MrMike]

Originally Posted by Robert

Pay lower commissions and build the charge back rate into your numbers.
Or pay an additional commission once the customer had surpassed the 6 month mark.

Good idea but we are talking about 3 years of history that some agents are threatening to sue me for. if I lower the commissions now, I am sure they would sue me for that as well. If I withhold a portion for 6 months, I am sure they would sue for that as well.

Originally Posted by Robert

What happens if someones makes 50 sales, get's paid and then leaves.
Who absorbs any future charge backs on those sales?

Well I do. The amount of comission that the agent receives is symbolic compared to what the compay earns. (still significant to the agent, of course) The main reason I have applied chargebacks is to instill in long term employees anunderstanding of the need to follow up on customers and provide quality sales that will stick.

When peope leave, I dont much care what they do.

[Robert]

Do employees have a contract that they have signed that specifically states how the charge backs will be handled? I hope so!

You know what most employees are like here, they will sue if they smell a sniff of money, even if it causes the business to close down. Even worse when a few get together and have that "pact" mentality.

[MrMike]

Their contract says that there are various commissions and incentives that are subject to change and modiication. Since we dont plan to only ever have one campaign, we thought we should leave it open like that.

My lawyers tell me they believe our position is defendable, since we can prove that we were deducted the money ourselves.

So I am settling in for the long haul, it will be interesting to see how it comes out.

[planner]

Hey honey keep us posted on the outcome! I am sure I am not the only one interested.

[MrMike]

So far no one has sued me, but I have also suspended chargebacks temporarily in my company since we temporarily switched from warm leads to cold calling, sales are a lot harder to make and I think that for the moment chargebacks would be more discouraging than it is worth to teach the lesson.