Todd Dormer v Rhino-Rack New Zealand Limited [2026] NZERA 353

This Employment Relations Authority (ERA) determination concerns Todd Dormer, who was employed by Rhino-Rack New Zealand Limited as Head of Sales New Zealand, having previously been New Zealand Country Manager. His employment agreement recorded his commission entitlement in only three words: "10% paid quarterly". Mr Dormer argued that this entitled him to 10 percent commission on sales, or alternatively gross margin. Rhino-Rack argued that the company Sales Commission Scheme applied, meaning commission was dependent on individual, regional and company targets. The ERA rejected Mr Dormer's claimed commission calculation, but found Rhino-Rack unjustifiably disadvantaged him by failing to give him clear written details of the scheme early in his employment. Rhino-Rack was ordered to pay $14,000 compensation. Costs were reserved. The full determination is embedded at the end of this page.

The short point

This case is about what happens when an employment agreement records a commission entitlement without explaining what the commission is actually calculated on. Mr Dormer's agreement did not say "10 percent of sales", "10 percent of gross margin", "10 percent of base salary", or "commission under the Sales Commission Scheme". It simply said "10% paid quarterly".

The ERA found that wording was inadequate. It was open to several possible interpretations and it left the employee without clear written information about a significant part of his remuneration. However, the ERA did not accept that this ambiguity gave Mr Dormer a blank cheque to select the most favourable interpretation after the event. On the evidence, the Authority concluded the company-wide Sales Commission Scheme was the scheme intended to apply to his role.

Rhino-Rack therefore defeated the substantial commission claim, but still lost on disadvantage. The employer was responsible for a significant drafting and communication failure. It could not prove that Mr Dormer was given the written scheme details early in his employment, and it did not fix the problem when the issue first surfaced.

Background

Mr Dormer started employment with Rhino-Rack on 3 June 2024. His role was a senior sales role, initially New Zealand Country Manager and later Head of Sales New Zealand. The schedule to his individual employment agreement summarised the key terms of employment. Under the heading "Commission", the agreement said only "10% paid quarterly". There was no further reference to commission, bonuses, incentive payments, sales targets, gross margin, or the Sales Commission Scheme in the employment agreement or the standard terms and conditions.

Rhino-Rack operated a Sales Commission Scheme across Australia and New Zealand. The scheme applied to qualifying sales employees and measured performance against targets, with a mixture of regional and individual revenue criteria. Although it was called a commission scheme, the ERA described it as operating more like a bonus or incentive scheme because entitlement depended on KPI and target achievement, not simply a percentage of sales.

Mr Dormer said he understood the wording to mean a true sales commission. He initially claimed 10 percent of gross sales, but later advanced the alternative that it should be 10 percent of gross margin. He said that no proper discussion about targets occurred until October 2024, when an email referred to the team not hitting commission targets. He formally raised the issue again in June 2025, asking about the 10 percent commission recorded in his employment agreement and whether it would be paid.

Rhino-Rack's position was that the Sales Commission Scheme applied to Mr Dormer in the same way as it applied to other eligible sales employees. It said the scheme had been explained during onboarding by Chris Radford, Mr Dormer's former manager, and that the scheme was well understood within the sales team. Mr Radford said the 10 percent reflected a percentage of base salary if individual, regional and company targets were met.

Non-publication application declined

Rhino-Rack sought a permanent non-publication order, or alternatively anonymisation of witness names. Mr Dormer opposed the application. The ERA applied the open justice approach discussed in MW v Spiga Limited and held that the threshold was not met.

The Authority accepted that the witnesses would prefer not to be named, but that was not enough. There was insufficient information showing specific adverse or prejudicial consequences that could reasonably be expected to occur. The application for non-publication or anonymisation was declined.

The issues for the ERA

The first and most important issue was the method of calculation. If Mr Dormer's commission entitlement was 10 percent of gross sales or gross margin, the potential amount was significant. If the Sales Commission Scheme applied, then Rhino-Rack's calculations under that scheme were not disputed.

The ERA also had to decide whether Rhino-Rack's failure to pay the commission claimed by Mr Dormer unjustifiably disadvantaged him, whether any penalties should be awarded for breach of the employment agreement, whether interest was payable, and whether either party should receive costs.

Contractual interpretation

The parties accepted that the commission wording was ambiguous. The ERA approached the issue objectively, asking what the words would mean to a reasonable person with the relevant background knowledge available at the time of contracting. The Authority also considered the agreement as a whole, relevant background, commercial context, and the limits on relying on pre-contractual negotiations because the employment agreement contained an entire agreement clause.

Mr Dormer relied on the ordinary meaning of commission in a sales context. The ERA accepted that commission is generally understood as an agreed amount or percentage earned when an employee makes a sale. It also accepted that commission is not usually the same thing as a performance bonus or incentive payment based on wider KPI or company targets. On that point, Mr Dormer's expectation of a commission-based scheme had force.

But the ERA considered that the words "10% paid quarterly" were too incomplete to identify 10 percent of what. The agreement did not specify gross sales, gross margin, salary, profit, or any other base figure. The lack of a base made Mr Dormer's interpretation difficult, particularly where he had shifted from gross sales to gross margin because gross sales was not commercially viable for Rhino-Rack.

Why the gross-margin commission claim failed

The ERA accepted that ambiguity in an employment agreement can weigh in favour of the employee. But it refused to treat that principle as absolute in this case. The Authority considered the wording so unclear that automatically adopting Mr Dormer's preferred interpretation would be inequitable and would effectively give him a blank slate.

Commercial common sense was important. Mr Dormer's interpretation would have produced a commission entitlement more than ten times what would be payable under the Sales Commission Scheme. The ERA noted that Mr Dormer already had a base salary at the lower end of the relevant market and that his interpretation would place his commission entitlement far beyond any leadership position within the company.

The Authority also placed weight on consistency with other sales roles. Rhino-Rack's evidence was that the Sales Commission Scheme applied to sales employees across Australia and New Zealand before Mr Dormer started. It was inherently unlikely that Mr Dormer alone would have been placed on a gross-margin commission model when equivalent sales employees were on the Sales Commission Scheme.

The ERA concluded that a reasonable person would understand Mr Dormer's employment agreement as intended to contain commission terms similar to other employees in similar sales roles across Australia and New Zealand. It found that the Sales Commission Scheme applied to Mr Dormer's employment. His claim that Rhino-Rack owed him commission calculated on gross sales or gross margin was therefore unsuccessful.

Rhino-Rack still unjustifiably disadvantaged Mr Dormer

Even though Rhino-Rack succeeded on the interpretation issue, the ERA found it had not acted as a fair and reasonable employer in how it communicated the commission scheme. The employer knew the employment agreement was not as detailed as it should have been. It also could not produce written evidence showing that it sent Mr Dormer the Sales Commission Scheme before June 2025.

Rhino-Rack maintained that the scheme was explained orally during onboarding and discussed within the sales team. The ERA did not accept that this was enough. Other employees had received scheme details, but Rhino-Rack could not prove that Mr Dormer had been given the same clear written material. The Authority considered it unlikely that Mr Dormer would have queried the scheme in October 2024 if he had already received a proper written explanation.

The ERA rejected Mr Dormer's separate claim that he lacked access to financial information or budgets. It accepted there was enough evidence that he had access to relevant information through online systems, individual meetings, team review meetings, and company-wide briefings. The successful disadvantage point was narrower: Rhino-Rack failed to provide clear written details of how the Sales Commission Scheme affected his remuneration.

That failure mattered because Mr Dormer continued working without full written details of his remuneration and potential earnings. A fair and reasonable employer could not leave an important pay component in that unclear state.

No breach penalty or interest

Mr Dormer sought penalties and interest. However, because the ERA found that the Sales Commission Scheme applied, and because no breach of the employment agreement was established, it declined to award penalties or interest. The substantial commission arrears claim therefore failed, despite the finding of unjustified disadvantage.

Compensation

Mr Dormer gave evidence about the effect of the dispute on him. He remained employed by Rhino-Rack, but the issue had become a major distraction. It affected his professional relationships with peers who knew about the dispute, and he said he felt excluded by the business. He had also sold his business to accept the role, making the remuneration dispute more significant to him.

The ERA accepted that Rhino-Rack exacerbated the impact by failing to put enough detail in the employment agreement and by failing to provide definitive written material and a clear explanation of the commission scheme, even after Mr Dormer queried it in October 2024. The Authority considered recent disadvantage awards, including Jacklin v Planit Software Testing Limited, and fixed compensation at $14,000.

Contribution

Section 124 of the Employment Relations Act required the Authority to consider whether Mr Dormer's own conduct contributed to the situation giving rise to the grievance. The ERA accepted that Mr Dormer could have clarified the terms of the commission clause before signing the agreement. However, it did not consider that conduct sufficient to reduce the remedy.

No contribution reduction was applied.

Why this case matters

The determination is useful for both employees and employers because it separates two different questions. First, what does the contract objectively mean? Secondly, even if the employer's interpretation is ultimately preferred, did the employer act fairly and reasonably in communicating the employee's remuneration entitlements?

Rhino-Rack won the first question but lost the second. The ERA was not prepared to convert a vague "10%" reference into a very large uncapped gross-margin commission entitlement. But it was equally unwilling to excuse the employer's failure to give clear written details of the scheme that it said applied.

The case is also a caution against relying on oral onboarding explanations for significant remuneration terms. If an employee's pay depends on targets, regional results, eligibility thresholds, or an incentive scheme, those terms should be incorporated into the employment agreement or clearly supplied in writing at the start of employment.

Practical takeaways

• Define the calculation base: do not write "10% commission" without saying 10 percent of what.
• Do not rely on labels: a document called a commission scheme may operate like a bonus or incentive scheme.
• Attach or incorporate schemes: if a separate commission scheme applies, refer to it in the employment agreement and provide a copy.
• Keep onboarding evidence: employers should retain written proof that remuneration schemes were provided and explained.
• Ambiguity is not always a blank cheque: unclear wording may help an employee, but it will not automatically justify the most lucrative interpretation available.
• Commercial context matters: the ERA may consider whether a proposed interpretation is commercially unrealistic when the contractual wording is incomplete.
• Disadvantage can succeed without arrears: Mr Dormer did not receive the commission he claimed, but still received compensation because the employer's communication failure unjustifiably disadvantaged him.
• Fix drafting problems early: once an employer knows a remuneration clause is deficient, it should correct the position promptly and transparently.

Read the full ERA determination (embedded)

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Source: Employment Relations Authority determination hosted on determinations.era.govt.nz.