“Can my boss tell me I have to renegotiate signed customer contracts, or suffer lower commissions if I can’t?”

Question: I am an Account Executive for a marketing company. Recently my boss has been going over contracts with customers that are already signed and in place, and asking us to go back and renegotiate higher prices from the customers. Some of them bear his own signature, and were signed just two months ago. 

He says that if we don’t renegotiate these existing customer contracts, then we will have to take lower commissions on them.

I find this extremely unethical. Is there anything I can do?

         Riverside, California

Answer: Janice, you present a very interesting question. It is really two questions about two separate “contracts.”

The first question regards customer contracts. In my experience, it is not unheard of for a company to REQUEST that one or more of its customers consider “opening up” a signed contract. It is something that, every now and then, a company may have to try to do. Let me give you an example: Imagine that Acme Lobster Company agrees to provide Fishy Restaurants all of the fresh lobsters Fishy Restaurants can use for six months at the price of $15 per pound. Say, after one month, a disease hits all of the local lobsters, and fresh lobsters must be brought into the city by truck from 1,000 miles away, making the price of lobsters $85 per pound. In this situation Acme Lobsters might have to ask Fishy Restaurants to renegotiate the signed contract, or otherwise Acme could go bankrupt, and for that reason not be able to provide any lobsters to Fishy Restaurants.

I don’t think it is unethical to do in business; the clients do not have to agree to renegotiate, but can do so if they want to.  

The second question regards your employer’s “contract” with you, the agreement you and your employer have regarding your commissions. It sounds like your employer is DEMANDING that you accept a retroactive lowering of what you are due if customers won’t renegotiate their contracts. This is really not the same thing as requesting a renegotiation, as your employer did with the customers.

This is in violation of your contract rights, and for this you could successfully sue your employer. Most employees, though, are fearful of losing their jobs if they do such a thing. You are definitely in a bind, but if you do want to collect your higher commissions, chances are the law is there for you. You could, though, lose your job for standing up for yourself in this way.

Hope that information is helpful. And hope you’ll recommend us to your friends and colleagues on Facebook, LinkedIn and other social media.

          Best, Al Sklover   

© 2010 Alan L. Sklover, All Rights Reserved.

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