Commission Agreement
A Commission Agreement allows you to set the terms and conditions regarding the payment structure of commission to an employee or contractor.
4.1 (15 reviews)
Last updated December 20, 2024
Under 10 minutes
Suitable for Australia
Written by
Edwin Montoya Zorrilla
Reviewed by
Damin Murdock
Document Overview
A Commission Agreement allows you to set the terms and conditions regarding the payment structure of commission to an employee or contractor. This document can be used for either an existing employee of your business or an external contractor. Commission agreements are usually unique to the individual or agent being employed as they are directly involved with the sales or marketing of the product or service. Clearly defining the terms of commission payment will improve transparency and help you avoid potentially costly disputes in the future.
Typically, a business might offer employees a percentage of their sales as commission. However, we understand that each business will have its own unique requirements regarding commission payment structure. This document allows you to choose from two common payment structures; straight commission (a flat rate payment per event, such as a sale) and performance-based commission (commission paid based on whether performance targets have been met). Alternatively, you can also set your own commission terms, based on your business’ needs. Commission based jobs are used to provide financial incentives for productivity and success in sales and marketing roles.
The Legal Risk Score of a Commission Agreement Template
Our legal team have marked this document as low risk considering:
- The document sets a fixed interest rate on overdue payments, which could be financially burdensome if the rate is high compared to standard industry practices.
- The salesperson can be engaged either as an employee or as a contractor.
- Either party may terminate for convenience.
Commission Agreement Checklist
Complete your free Commission Agreement with our checklist
Secure Mutual Signatures
Ensure that both parties sign the document to indicate their acceptance and agreement to the terms outlined.
Document Storage
Store the signed document securely and ensure that both parties have access to a copy for their records.
Review Termination Clauses
Regularly review the termination clauses to understand the conditions under which the agreement can be terminated.
Monitor Amendments
Keep track of any amendments or modifications agreed upon, ensuring they are documented in writing and signed by authorized representatives from both parties.
Use a Commission Agreement if:
- You want to establish commission-based work with either one of your own employees or an external third-party contractor.
- You want to clearly define your own custom commission payment structure, including but not limited to commission rates, target numbers and earnings limits.
- What does a Commission Agreement provide?
- The ability for you to clearly set out the terms and conditions of commission payment, customised to your business needs.
- The ability to customise your commission payment structure to either your own employees or third-party contractors.
- Any applicable durations, deadlines or end events.
- Applicable interest payments on late commission payments.
- Procedures regarding termination and dispute resolution.
- Options for indemnity and non-exclusivity clauses.
Further Information:
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