Am I missing something? Should I just take the pay cut?

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I need some help/neutral people to help me think rational about my work situation. I am posting this on a burner account.

I started a new job 2 years ago. I was salaried for the first year, then for my second they offered me to be on commission. When I say offered they said: “If you don’t sign it then we’ll have to see”. See what,… I don’t know.
I was hesistant at first because I knew I’d have to increase my productivity (thus my stress level) but in the end it’s worked out amazingly for me (altough yes, the work, stress is increased a lot too). The contract has no end date.

This contract is good compared to the industry! The realtive percentual profit I earn is about 25% compared to colleagues in the industry.

A couple weeks ago they said we’d have to sign a new contract. It was expected for several reasons:

  1. I’m getting a new certificate which opens up new revenue streams for me. This work was previously already done by me. I just wasn’t able to charge it. It was charged by the company. My current contract didn’t stipulate that this is not going to be part of my commission in the future.

  2. I did some things for free this year which I assume they want to keep being free.

  3. We have new colleagues that are probably going to demand to have the same contract too.

Their arguments were basically this:

  1. "It was obvious TO US [that the commission of the work you need the certificate for is included in the contract]. I’m sorry if we didn’t communicate it like this to you"
    To be clear: the contract doesn’t say it either if just states what % I get from everything

  2. We are doing a disservice to the other employers in this industry by paying you this much and it isn’t fair to the others.
    I am the longest tenured employee at the moment. It is obviously not my problem that others aren’t standing up for themselves more.

They never mentioned that they are losing money. I haven’t increased the ressources I need, I am taking a lot of slack and am doing things for free too because I’m interested in them like teaching the new employers in my free time or during my work hours.

According to the numbers I have access my revenue has increased by about 80%. My salary has not increased as much as there are some things I can’t charge. I obviously don’t know how much their expenses are but I assume it should be more or less the same as we didn’t expand.

The new contract is going to be much more in line withthe rest of the industry. Based on my current numbers I expect to earn about 16%. It’s still a bit better that industry standard but:

  1. Can I live with myself if I knew that I just rolled over and accepted a huge paycut? Could you? This is usually it for us, if we stay at this job this is the highest you’ll get.

  2. You obviously only have my side, but based on this, am I missing something? I tend to sometimes get taken over by my emotions.

To answer some questions in advance:

  • I expect I’ll be able to find a job quickly but compared to the old (and new) contract it would be a pay cut. It’s still enough.
  • While I earn more than my wife we are ok with me taking some time off as we have enough money saved.
  • While this workplace is nice as it’s close to my home and modern, I have cool collegues I’d miss and customers I’d miss my relationship with the bosses is strained based mostly on the contract and financial situation.
  • I don’t see what else they could offer as we do not have shares in the company or some bonuses or something like that. Maybe you guys have an idea though.

Thank you so much for reading this wall of text! I appreciate it!

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I see three aspects to this decision:

  1. is financial:
    1a) what do you need/want for your financial future?
    1b) will you have it with the new contract?
    1c) can you get it elsewhere?

  2. is psychological:
    2a) can you appreciate working for these people any more or is the relationship getting strained to the point of leading to a breakup anyway?
    2…
    2b) does 2a apply if you don’t sign the new contract?
    2…
    2c) does 2a apply if you sign the new contract (taking into account potential resentment from your part due to the way they pulled this on you)?

  3. is work-life balance or mental health related:
    3a) working on commissions has increased your work related stress. Will the new contract make the situation worse and are you willing to deal with it (taking into account the potential resentment coming from feeling you’re not compensated as well as you should be for the amount of efforts you’re putting in)?
    3…
    3b) would the situation be better elsewhere or in a different position/industry?

From their point of view, I’d say they can:

A) back down and keep things as is (unlikely in my experience but smarts and business acumen weren’t key assets I’d say my former employers had so my assessment is biased and probably not representative of the situation at large).

B) terminate your actual contract, put the new one on your table and let you go if you don’t sign it.

C) discuss the terms of the new contract with you and come to an agreement (also not likely in my experience but there again, my experience is biased).

Can you live with either of these outcomes?

Put in your shoes, I would want to take some perspective and have a fresh mind to ponder my options. This might put new options/ideas/desires on your dashboard.

What I would do:

  1. Discuss the situation with my wife, outline the stress the situation is bringing upon you and the stress and frustrations the future situation might. Try to get her agreement that you taking some time off is a good thing for you to take the best decision moving forward. Decide how much time that would be (could be 1 week, could be 1 month, could be much more; if you’ve been looking for an opportunity to travel, this could be it).

  2. Tell my employer that I need time to think about their proposal and that I’m taking a sabatical to freshen my perspective on it. Make it an information and not an option.

  3. Take the required time to assess what I really want to do moving forward.

As for what I usually do in those situations:

I can live with myself in a broad array of situations. On a general basis, I try to be pleasant with myself, kind (but not nice, I do hold myself to certain standards) and to give myself some leeway to handle the results of the actions/decisions of my past self, provided he took them with the best intent given the information available to him at the time (which is probably less than present me has when he does his retrospective).

HOWEVER, I would be very, very soar regarding my employer. This is the kind of shenanigans I consider to be deal breakers and I would immediately start searching elsewhere if I can find a new position that suits my expectations. I’d resign as soon as I’ve found it (but not before).

In the mean time, but this is me as a pretty stuborn person with a high view of myself (the rational thing to do may not be this), I probably would personally not sign the new contract, tell them that it isn’t what was agreed upon when we signed the present contract, that if they do care for fairness regarding their other employees, they can give them a raise matching my contract (and that the hapiness of the employees of their competitors is none of their business - if anything, they should be happy if they’re unsatisfied with their own employer, if that’s the issue) and that if they are not happy with it, they can terminate my contract provided they abide to the relevant laws and terms of it.

I’d expect them to terminate the contract which, in effect, would give me my sabatical with unemployment benefits (sending ~10 applications a month leaves plenty of time for letting the pressure drop and taking some perspective) and let me assess the best way forward, confident in my ability to find employment whenever I need it.

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3

When it comes down to it:

  • What is your BATNA (best alternative to a negotiated settlement)? i.e. if you walk away, what can you get? Can you go to competitors and take customers with you? Can you set-up your own shop?
  • What is the BATNA for the company if you leave? Will they lose revenue or will other employees pick up the slack?
  • If things go nuclear and disclose how much you earned and how much the other employees were ‘ripped off’ how would they react? (I experience as similar case where employees just walked they got so pissed off)
  • What position are you in? Are you already FI and can just walk?
  • What about the company? Are they doing well, or could a loss of revenue put them in trouble?

When you understand the relative positions of negotiating strength, you know the parameters for negotiation and can move forward accordingly.

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You currently get nothing for this. My opening position would be that this is fully commissioned. If the contract is unclear, the contract should be revised to make it clear that this will be eligible for full commission.

In reality, this is perhaps something that might be a bargaining chip. Maybe a percentage of revenue subject to commission e.g. 50%.

IDAF how you deal with the other employees. I’m the employee with longest tenure and best results. If you haven’t been fair to the other employees, will you go back and pay the commission to match? I think it fair that with tenure/performance I should continue the contract which we both agreed. [If appropriate drop hint about wondering how other employees would react if they find out that they’ve been ripped off.]

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Thank you so much for taking the time to write this! This was my thought process too, I just wasn’t sure if emotion is clouding my judgement. Yes the new contract would still be better than most competitors but it would come at a cost - my own pride and a lot of pent up resentment that I would be carrying day in, day out.

6

These are all great points! I believe in transparency and that sharing contract information will make everybody better off, so I don’t keep it a secret. The people in my position at the company all know my contract. At the moment I don’t think any of them can pick up the slack. I humbly know that I’m the best performer based on revenue and customer satisfaction. I could maybe take some customers but it depends on location.

I’m not FIRE, still have ways to go, but I am still relative young and we have enough where I could comfortably take time off and travel. FIRE is not a priority.

This is what I’m struggling with the most. I don’t know how they are doing. Based on some numbers I am able to see I think they are doing well. They do have people who are less profitable but it’s definitly not me.

You currently get nothing for this. My opening position would be that this is fully commissioned. If the contract is unclear, the contract should be revised to make it clear that this will be eligible for full commission.
In reality, this is perhaps something that might be a bargaining chip. Maybe a percentage of revenue subject to commission e.g. 50%.

Would you mind going over what you mean here. From what I understand you would counterargue that instead of decreasing my salary going forward it should actually be increased now? The contract only states “The employer will pay the employee x% of Y and Z that is charged to the customer”. The work I will be able to charge for once I have the certificate is part of Y. Do you mean that I can bargain and say: “Hey listen, I get it, you didn’t communicate well enough. I’ll be gracious and let’s say I will only take x - 5% on this new skill instead of the full x%.”?

(I’m sorry for the confusing lingo, it’s just that I want to be somewhat vague so I don’t doxx myself).

7

say “hey, this work should now attract commission (all of it)”

So your salary should go up.

When they push back, then negotiate a percentage of it should attract commission as a concession from your side. e.g. 50%

Maybe in the end you give it up entirely, to get something else that you want. That way they walk away with a ‘win’ and you too (e.g. otherwise preserve the contract how you want).

Or if the contract is clear (seems clear based on your wording) when you have the certificate, you will charge the customer, so you get commission. isn’t the operation of the contract clear on this point?

8

Yes and no, I charge them through the company. It is in my statistic but in the end they are the ones doing the billing. They could theoretically filter this out and decrease my % or get rid of it completely I guess. But yes, the contract is clear, if they would do that I think I’d have grounds to sue I guess.