What is a Commission Agreement?
A commission agreement is a type of employment agreement that indicates an employer and employee's consensus for work paid on a commission-based salary. This agreement is made so employees know what to expect in the course of their employment.
How to Make a Convincing Commission Agreement
Commission agreement contracts are very important documents that your business should put emphasis on and focus on. This is, after all, a vital document that people will have to sign before they become full-fledged employees of your company. Read this section to see a few tips on how to create a well-made commission agreement.
1. Be Detailed
Making commission contracts—or any kind of contract for that matter—can take an up absurdly large chunk of your time. According to springcm.com, it takes about an average of 3.4 weeks to create and approve a contract. This is because making contracts require paying attention to details. Commission agreement forms and contracts must contain all the clauses that the employer and employee are subject to.
2. State the Commission Percentages and Salary Clearly
In making commission agreements—sales contracts, especially—you have to clearly indicate what the commission percentages and salaries are. Aside from letting applicants know how they will receive their commission-based salary, this is also a way to avoid getting into trouble with legal matters.
3. Include the Employee Benefits
As all employee contracts go, you should include the employee benefits within the commission agreement. This is a method to convince and reassure interested applicants of the authenticity of your company. You should put this in your commission agreement to avoid blindsiding people from what they will be going into. Similar to the previous tip, you should also do this to avoid any problems with the law.
4. Brief the Employees on the Set Qualifications
Before you can hire someone, you have to make sure that they are aware of the qualifications of receiving a commission and this must be reflected in your final employee agreement or company contract. For example, if you are giving a referral fee to referral agents for bringing in prospective employees for your company, you have to indicate that they will only receive commission once the people they refer to the company become bona fide employees.
5. Make Sure that the Agreement is Fair for Both Parties
In dividing the percentage of the commission, make sure that it is fair for both the company and the employees. Aside from making sure that the employees are aware of the commission percentages (how it is divided between them and their company), you also have to ensure that it is a fair divide. Keep in mind the basic business ethics and morals. And don't forget to include the payment schedule or profit-sharing scheme on the agreement.
6. Make the document clear
In a poll held in August 2014, CreditDonkey found out that among 1,400 participants, 27.4% of them said that they usually sign contracts without reading them. The age range of these participants were people from 18 to 34 years old—otherwise known as our current working force. In an attempt to battle this habit, you must make your commission agreement as clear and readable as possible. Avoid putting fancy and unnecessary words in the document.