Commission agreement

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. 


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:

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