Commission policy

Your commission policy, or commission agreement, is the document and contract that details a rep’s incentive compensation package. 

We recommend every organization issue a commission policy when you pay salespeople variable pay. Plus, in California and New York, commission policies are required by law.  

Your commission policy should include the following:

  • 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

You should send out for a signature a new commission policy anytime you make a change to your sales compensation plan. 

To manage this comp plan sign-off process, use QuotaPath’s in-app Plan Verification tool. 

How to write a commission policy

To write a commission policy include the commission structure and when and how reps are paid. The document should also highlight your clawback clause.

You can also download our compensation policy templates available for help drafting up your next document:

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