Commission
Produced in partnership with Keith Bryant QC of Outer Temple Chambers
Commission

The following Employment guidance note Produced in partnership with Keith Bryant QC of Outer Temple Chambers provides comprehensive and up to date legal information covering:

  • Commission
  • Structure of commission schemes
  • Status of commission scheme: contractual or discretionary
  • Rights during employment
  • Rights on termination
  • Types of claim for non-payment of commission
  • Burden of proof in discretion claims
  • Other potential claims
  • Taxation of commission payments

Some employers, typically those with employees engaged in sales roles, operate commission schemes. Under commission schemes, part or sometimes all of an employee's earnings are paid as commission rather than as basic pay. Commission is a payment that is generally dependent upon the level of sales achieved; the higher the level of sales, the greater the amount of commission paid. In this way, employees can be motivated to perform to the best of their abilities since their earnings are directly linked to their level of work achievement. The employees benefit because they earn more and the employer benefits because greater sales are achieved for its business.

Structure of commission schemes

The structure of commission schemes varies greatly but, as indicated, they usually provide that commission will be paid to employees depending on the level of sales achieved. Depending on the type of business involved, commission may be based on the level of investment made by clients or the number of leads generated rather than sales as such.

A commission scheme may be freestanding or it may be linked to, or even part of the same written terms as, a bonus scheme or other scheme which links payment with performance. For some sample commission terms, see Precedent: Clauses—commission.

Commission entitlement may be based on sales achieved by the individual employee or by a

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