JIQ v JIR [2026] SGECT 4

The claimant, Ms C, is employed by the respondent, FPL, as a Senior Production Solutions Consultant, a sales role. She has been an employee of FPL since 2013 and, notwithstanding the instant dispute, she has remained in her role. Essentially, Ms C’s claim arose out of a disagreement as to the construction of certain terms issued by FPL to govern the computation of sales commission payable to its staff. On Ms C’s case, she was part of a team of sales staff who had secured a contract between FPL and DB (the “DB Contract (No 5)”) and, for this contract, she averred that she had not been paid the full commission that was due to her on a proper interpretation of the relevant terms. Opposing that, FPL contended that Ms C’s interpretation of those terms was erroneous and advanced its own interpretation. On its interpretation, Ms C’s claim could not be sustained.

On 24 May 2023, I heard the parties. Ms C gave evidence for herself, and she and her union representative, Ms UR of the Singapore Manual and Mercantile Workers’ Union, made submissions in support of her position. The representatives for FPL were its Chief Financial Officer (“Mr CFO”), and its Senior Director for Strategic Business and Marketing (“Ms SBM”). They both gave evidence and made submissions in support of FPL’s position. After hearing the parties, I reserved my decision. Thereafter, on 19 June 2023, I allowed Ms C’s claim and ordered that FPL pay her the sum of $7,030.86 by 3 July 2023. On that day, I gave brief grounds for my decision. These are the full grounds of my decision.

Relevant background and the parties’ positions

As the parties’ disagreement as to interpretation formed the backbone of their dispute, I begin by setting out those terms and their views thereon. With those terms in mind, factual circumstances giving rise to this dispute are easier to appreciate.

Terms governing Ms C’s entitlement to sales commission

In November 2013, Ms C commenced her employment with FPL with a basic salary of $4,000 and commission payable “in accordance with the Sales Pay Plan”. Over time, she was promoted and her basic salary was increased. At the time of the hearing, she was paid a basic salary of $5,965 per month and continued to receive commission on sales. At the hearing, the parties agreed that in so far as the present dispute was concerned with the DB Contract (No 5), the applicable “Sales Pay Plan” pursuant to which Ms C’s sales commission was to be calculated, was one which had been introduced in June 2021. Accordingly, all references made hereafter to the “Pay Plan” are to that plan specifically, and not any others which may have been in force at earlier points in time. I should also add that no other older pay plan was placed before me.

The basic scheme of the Pay Plan was undisputed. In essence, sales commission was determined using the following formula: Quota Retirement (“QR”) ÷ Sales Quota (“SQ”) × Variable On-Target Earnings (“VOTE”). The manner in which the latter two components, SQ and VOTE, were derived was irrelevant to the present dispute. Therefore, they could, by and large, be disregarded. That said, I should note that the parties agreed on a specific point about the operation of these other components which bore on my decision. I will return to this at [46] below.

The component which was in issue was QR. I should state, as a preface, that the term “quota retirement” is not a term of art, nor was it defined in the Pay Plan. Fortunately, there was no dispute that it referred to the amount of revenue recognised for a particular deal, for the purposes of calculating commission on sales. Put simply, if the expected revenue from a hypothetical deal is $500,000 and that sum is fully recognised as QR, the staff involved in securing the deal would have their commission calculated on that $500,000 figure. (I am mindful of the accounting principles referred to by Mr CFO and Ms SBM which they say underlie the recognition of revenue; I use the term “value” here only loosely.) If, however, only half of that sum is recognised as QR, the staff would be paid commissions calculated on the basis that the value of the deal was $250,000. The question that arose from this, of course, was how—according to the terms of the Pay Plan—revenue would be recognised for a given deal. Or, to use the jargon of the plan, how “quota retirement” was to be determined.

The Pay Plan provided that revenue recognition for the purpose of computing sales commission was based on whether the deal was “protected” or “non-protected”. The relevant terms were as follows:

The terms “protected deal” and “non-protected deal” were not defined in the Pay Plan. It was this lack of a precise definition which lay at the heart of the present dispute, though, I should add, it was not the case that the parties were entirely apart in their understanding of the terms. They agreed on the general meaning of the words “protected” and “non-protected”. However, before I set out what the parties agreed on, I should emphasise that their common understanding of these words was a general one and not dispositive of the meaning of the full terms. Simply put, they agreed on the relevant concept but not its operation.

Ms C understood a deal to be “protected” whenever FPL’s contractual counterparty agreed to an “early termination clause” (“ETC”) which guarded FPL’s interest in the continuation of the contract. Thus, if the counterparty terminated the contract “early”, FPL would be held harmless. In Ms C’s own words:

The representatives for FPL had the same broad understanding of what “protected” meant. In Mr CFO’s words:

In Ms SBM’s words:

This brings me to the parties’ key disagreement—that being the meaning of a “deal”. On FPL’s case, a “deal” referred to the entire contract entered into with the counterparty. For example, in the case of the DB Contract (No 5) in issue, DB purchased hardware, licensed software, and engaged FPL to provide manpower services. Thus, on FPL’s case, the “deal” comprised all of these components and it was not one “deal” for hardware and software, and a separate “deal” for services. In Ms SBM’s words, she was “personally aware” that it was a “long-standing practice” of FPL to interpret the word “deal” in this manner for the purpose of calculating commission. This, she said, was justified because:

Mr CFO, naturally, had the same understanding.

On the other hand, Ms C suggested that, on a proper reading of the Pay Plan, “deals” ought to be recognised based on the individual components specified in the table set out at cl 2.1 (see [7] above). Given that the table suggests that there were four deal types—namely, (a) “hardware and software”, (b) “operating lease”, (c) “services” and (d) “extensions”—in so far as the DB Contract (No 5) was concerned, there was one “deal” for hardware and software and another for services. In support of this view, Ms C relied heavily on the plain text of the Pay Plan and contended that, if FPL had simply intended to draw a plain line between “protected” and “non-protected” contracts as a whole, there would have been no need for the tables at both cl 2.1 and cl 3.1 to specify deal types. Thus, Ms C said:

The foregoing adequately describes the parties’ positions in respect of their substantive dispute. Before getting to my decision thereon, however, it is necessary to recite the chronology of events leading to said dispute. This is because, as I will explain momentarily, whether Ms C had initiated the present proceedings in time was also in issue.

Events leading to the present dispute

The following timeline was not in dispute. In June 2021, Ms C and two other sales colleagues managed to secure the DB Contract (No 5). For context, the deal is referred to as “No 5” because it was the fifth addendum to an ongoing contractual relationship FPL has had with DB since November 2014. By their original agreement, FPL had been contracted to provide DB with high production printers (the model ‘Versant 2100 Press’), as well as accompanying maintenance and support services. The period of this original agreement was 60 months from 1 March 2015 (ie, it would end on 29 February 2020).

Between 2017 and 2021, FPL and DB executed four addenda to their original agreement. By the first addendum, signed in July 2017, the parties agreed to add on “Enhanced Maintenance Support” for a monthly fee of $6,900. By the second addendum, signed in March 2020, the parties agreed to extend their agreement for a further year until 28 February 2021. The fee for “Enhanced Maintenance Support” was also increased, as were printing charges. By the third addendum, signed in February 2021, the parties agreed to re-extend for just one month, until 1 April 2021. Lastly, by the fourth addendum, signed in March 2021, the parties agreed to further extend their agreement for another three months, until 1 July 2021.

This brings me to the more substantive changes that had been brought about by the fifth addendum, ie, the DB Contract (No 5). There were two phases to this agreement. The first was an extension of the existing agreement between the parties from 2 July 2021 until 1 March 2022. This was referred to as an “interim” extension because, during this period, FPL was to supply new equipment (newer high production printers—the model ‘Fuji Xerox Versant 3100ii’) and updated software licences to DB to “replace current aging devices”. After the new equipment and software had been supplied (by 1 March 2022), the second phase of the fifth addendum would take effect. The second phase was to be a further 60-month term (starting from 1 March 2022) during which, as stated at [12], FPL would lease the renewed hardware and software, and continue providing maintenance services. The DB Contract (No 5) also contemplated good faith negotiations in respect of a prospective “Outsourcing Service Agreement”. At the hearing, Ms C explained that this was essentially in contemplation of FPL taking over the “print room” of DB.

The monthly fees payable by DB from 1 March 2022 onwards were:

During the negotiations for the DB Contract (No 5), Ms C—as a “product specialist”—only negotiated the terms relating to the hardware and software components of the contract. Ms C’s two sales colleagues included one other sales “consultant” and an “account manager”, the latter being the overall relationship manager between FPL and DB. The other consultant also played a broader role than Ms C. He was the “opportunity manager” and was responsible for the negotiations as a whole. As a team, the trio managed to secure the following ETC:

The figure of $29,416 covered some of the monthly fixed charges. Specifically, the three bolded and underlined figures in the table reproduced at [18] above as well as a free-standing fee of $6,500 (ie, $651 + $15,572 + $6,693 + $6,500). On Ms C’s evidence, though the team worked as a whole to secure DB’s agreement to the free-standing $6,500 early termination fee, she was the one who specifically negotiated the early termination fee in respect of the hardware and software components of the contract (ie, $15,572 + $6,693), and, thus, fully protected FPL’s interest in those components in the event of an early termination. The partial protection of the “manpower” fees (ie, $651) had been raised by the other sales consultant who was a “services specialist”.

Both while negotiations were ongoing, as well as after the DB Contract (No 5) had already been secured—that was, between June and August 2021—there were internal discussions between Ms C, her sales colleagues, and various managers in FPL. The discussions concerned whether the abovementioned ETC ought to result in the DB Contract (No 5) being classified as “protected” or “non-protected” under the terms of the Pay Plan.

As no consensus could be reached, this eventually led to a formal request for the “Pay Plan Committee” to address the issue. To explain, this committee was constituted under the Pay Plan with the authority to resolve ambiguities arising from the plan:

On 1 October 2021, the Pay Plan Committee took the view that there were several components of the DB Contract (No 5) which had not been “protected”, but recognised that the sales team had managed to secure partial protection (ie, $29,416 out of the total $48,500 monthly fixed charge). Accordingly, rather than classifying the contract as “non-protected” and recognising only 50% of its revenue pursuant to cl 2.1 of the Pay Plan (see [7] above), the committee decided to recognise 60% of the contract’s revenue as commissionable revenue. This decision was taken on the basis that the value of the ETC that had been secured protected approximately 60% of the contract’s fixed monthly charge.

Dissatisfied with this, Ms C appealed for reconsideration on the same day (ie, 1 October 2021). On 21 October 2021, the Pay Plan Committee restated its decision that the commissionable revenue would only be recognised at 60%. Again, on the same day, Ms C’s Department Head (“Ms DH”) made a request for reconsideration. She reasoned that the hardware and software components were protected and, thus, members of her department, who were concerned with such products, should not be “penalised”. On 26 October 2021, Ms SBM responded to that request for reconsideration and restated the decision of the “Pay Plan Committee” again.

Before turning to the next relevant date, I digress to highlight that cl 5 of the Pay Plan stated the following:

At the hearing, I referred Ms SBM to this clause and queried: (a) who held the appointment of “Integrated Solutions & Sales Senior Director”; and (b) whether any appeal had been made to the aforementioned “Commission Dispute Committee”. She explained: (a) that “Integrated Solutions & Sales Senior Director” was her old title; and (b) that the response she sent on 26 October 2021 could be regarded as a decision of the “Commission Dispute Committee” as it was taken by her and the members of the Pay Plan Committee. Ms C did not dispute this explanation.

The next relevant date was 7 December 2021. On this date, Ms DH sent an email to Ms SBM appealing for further reconsideration. She reiterated the point that, in so far as the revenue expected from hardware and software was concerned, ie, the products falling within her department’s domain, the ETC in the DB Contract (No 5) ensured that DB would be fully liable for all charges until the end of the whole 60-month contract period. The email went overlooked for some time and, after Ms DH sent a chaser on 11 January 2022, Ms SBM responded once again on 13 January 2022 that the earlier decision would not be varied.

It bears highlighting that, although Ms C and her two sales colleagues (involved in the negotiations for the DB Contract (No 5)) initially contested FPL’s decision as a group, the latter two eventually gave up the fight. Ms C remained the last person who wished to pursue the challenge further. On that basis, she sought the assistance of her union sometime in 2022. This eventually led to Ms UR meeting FPL’s Managing Director (“MD”) in September 2022, after Ms C’s commission was paid in June 2022. The meeting was held with a view to getting him to reconsider the decision which had been taken. The MD declined to vary the decision and, consequently, Ms C filed a mediation request under s 3 of the Employment Claims Act 2016 (“ECA”) on 8 November 2022. The mediation conducted by the Tripartite Alliance for Dispute Management (“TADM”) was unsuccessful and Ms C decided to file her claim in the Employment Claims Tribunals (“ECT”) accordingly.

Issues arising for determination

From the foregoing, three issues arose for my decision: (a) first, whether Ms C’s mediation request was filed in time; (b) second, what the proper interpretation of the Pay Plan ought to be; and (c) third, whether anything ought to be made of cl 1.2(d) of the Pay Plan. I take each in turn.

Preliminary issue: Whether proceedings were initiated in time

The relevant provisions governing the time within which Ms C needed to file her mediation request with TADM are ss 3(2)(g) and 3(3)(a)(ii) of the ECA:

Based on the sequence of events set out at [15]–[27] above, FPL contended at the trial that Ms C initiated the present proceedings out of the time limit prescribed by the ECA. On FPL’s case, the decision taken on 26 October 2021 (see [24] above) was the final decision. Thus, as Ms C’s mediation request was only submitted on 8 November 2022, it fell just outside the one-year limit prescribed by s 3 of the ECA.

Opposing FPL’s contention, Ms UR made two submissions.

(a) First, she argued that Ms C’s commission for the DB Contract (No 5) was only paid in June 2022. Accordingly, it was only at this time that the dispute properly arose because, until such payment had been made, Ms C did not know the basis on which her commission would be paid.

(b) Second, and in the alternative, Ms UR referred to the fact that—after the Pay Plan and Commission Dispute Committee had given their decisions in October 2021—Ms DH made a further attempt to have the position reconsidered on 7 December 2021. After FPL had communicated on 13 January 2022 that the earlier decision taken would stand (see [26] above), Ms C then fairly took steps to involve the union. The union, in turn, approached FPL’s MD in hopes of still resolving the issue amicably. In September 2022, Ms UR met the MD and he declined to vary the committees’ decision (see [27] above). Without any further recourse within the company, Ms C then took time to consider whether she wished to take up the case with TADM and, thereafter, file a claim in the ECT. She took two months to consider her position between September and November 2022 because she knew she would be remaining in FPL’s employment and, thus, was unsure if further escalation was the right decision. Relying on this sequence of events and the grievance procedures stipulated by the union’s collective agreement with FPL (which was certified by the Industrial Arbitration Court in 2021 pursuant to s 25(1) of the Industrial Relations Act 1960), Ms UR argued that the time between 26 October 2021 and 8 November 2022 had been accounted for.

I did not accept Ms UR’s first argument on the terms that she expressed it. In my view, it was contrived to suggest that Ms C did not know what she would be paid until she received her commission in June 2022. The communications which would have been had between the parties from October 2021 onwards would have made it abundantly clear that she would receive commission on the basis that only 60% of the revenue from the DB Contract (No 5) would be recognised.

However, there was force in her suggestion that the date of payment in June 2022 ought to be the relevant start-date for the purposes of counting the one year prescribed by ss 3(2)(g) and 3(3)(a)(ii) of the ECA. Indeed, in my view, had Ms C filed a mediation request and, consequently, brought a claim before she had received (on her case) short payment of commission, her complaint would have been premature. This is because the ECT only has the power to make the types of orders specified in s 22(1) of the ECA. Notably, it does not have the power to issue declarations as to the proper interpretation of contractual documents which, if Ms C’s claim had been brought before her commission was even due to be paid, is all she would have been able to seek. Thus, the fact of short payment in June 2022 could be said to have been the final “material fact” that was needed to “give rise” to the present dispute. If so, as Ms C’s mediation request had been filed on 8 November 2022, she initiated proceedings in time.

I am mindful that the present case was somewhat unique in that the parties’ disagreement as to the proper interpretation of the Pay Plan and, thus, the amount of commission Ms C ought to receive, arose quite some time before the date on which such commission was even due to be paid. However, even if I am wrong that June 2022 ought to be the relevant start-date for ascertaining whether Ms C’s mediation request had been filed within one year, I did not agree with FPL that the relevant start-date should then instead have been 26 October 2021. In this regard, I generally accepted Ms UR’s second argument, though my reasons for this view were not quite so simple as the mere fact that the time had been accounted for by reasonable steps taken with the goal of resolving the issue amicably.

Rather, I was satisfied that the Pay Plan included issue-specific (by this, I mean issues specific to the Pay Plan and sales commission) dispute-resolution mechanisms (namely, cl 1.2(d) and cl 5: see [22] and [25] above), and that these specific mechanisms needed to be read alongside the general grievance procedures provided by the company’s collective agreement with the union. At the highest level of escalation, the grievance procedure contemplated discussion between the union and the “management of the company”. In context, I understood this to be the general management of FPL and, therefore, although senior members of FPL’s management sat on the Pay Plan and Commission Dispute Committees, they were wearing specific hats and ought not be regarded as the “management of the company” in the sense contemplated by the collective agreement. Thus, in my view, the very highest level of escalation was that stipulated in the collective agreement and not by the Pay Plan itself.

The general grievance procedure provided by the collective agreement therefore placed Ms C’s decision to pursue further internal avenues of amicable resolution after 26 October 2021 on a sound and formal legal basis. It was not the case that Ms C was merely informally attempting to rehash a matter that, after 26 October 2021, ought to have been submitted to TADM for mediation and, subsequently, the ECT for determination (failing mediation). Simply put, there were still formal internal avenues of recourse which Ms C had available through the collective agreement. Indeed, that Ms UR did in fact meet with the company’s MD supported this.

This brings me back to the wording of ss 3(2)(g) and 3(3)(a)(ii) of the ECA. The provisions are specifically concerned with the “material facts” which “give rise” to the dispute. Even if I had not regarded the short payment in June 2022 as a “material fact” necessary for the parties’ dispute to have arisen, in my judgment, where there exist formal internal mechanisms for employee grievances to be resolved, the material facts do not “give rise” to a “dispute” until those internal mechanisms have been either exhausted or waived. And, of course, this would not operate as an indefinite freeze on the limitation clock. The terms providing for those formal internal mechanisms would, in most cases, specify detailed timelines which need to be followed, and, if they do not, the usual implied limit of “within a reasonable time” would naturally apply.

Such a view of ss 3(2)(g) and 3(3)(a)(ii) is strongly justified as a matter of legal policy. The local courts have, for a long time, expressed the importance of facilitating the parties’ resolution of disputes outside the court. For example, in Tjong Very Sumito and others v Antig Investments Pte Ltd [2009] 4 SLR(R) 732, the Court of Appeal said at [28]:

Although the apex court here was addressing arbitration specifically, it is clear from the text emphasised that its view was held more generally. Moreover, beyond the suggestion that alternative dispute resolution (“ADR”) mechanisms should broadly be encouraged, there is particularly great force in this view where employment disputes are concerned. Indeed, the very fact that Parliament prescribed TADM mediation as a pre-requisite to filing ECT claims is itself a strong indication of this. And, if the law is to be consistent in its policies, it ought not say that ADR is encouraged on the one hand yet, on the other, hold parties who abide by contractually-negotiated ADR mechanisms to limitation periods which do not have regard to the time needed for those mechanisms to be utilised. Therefore, even if the primary basis of my decision (at [33] above) was erroneous, I would have assessed the timeliness of Ms C’s claim on the footing that ss 3(2)(g) and 3(3)(a)(ii) of the ECA bore the meaning stated at [37] above.

The question which remained on this reading of the provisions, was whether Ms C’s usage of the grievance procedure in the collective agreement was sufficient to bridge the time. In my view, the answer was ‘yes’. The collective agreement did not specify a timeframe within which the discussion between the union and management was to take place. Ms C was therefore required to set this into motion within a reasonable time. On the facts, given that Ms C’s Department Head also did not agree with the decisions of the Pay Plan and Commission Dispute Committees, and had been the one to seek reconsideration of the issue after 26 October 2021 (see [26] above), it was entirely reasonable for Ms C to wait until this loop was closed before further escalating the matter by making a reference to her union. As stated, this loop was only closed on 13 January 2022 whereupon Ms C involved her union. This amount of time was, by itself, enough to bring Ms C within the timeframe prescribed by ss 3(2)(g) and 3(3)(a)(ii). Thus, as it was reasonable for Ms C to refer the matter to the union only after this loop had been closed (which she did), time was sufficiently bridged. On this alternative view, Ms C’s mediation request was still filed in time.

Substantive issue: Proper interpretation of the Pay Plan

I turn to the substantive issue which arose in this matter.

In sum, I preferred Ms C’s interpretation of the Pay Plan. However, before I explain why, given Mr CFO and Ms SBM’s reliance on their personal knowledge of the “long-standing practice” of treating “deals” as the entire contract (irrespective of the number of separate components it comprises) (see [12] above), I should emphasise the trite point that contractual interpretation is an objective exercise that has regard to the relevant context, which may be internal or external. Internal context refers to the “document as a whole, which includes the provisions other than those sought to be interpreted and the organisation of the document” (Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 at [53]). External context generally means the surrounding circumstances, which includes the “facts and circumstances which were (or ought to have been) in the mind of the [drafter] when he used [the] words [in the contract]” (Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal [2013] 4 SLR 193 at [64]). Importantly, and relevant to the present case, “[p]arol evidence of the drafter’s subjective intention does not constitute such surrounding circumstances” [emphasis added] (ibid).

This general approach was summed up simply by the Court of Appeal in CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appeal [2018] 1 SLR 170 at [19]:

I need not belabour the applicable principles of contractual interpretation beyond these. As a starting point, my view was that the tables set out in cll 2.1 and 3.1 of the Pay Plan (see [7] above) plainly conveyed that sales commission was calculated along product lines rather than whole-of-contract lines. While I appreciated Ms SBM’s more substantive arguments as to why it was desirable to regard a “deal” as the whole contract entered into, regardless of its components (see [12] above), these arguments simply could not account for the plain text of the plan. Indeed, if, as Mr CFO said, it had “never been envisioned that deals would be broken down into individual components for the purposes of revenue recognition” [emphasis added]—that begged the question why the plan had been written as it was. To this, Mr CFO and Ms SBM had no real response other than to restate their general point that such a division had not been contemplated.

Moreover, quite apart from the lack of a clear explanation as to why the Pay Plan had been written as it was, there were two contextual points which cut against the interpretation advanced by FPL and supported that advanced by Ms C.

First, at the hearing, I observed that if Ms C’s claim was ultimately successful, that could negatively impact the calculation of commission paid out to her two sales colleagues also involved in securing the DB Contract (No 5). Accordingly, I asked Ms C to state whether she was prepared for there to be such potential knock-on consequences for her colleagues. In response, the parties agreed that there would be no such consequences because—by virtue of variations between staff as regards the specific components used to compute their individual sales commission (see [5] above)—the other two staff had received commission on 60% of the revenue for all components of the DB Contract (No 5). This was because they held broader portfolios and were responsible for the contract as a whole. By contrast, as Ms C was only a specialist in the sale of hardware and software, she only received commission on 60% of the revenue for the hardware and software components of the contract.

In my judgment, this strongly supported Ms C’s interpretation of the Pay Plan. Specifically, it bolstered her submission that cll 2.1 and 3.1 objectively intended to draw distinctions along component lines and did not necessarily view “deals” as whole contracts, irrespective of the number of components falling within that contract. After all, if the Pay Plan contemplated that individual staff would receive different recognition of a contract’s revenue along component lines, it is difficult to see why it could not also recognise that a single contract can comprise multiple components with the revenue of some components being protected by an ETC and the revenue for others not.

Not only was this view more compatible with the manner in which cll 2.1 and 3.1 had been presented, it was also entirely consistent with the underlying reason why revenue was recognised differently for “protected” and “non-protected” deals. Mr CFO and Ms SBM stated that the Pay Plan recognised revenue differently in respect of “protected” and “non-protected” deals because, as a matter of accounting, revenue could only be taken as earned upon the execution of a contract if the revenue to be gained from that contract did not depend on it running to completion. This was why ETCs mattered (see [10]–[11] above). That being the case—and, given that it was clear from the terms of the DB Contract (No 5) that the hardware and software components of the contract had been fully protected (see [18]–[20] above)—recognising this to be the case was merely an issue of the specificity with which FPL kept its books. Simply put, Ms C’s interpretation of the Pay Plan did not offend the relevant accounting principle.

At this point, it is relevant to highlight that the parties agreed that the ETC in the DB Contract (No 5) was “novel” in the sense that FPL and its staff had not encountered a situation where a client only wished to undertake an early-termination fee in respect of part of the contract’s monthly charge. Prior to this agreement, contracts either provided for an early termination fee for all charges, or they did not. On this footing, FPL’s representatives suggested that the Pay Plan could not have contemplated such a situation and, thus, the interpretation advanced by Ms C. That it had not been contemplated, in turn, showed that the company’s decision to recognise 60% of the contract’s revenue rather than treating it as entirely “non-protected” and recognising only 50% was principled.

In my view, the fact that the ETC was novel was irrelevant for two reasons. One, it could only have affected my decision if “deals” were, in the first place, properly understood as comprising whole contracts rather than the individual components listed at cll 2.1 and 3.1 of the Pay Plan. As such, it had to presume the conclusion for the point in issue. Two, the universe of eventualities will always be greater than a draftsman’s field of vision or scope of imagination. The terms he drafts will, thus, always have to deal with situations he did not have in mind. If he is skilled, he will know how to identify the right balance between specificity and generality. If he is too specific and the terms of a contract fail to address circumstances which subsequently arise, the parties will likely suffer. If he is too general and the terms fail to capture specific intentions, the parties will also likely suffer. In the present case, the drafter of the Pay Plan was exceedingly specific in his division of “quota retirement” along component lines. Such specificity, in turn, enabled cll 2.1 and 3.1 to objectively deal with the novel ETC seen in the DB Contract (No 5). The fact that FPL had not subjectively contemplated it was irrelevant.

This brings me to the second contextual point which I found stood in support of Ms C’s interpretation. That was the fact that this Pay Plan (ie, that introduced in 2021) was the first to formally introduce the distinction between “protected” and “non-protected” “deals” for the purposes of computing sales commission. Before this plan, sales commission was not calculated by reference to what could or could not be recorded as upfront revenue for FPL. Rather, staff were either paid a flat commission upfront, or a periodic commission when the client paid its monthly fees (ie, when money was in FPL’s pocket and, thus, could plainly be recognised as revenue). Mr CFO explained that the Pay Plan introduced in 2021 adopted the protected/non-protected distinction for calculating commission because many of FPL’s clients were, ostensibly as a result of the pandemic, seeking to avoid ETCs with early-termination fees. Thus, the plan served to incentivise staff to do their best in negotiations to protect FPL’s interest in securing ETCs with full-coverage of early termination fees.

While I supposed such context could have supported FPL’s interpretation of the Pay Plan, it lent slightly stronger support to Ms C’s interpretation. I took this view because, while a binary classification of “protected” and “non-protected” contracts (as a whole) certainly could incentivise employees, it did nothing to account for the context that FPL’s counterparties were also less keen to agree to fully protected ETCs. By contrast, the interpretation offered by Ms C enabled sales staff to approach negotiations with the clear objective of seeking to protect every component, but, as the DB Contract (No 5) showed was necessary, they were also accorded the flexibility to press for the protection of at least some components without concern that their efforts would only be recognised on an all-or-nothing basis. This, it seemed to me, would arguably have better supported the purpose of the Pay Plan and, thus, accorded better with the context in which it was drafted and introduced.

For these reasons, I found that Ms C’s interpretation of the Pay Plan was not only more obviously compatible with the plain words of the plan and the manner in which it was presented, but it also sat comfortably with the contextual cues relevant to the exercise of interpretation. In arriving at this conclusion, I was mindful that it may well be that my interpretation was not what the management of FPL had subjectively intended when it drafted and introduced the Pay Plan. However, that was entirely beside the point of the objective exercise of interpretation. Moreover, given that FPL had free rein to unilaterally draft the terms of the plan in a manner which captured its specific intentions, it might be said that, if it had intended otherwise, it had no excuse for its lack of clearer definitions and imprecise drafting. Thus, on the footing that Ms C’s reading of the Pay Plan, particularly cll 2.1 and 3.1, represented the better interpretation, I found that she should have received commission calculated by recognising 100% of the revenue from the hardware and software components of the DB Contract (No 5).

Ancillary issue: Effect of cl 1.2(d) of the Pay Plan

Before concluding, I should refer to cl 1.2(d) of the Pay Plan (see [22] above). While it was not expressly argued by FPL that the very existence of cl 1.2(d) meant that the “interpretation and decision” of the Pay Plan Committee “prevailed” specifically over the court (or, in this case, tribunal), the clause was one on which both Mr CFO and Ms SBM relied. If not for the purpose of suggesting that the Pay Plan Committee’s decision ought not to be interfered with, it was unclear what else they would have wished for me to gather from cl 1.2(d). Thus, when I delivered my brief grounds on 19 June 2023, I addressed the effect of this clause. I stated that it did not affect my decision because it neither deprived the ECT of jurisdiction to determine the proper interpretation of cll 2.1 and 3.1 nor made the Pay Plan Committee’s interpretation binding on it. I explain in greater detail.

The starting point was s 28 of the ECA:

The words “to the extent” are important. Section 28 does not invalidate every contractual term under which an employer establishes an internal mechanism for administering a pay plan or resolving disagreements arising from it. Clause 1.2(d) could therefore operate according to its terms within FPL’s internal processes. What it could not do was deprive the ECT of the ability to decide a matter falling within its statutory jurisdiction.

If cl 1.2(d) were construed as requiring the Pay Plan Committee’s interpretation to prevail over the ECT, it would, at the least, purport to limit the tribunal’s jurisdiction within the meaning of s 28(a). Ms C’s claim was for commission alleged to be contractually due. The determination of that claim necessarily required the tribunal to decide what cll 2.1 and 3.1 meant and, in turn, what amount was payable. A contractual term which required the tribunal to accept the Pay Plan Committee’s interpretation of those clauses as conclusive would withdraw that necessary question from the tribunal’s determination. Section 28(a) precluded such a result. To the extent cl 1.2(d) purported to produce it, the clause was void.

This statutory conclusion was sufficient to dispose of any suggestion that cl 1.2(d) bound the ECT. The position under the general law, as applied to the clause, pointed in the same direction. It is not uncommon for contractual documents to reserve dispute resolution powers to a body or person other than a court or arbitral tribunal. Typically, these bodies or persons are “experts”, and the issues referred to them most often concern questions of fact that involve some professional, but non-legal expertise (eg, professional engineers: see Poh Cheng Chew v K P Koh & Partners Pte Ltd and another [2014] 2 SLR 573). That said, it is not impermissible for questions of contractual interpretation (which are generally regarded as questions of law: see Pioneer Shipping v BTP Tioxide Ltd (The Nema) [1982] AC 724 at 736 (per Lord Diplock), though also see Norwich Union Life Assurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 at 168G (per Dillon LJ) (“Union Life”)) to be referred to experts. In such cases, questions of law may be determined by the expert so long as, on a proper construction of the term conferring jurisdiction on the expert, such questions of law had indeed been remitted to the expert for determination (see Union Life at 169E). In fact, Union Life is a particularly significant decision because the English Court of Appeal either distinguished or declined to follow earlier decisions (eg, Postel Properties Ltd v Greenwell [1992] 2 EGLR 130) in which it was held that the court has the jurisdiction to redetermine questions of law which properly fell within the jurisdiction of the expert.

Put simply, if, by contract, parties assign jurisdiction to determine a question of law to a designated expert, the expert’s decision on that question binds the parties. The court would not ordinarily intervene to redetermine the question, though it has the jurisdiction to determine whether that question of law properly fell within the expert’s jurisdiction in the first place. This is, very much, a case-specific inquiry which depends on the clause and facts in issue. For example, in Mercury Communications Ltd v Director General of Telecommunications [1996] 1 WLR 48, a contract between Mercury and British Telecom contained a clause which provided that reference was to be made to the Director General of Telecommunications if either party considered that there was a fundamental change in the circumstances in which they had contracted. However, the Director General was required to make his determination in accordance with specified criteria.

Without going through this mechanism, Mercury directly applied for a declaration from the court as to the correct interpretation of certain phrases used in the contract. The Director General as well as British Telecom applied to strike out the application on various grounds. Most pertinently, they contended that the court’s declaration could only be sought—if at all—on application to judicially review the Director General’s determination. The English High Court initially found in favour of Mercury and granted a declaration. The Court of Appeal overturned the High Court by a majority decision which proceeded on different bases. Dillon LJ held that the parties had left the interpretation of those terms to the Director General and that the court thus had no jurisdiction. Saville LJ took the view that the court had the jurisdiction to grant a declaration as to the proper interpretation of the phrases but, ultimately, held that the parties should be held to their express bargain of referring the matter to the Director General. Hoffmann LJ dissented and held that the court ought to be the body that determined the proper interpretation of the phrases in issue.

The matter went on further appeal to the Lords which overturned the decision of the Court of Appeal. Lord Slynn, who gave the decision of the House (he sat with Lords Keith, Browne-Wilkinson, Lloyd, and Nicholls), explained the key contention advanced by the Director General and British Telecom, as well as the House’s views thereon at 58–59:

In short, the Lords placed weight on the fact that the agreement between Mercury and British Telecom required that the Director General’s jurisdiction be exercised under specified conditions. On that footing, they took the view that the clause in question did not confer exclusive jurisdiction to the Director General. After all, if the Director General had to comply with certain conditions, the court would need to be the one to determine if those conditions had been fulfilled. What is salient to note is the underlying tenor of the decision—that, in the absence of very clear terms to the effect, the court will not readily regard a private, expert adjudicator as having exclusive jurisdiction to determine questions of law. And, as stated, questions of contractual interpretation are generally regarded as questions of law.

Against that background, even leaving s 28 of the ECA aside, cl 1.2(d) was certainly not so clear. It merely stated that the Pay Plan Committee’s interpretation and decision “shall prevail”; over whom, it did not say. In context, the more natural reading was that the Committee’s interpretation and decision prevailed within FPL’s internal processes, not that they prevailed over a court or tribunal. This was fatal to construing cl 1.2(d) as reserving to the Pay Plan Committee the exclusive jurisdiction to determine the proper interpretation of the Pay Plan’s terms. Quite apart from this textual inadequacy, there were two additional reasons supporting my conclusion.

(a) First, the Pay Plan was not a typical contractual document in the sense that the parties bound by it had negotiated its terms, particularly its dispute-resolution clauses. FPL prescribed the terms of the Pay Plan unilaterally and also unilaterally included cl 1.2(d). The usual policy-based arguments in favour of private dispute-resolution mechanisms therefore did not carry the same force here (those arguments most commonly feature in the context of arbitration and mediation (see [38] above), though the same essential arguments exist in relation to most forms of alternative dispute resolution: see, eg, Clive Freedman and James Farrell, Kendall on Expert Determination (Sweet & Maxwell, 5th Ed, 2015) at paras 1.6-13–1.6-14).

(b) Second, the structure of the Pay Plan itself did not seem to accord primacy to the Pay Plan Committee’s decisions. As mentioned at [25] above, cl 5(a) provided that there was to be a “Commission Dispute Committee”, comprising the “Pay Plan Committee and Integrated Solutions & Sales Senior Director”, which “will review appeals against any decision on commission deduction or payment”. Thus, it appeared that the Commission Dispute Committee sat above the Pay Plan Committee, given that the latter plainly made decisions about the payment of sales commission. This being the case, if the decisions of the Pay Plan Committee did not even prevail over the Commission Dispute Committee, it could hardly be said that the ECT’s jurisdiction to decide the proper interpretation of the Pay Plan’s terms had been excluded by cl 1.2(d).

Accordingly, cl 1.2(d) did not affect my decision. Properly construed, it governed the internal operation of the Pay Plan and did not bind the ECT. If it were construed more broadly as requiring the Pay Plan Committee’s interpretation to prevail over the ECT, it would be void to that extent under s 28(a) of the ECA.

Award and conclusion

For the foregoing reasons, I allowed Ms C’s claim—essentially—in full. The only point which needs to be highlighted is that Ms C filed a claim for $7,040.78. Ms SBM highlighted that this was slightly inaccurate as, even if she was successful, her claim ought to have been for $9.92 less. The reasons for this are irrelevant as Ms C agreed at the hearing that her claim sum was incorrect and that Ms SBM’s correction was accurate. Thus, I allowed Ms C’s claim for $7,030.86. I directed that FPL pay Ms C this sum within two weeks from my judgment, that is, by 3 July 2023.