Compensation Agreement Template

Compensation Agreement Template

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What Is a Compensation Agreement?

A Compensation Agreement is a legal document that guarantees that an individual will receive compensation for certain actions. It can include compensation for an individual getting paid as an employee, a commission that a worker is entitled to receive, compensation for a Non-Compete Agreement, etc.

Alternate Name:

  • Agreement for Compensation.

The purpose of the agreement is to put into writing all of the details about the compensation payment and any changes to it and to secure the position of the employee and the company. Thus, when an employee's payday comes there won't be any questions or confusion about the amount of money an employee is supposed to receive.

A contract closely related to this one is called a "Deferred Compensation Agreement." It is a legal contract upon which the parties come to an arrangement that a portion of an employee's payment will be transferred later than the day it was earned.

You can download a Compensation Agreement template through the link below or create your own document with our online form builder.


How to Write a Compensation Agreement?

A standard Compensation Agreement consists of several parts, which include the following:

  1. Introduction. In the first part of the contract, a filer should state the full names of the parties.
  2. General terms. For the sake of the agreement, an applicant should give definitions to the most used terms in the document.
  3. Background information. Here parties should explain what this compensation agreement is connected with or list any document that defines the relationship between the parties involved. For example, an employment contract.
  4. Payment terms. In this part of the document, a filer must describe all of the things connected with payment in great detail. The amount of it, hourly wage, when or how often it will be paid, will there be any deductions, if it's taxable, etc. The more thorough it will be, the fewer questions it will cause.
  5. Amendment and termination of the agreement. The parties should agree on the terms of the amendments and termination of this agreement as well.
  6. Signatures. In the last part of the contract, the involved parties designate their will and intention to obey the agreement by signing it.

The parties can also include other sections in the document, such as dispute resolution, governing law, severability, etc.

What Is a Compensation Agreement in Real Estate?

Compensation Agreements are not only used for employment but in other areas as well. One of the most common uses of them is in the real estate market. Among the many variants, the most popular ones are:

  • A compensation agreement signed between a homeowner and a broker, upon which a broker is entitled to receive compensation for finding a buyer and closing a deal;
  • A compensation agreement signed between a buyer and a broker, upon which a broker is entitled to receive compensation for finding a property and closing the deal.

In those cases, the structure of the document will slightly differ from the standard compensation agreement, however, all the main elements will remain, but will be accompanied with a few additional elements.

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