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 (14 reviews)
Last updated November 22, 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
Interest Rates
Commission agreements often lack specific interest rates applicable to the agreement. This could lead to disputes and uncertainty. It is recommended to include a specific interest rate, such as a percentage above the prevailing market rate, to ensure fairness and clarity.
Government Regulations
The corresponding government regulations should be explicitly stated within commission agreements to ensure compliance with legal requirements and to clarify the rights and obligations of both parties. This helps prevent misunderstandings and ensures that the agreement adheres to relevant laws and regulations. It is recommended to include the specific jurisdiction and governing law that will apply to the agreement to ensure clarity, consistency, and enforceability in any legal proceedings.
Extension Terms and Procedures
The contract does not specify the duration of the extension or the process for extending the term. This could lead to ambiguity and potential disputes. It is recommended to include clear guidelines on the length of any extension, the procedure for extending the term, the required notice period, and any limitations on the number of extensions to ensure transparency and avoid future conflicts.
Using Lawpath’s Commission Agreement template grants you the comfort of ensuring full compliance and the minimisation of legal risk.
Commission Agreement Checklist
Complete your free Commission Agreement with our checklist
Get the right individuals to sign the document
Where the parties are companies, their authorised representatives should sign this document.
Keep the document readily available
Both parties should have the document handy as an easy reference for their obligations.
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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