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What is a Commission Agreement?

What is a Commission Agreement?

Commission agreements essentially set out the key financial details of payment between parties. Commission based jobs are used to provide financial incentives for productivity and success in sales and marketing roles. It is important these terms and conditions regarding the payment structure of the commission are known by both employers and employees before entering a working arrangement.

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. Whether you are an employer or employee, it is important to have a vested interest in the terms and conditions of a commission agreement to ensure you are aware of your rights and entitlements!

Key Details when considering a Commission Agreement

These are the key things and concerns you should be looking at including or clarifying in a commission agreement:

  • structure of commission
  • potential or limit of earnings
  • mode and time of payment
  • geographical region if applicable
  • target numbers
  • competition or support from other employees/sales agents
  • deadlines
  • duration of employment or assignment length
  • expected hours or days worked
  • dispute resolution and audit procedures

Why should employers use them?

Employers should consider commission agreements to protect themselves from competitive actions by contractors, sales agents or temporary employees. These agreements ensure you have non-compete and non-solicitation clauses, confidentiality arrangements and dispute resolution processes in place for any potential conflict in the future.

Why should contractors, sales agents or employees consider them?

Commission agreements put in writing what you are legally entitled to or what you may have agreed or discussed with your employer earlier ! By having the details of the term, structure and payment of commission already in writing, it allows open communication between the parties and less opportunity for dispute or uncertainty. If circumstances change, or there are queries between the parties, commission agreements provide clarity and guidance on what the next steps are.


Ultimately – If you ensure you are aware of the terms and conditions of a commission agreement in a contract from the beginning there is less chance further down the track to have issues later on! Commission agreements are a vital way that both legal parties in any working arrangement are aware of their rights and responsibilities.

For help to create your own commission agreement, consider Lawpath for all your document needs or get a free quote with Lawpath’s Legal Marketplace to put you in touch with a lawyer that can do it for you!

Still unsure of what you need? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from Australia’s largest legal marketplace or to get answers to your legal questions.

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