Commission is payment based on sales or work you personally generate—for example, 5% of every sale you make. Unlike salary, it varies month to month depending on your performance. This is high-risk because commission clauses often contain hidden traps: unclear definitions of what counts as a "sale," disputes over who gets credit for a deal, or rules that let employers claw back commission if a customer cancels later. In the US, some states require commission to be paid within a set timeframe; the UK has no such law, so payment can be delayed. Ambiguous commission clauses lead to frequent disputes and lost income.
Demand a written formula showing exactly how commission is calculated (e.g., "5% of invoice value when payment is received"). Clarify: are you paid on orders placed, invoices issued, or cash received? What happens if a customer cancels—do you lose the commission? Ask when you're paid (weekly, monthly?) and request a worked example showing how a typical sale would be calculated. Never accept "commission to be agreed" or vague language. ---
Frequently Asked Questions
What does this clause mean in simple terms?
Commission is payment based on sales or work you personally generate—for example, 5% of every sale you make.
Why should I care about this clause?
Unlike salary, it varies month to month depending on your performance.
What are my options?
This is high-risk because commission clauses often contain hidden traps: unclear definitions of what counts as a "sale," disputes over who gets credit for a deal, or rules that let employers claw back commission if a customer cancels later.
How does this affect small businesses?
In the US, some states require commission to be paid within a set timeframe; the UK has no such law, so payment can be delayed.