Commission Agreement Template

Commission Agreement Template

What Is a Commission Agreement?

A Commission Agreement is a legal document signed by an employer and an employee regarding work paid on commission. This contract outlines the details of the working relationship between the employer and employee, defines the expected employment, and establishes salary and commission percentage. Quite often an employee's pay is based in part or in whole on commission, so before their work may begin, an agreement must be negotiated and signed by the involved parties.

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You may download a Commission Agreement template below or draft a more personalized document with the help of our online form builder.


How Does a Commission Agreement Protect a Salesperson?

In certain cases, an employment contract does not determine commissions. If you are being hired as a salesperson and want your rights and obligations documented in the right way, thoroughly read the Sales Commission Agreement before signing it and starting your work. A properly drafted commission agreement must specify how the commission is computed and the basis of the commissions. Sometimes, an agreement states that the commission is the only compensation the salesperson will receive outside of bonuses and other incentives, making the agreement even more significant for the employee. Additionally, this contract may indicate when the salesperson receives compensation for their work - for instance when the product is shipped to the customer. This agreement will also list the circumstances when commissions are not paid to the salesperson.

How to Write a Commission Agreement?

To create a simple Commission Agreement, negotiate and add the following provisions to the contract:

  1. Names of the parties and the date of signing the document.
  2. Responsibilities of the employee. List all the job duties to be performed and specify the location, or sales territory. The employee must adhere to the company guidelines and agree to be subject to the supervision, direction, and advice of supervisory personnel. The job duties and other services must be performed industriously and faithfully.
  3. Compensation of the employee. State the salary details, dates of payment, and the chosen method of payment. This clause is optional - many contracts only contain a commission provision.
  4. Commission earnings and payment structure. In addition to the wage under the preceding section, the employee will also receive commission payments. Clearly define the "Trigger Event" - the event that gives the employee the right to be paid. Determine the amount of commission and the manner these payments are calculated. Be sure to mention all relevant details such as variable commission percentages, quotas, and payout schedules.
  5. Confidentiality. The employee promises not to disclose trade secrets and other private information learned during the period of employment to any third party. This clause lets the employer protect their business.
  6. Termination. Either party can cancel the agreement upon written notice.
  7. Signatures of the parties. Once the papers are signed, this contract becomes legally binding. However, this document is highly flexible, can be used in different situations, and the parties are free to negotiate another contract to adjust to changing circumstances.

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