What is a commission agreement? A commission agreement is a contract between a company and an individual that outlines the terms of the individual’s incentive compensation, which is typically based on a percentage of the sales they generate. Commission agreements are common in sales-driven industries and legally required in states like California and New York.
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A commission agreement typically includes the following information:
- The name of the company and the individual
- The start and end dates of the agreement
- The individual’s job title and responsibilities
- The commission rate
- The sales goals that must be met in order to earn commissions
- The process for calculating and paying commissions
- Clawback clause
- The terms for termination of the agreement
We recommend issuing a new commission agreement anytime you make a change to your sales compensation plan that you and your reps sign off.
To manage this comp plan sign-off process, you can use QuotaPath’s Plan Verification feature.
How to write a commission agreement:
To write a commission agreement, include the commission structure and when and how reps are paid. The document should also include a clawback clause.
We have three compensation policy templates available for download that you can customize to help: