Free Commission Agreement

Answer a few simple questions Print and download instantly It takes just 5 minutes

Create Your Free Commission Agreement

Answer a few simple questions
Email, download or print instantly
Just takes 5 minutes

Commission Agreement

QGcommission

What type of compensation will the employee receive?

Salary or wage plus commission

Commission only

Other

Back CREATE MY CONTRACT

Your Commission Agreement

Update Preview

This document preview is formatted to fit your mobile device. The formatting will change when printed or viewed on a desktop computer.

COMMISSION AGREEMENT

THIS COMMISSION AGREEMENT (the "Agreement") dated this ________ day of ________________, ________,

BETWEEN:

__________________________ of ____________________________________________

(the "Employer")

OF THE FIRST PART

- AND -

____________________________________________ of ____________________________________________

(the "Employee")

OF THE SECOND PART

BACKGROUND:
The Employer carries on the business of ______________________.
The Employer is of the opinion that the Employee has the necessary qualifications, experience and abilities to assist and benefit the Employer in its business.
The Employer desires to employ the Employee and the Employee has agreed to accept and enter such employment upon the terms and conditions set out in this Agreement.

IN CONSIDERATION OF the matters described above and of the mutual benefits and obligations set forth in this Agreement, the receipt and sufficiency of which consideration is hereby acknowledged, the parties to this Agreement agree as follows:

Commencement Date and Term
The Employee will commence full-time employment with the Employer on the 18th day of September, 2025 (the "Commencement Date").
Job Title and Description
The initial job title of the Employee will be: _____________________________.
The initial job duties the Employee will be expected to perform will be the following:
1. ____________________________________________________________.
The Employee agrees to be employed on the terms and conditions set out in this Agreement. The Employee agrees to be subject to the general supervision of and act pursuant to the orders, advice and direction of the Employer.
The Employee will perform any and all duties as requested by the Employer that are reasonable and that are customarily performed by a person holding a similar position in the industry or business of the Employer.
The Employer may make changes to the job title or duties of the Employee where the changes would be considered reasonable for a similar position in the industry or business of the Employer. The Employee's job title or duties may be changed by agreement and with the approval of both the Employee and the Employer or after a notice period required under law.
The Employee agrees to abide by the Employer's rules, regulations, policies, and practices, including those concerning work schedules, vacation, and sick leave, as they may from time to time be adopted or modified.
Performance of Duties
The Employee agrees to apply their best skills, knowledge, and expertise as an employee of the Employer in performing their duties and obligations as described in this Agreement.
The Employee agrees to use only the software, tools, or documentation approved or provided by the Employer for monitoring sales, recording commissions, and tracking expenses. The Employee is responsible for ensuring that all data and information entered in the approved tools is accurate and updated.
Employee Compensation
Compensation paid to the Employee for the services rendered or sales completed by the Employee (the "Compensation") will include a salary of __________ USD per hour plus a commission calculated as follows:
________________________________________________________________________
________________________________________________________________________.
Sales made by the Employee are included in the calculation of their commission after full payment for the goods sold by the Employee or services completed by the Employee is received by the Employer (the "Earned Commission").
This Compensation will be calculated and payable every two weeks while this Agreement is in force. The Employer is entitled to deduct from the Employee's Compensation, or from any other compensation in whatever form, any applicable deductions and remittances as required by law.
The Employer will reimburse the Employee for all reasonable expenses, in accordance with the Employer's lawful policies as in effect from time to time, including but not limited to, any travel and entertainment expenses incurred by the Employee in connection with the business of the Employer. Expenses will be paid within a reasonable time after submission of acceptable supporting documentation.
Place of Work
The Employee's primary place of work will be at the following location: ____________________________________________.
Employee Benefits
The Employee will be entitled to only those currently available benefits as described in the lawful provisions of the Employer's employment booklets, manuals, and policy documents or as required by law.
Employer discretionary benefits are subject to change, without compensation, upon the Employer providing the Employee with 60 days written notice of that change and providing that any change to those benefits is taken generally with respect to other employees and does not single out the Employee.
Conflict of Interest
During the term of the Employee's active employment with the Employer, it is understood and agreed that any business opportunity relating to or similar to the Employer's actual or reasonably anticipated business opportunities (with the exception of personal investments in less than 5% of the equity of a business, investments in established family businesses, real estate, or investments in stocks and bonds traded on public stock exchanges) coming to the attention of the Employee, is an opportunity belonging to the Employer. Therefore, the Employee will advise the Employer of the opportunity and cannot pursue the opportunity, directly or indirectly, without the written consent of the Employer.
During the term of the Employee's active employment with the Employer, the Employee will not, directly or indirectly, engage or participate in any other business activities that the Employer, in its reasonable discretion, determines to be in conflict with the best interests of the Employer without the written consent of the Employer.
Contract Binding Authority
Notwithstanding any other term or condition expressed or implied in this Agreement to the contrary, the Employee will not have the authority to enter into any contracts or commitments for or on the behalf of the Employer without first obtaining the express written consent of the Employer.
Termination of Employment
The Employer and the Employee agree that the Employee's employment is at-will. As such, this Agreement is subject to termination by the Employee or the Employer at any time with or without notice, and with or without cause. Nothing in this Agreement, or in any of the Employer's policies or procedures, should be interpreted to eliminate the at-will employment status of the Employee.
"Termination Date" means the date specified in this Agreement or in a subsequent notice by either the Employee or the Employer to be the last day of employment under this Agreement. The parties acknowledge that various provisions of this Agreement will survive the Termination Date.
The Termination Date specified by either the Employee or the Employer may expire on any day of the month and upon the Termination Date the Employer will forthwith pay to the Employee any outstanding portion of the compensation including any unpaid Earned Commission, accrued vacation and banked time, if any, calculated to the Termination Date. The Employee cannot earn any commission after the Termination Date.
If notice has been given by either party for any reason, the Employee and the Employer agree to execute their duties and obligations under this Agreement diligently and in good faith through to the end of the notice period. The Employer may not make any changes to compensation or any other term or condition of this Agreement between the time termination notice is given through to the end of the notice period.
Remedies
In the event of a breach or threatened breach by the Employee of any of the provisions of this Agreement, the Employee agrees that the Employer is entitled to a permanent injunction, in addition to and not in limitation of any other rights and remedies available to the Employer at law or in equity, in order to prevent or restrain any such breach by the Employee or by the Employee's partners, agents, representatives, servants, employees, and/or any and all persons directly or indirectly acting for or with the Employee.
Severability
The Employer and the Employee acknowledge that this Agreement is reasonable, valid, and enforceable. However, if any term, covenant, condition, or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, it is the parties' intent that such provision be changed in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired, or invalidated as a result.
Notices
Any notices, deliveries, requests, demands, or other communications required here will be deemed to be completed when hand-delivered, delivered by agent, or seven days after being placed in the post, postage prepaid, to the parties at the following addresses or as the parties may later designate in writing:

Employer:
Name: __________________________
Address: ____________________________________________

Employee:
Name: ____________________________________________
Address: ____________________________________________
Modification of Agreement
Any amendment or modification of this Agreement or additional obligation assumed by either party in connection with this Agreement will only be binding if evidenced in writing signed by each party or an authorized representative of each party.
Governing Law
This Agreement will be construed in accordance with and governed by the laws of the State of Ohio.
General Provisions
Time is of the essence in this Agreement.
Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
No failure or delay by either party to this Agreement in exercising any power, right, or privilege provided in this Agreement will operate as a waiver, nor will any single or partial exercise of such rights, powers, or privileges preclude any further exercise of them or the exercise of any other right, power, or privilege provided in this Agreement.
This Agreement will inure to the benefit of and be binding upon the respective heirs, executors, administrators, successors, and assigns, as the case may be, of the Employer and the Employee.
This Agreement may be executed in counterparts. Electronic signatures are binding and are considered to be original signatures.
If, at the time of execution of this Agreement, there is a pre-existing employment agreement or commission agreement still in effect between the parties to this Agreement, then in consideration of and as a condition of the parties entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, this Agreement will supersede any and all pre-existing employment or commission agreements between the Employer and the Employee. Any duties, obligations, and liabilities still in effect from any pre-existing employment or commission agreement are void and no longer enforceable after execution of this Agreement.
This Agreement constitutes the entire agreement between the parties and there are no further items or provisions, either oral or written. The parties to this Agreement stipulate that neither of them has made any representations with respect to the subject matter of this Agreement except such representations as are specifically set forth in this Agreement.

IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.

__________________________

Per:

____________________________

(Seal)

Officer's Name: __________________________

_______________________________

______________________ (EMPLOYEE)

ACKNOWLEDGMENT FORM

(Human Resources Department Copy)

I acknowledge that I received a copy of __________________________'s Commission Agreement and that I understand I am fully responsible for reading its contents, as well as all other policies and procedures of the Employer.
And lastly, I acknowledge that my employment is at-will and that I have the right to terminate my employment at any time without notice or cause, as long as the reason for the termination is not illegal, and that the Employer has the same right.

Please sign and date this copy and return to the Human Resources Department.

__________________________________ Employee's Signature	______________________ Date
__________________________________ Employer's Signature	______________________ Date

ACKNOWLEDGMENT FORM

(Employee Copy)

Please sign, date, and retain this second copy of the Acknowledgment Form for your reference.

__________________________________ Employee's Signature	______________________ Date
__________________________________ Employer's Signature	______________________ Date

Question Help

Commission Agreement Document Preview

Document Preview About this Document

What is a Commission Agreement?

A Commission Agreement is a contract between an employer and an employee that outlines the compensation for a commission-based role. It further documents the terms and conditions of employment so both parties know their responsibilities and expectations during the employment period.

An employer typically makes this document and gives it to employees to sign and agree to the terms.

A Commission Agreement is also known as a:

Commission payment agreement
Sales commission agreement

If you’re hiring an employee with only a salary or wage, use LawDepot’s Employment Contract. Alternatively, use our Compensation Agreement to document your current employee’s new compensation or commission rates.

What is a commission?

A commission is an incentive-based form of payment that an employee can receive, which is typically found in sales-type jobs. Commissions are often based on performance and calculated as a percentage of a total sale value.

A commission can sometimes be an employee's only compensation, but it can often be an addition to a salary or wage in other situations.

It’s important to note that commission-only employees are still entitled to a minimum wage. You must ensure their income matches state or federal wage requirements. However, outside sales employees are considered exempt and are not entitled to minimum hourly wages.

When do I use a Commission Agreement?

You use a Commission agreement anytime an employee is paid a commission for selling goods or services for your business. The U.S. Department of Labor doesn’t require roles to have a commission, but it still considers it a wage for those who receive one.

Common fields of work that can use a Commission Agreement include, but are not limited to:

Sales (e.g., car dealers, art galleries, furniture, computers)
Services (e.g., hair salons, nail technicians)
Software as a service (SaaS)
Marketing

LawDepot’s Commission Agreement is for full, part-time, or contracted employees but is unsuitable for contractors, as employees and contractors are classified differently. If you’re hiring an independent contractor for a speciality job and period, you can use LawDepot’s Service Agreement or Independent Contractor Agreement instead of an employment contract.

Are Commission Agreements legally required?

A Commission Agreement may be a legal requirement under your state’s employment laws. For example, California’s Labor Code states that any employee who receives a commission must receive a written agreement from an employer that sets out the method and rate of payment.

New York is another state that requires employers of commission salespersons to have a written agreement signed by both employer and employee. It must outline details like how compensation will be paid and a record of any additional wages and bonuses.

If an employee receives a base wage or salary with a commission, it should also be in your agreement. Check your state employment laws for information on when you must make a Commission Agreement.

Purpose of Commission Agreements

A Commission Agreement protects you and your employees by creating transparency and accountability. It’s a strong employee management tool for all your onboarding staff.

Documenting an employee’s responsibilities and targets to earn commission creates clear expectations of their role with the company. It also helps you provide incentives for a stronger performance from your employees.

If any dispute arises from either party, a written contract can help provide evidence of the original agreement to resolve any issues. You can also include a confidentiality clause to protect your work's intellectual property and a non-solicitation clause to keep employees from recruiting your staff for their future ventures.

Is a Commission Agreement legally binding?

State laws vary in how employers approach employment contracts, including contract requirements for commission-based roles. Whether your state requires a Compensation Agreement or not, a contract is legally binding when executed correctly.

If you fail to pay an employee their commission as laid out in your agreement, you’ll not only be in violation of labor laws but also in breach of contract. This means an employee may be able to recover unpaid commission, lost benefits, attorney fees, and damages.

There are also consequences for an employee who breaches a contract. As their employer, you can terminate their employment or withhold any commission if they fail to meet the payment requirements outlined in the agreement.

LawDepot’s Commission Agreement template is customizable for all U.S. States. If your employee is located in a different state, as can be the case with remote employees, check the laws of each state to determine which labor laws will apply to your Commission Agreement.

How is commission calculated?

Calculating a commission will depend on your unique business and needs. When completing your agreement, you must calculate the commission. Some details to remember when deciding on how a commission will be given include:

Commission rate

A commission rate is a specific percentage or fixed amount an employee will earn from a sale they make for the company or service they provide for a client.

For example, say you choose a commission rate of 10% once goods are delivered to a client and your employee receives a job that will bring in $10,000. That means once the client has received their final product, your employee will receive a commission of $1000.

Commission base

A commission base is the point of sale from which your employee’s commission is calculated.

For example, a commission can be calculated from the total sales amount, the net value, or the gross margin.

Commission structure

A commission structure is how your employee’s compensation will be paid to them. Examples of structures can be:

Straight commissions, where your employees receive no base salary, and their income is based entirely on their sales performance
Salary plus commissions, which gives a financial income in addition to any commission from their completed work or sales
Tiered commissions, also known as a graduated commission, which is a system that allows the commission percentage to grow as an employee increases their sales targets

Clawback events and commission caps

LawDepot’s questionnaire also allows you to add any clawback events or commission caps that may apply to your employment protocols.

A clawback event is a clause that identifies any specific reasons an employee may need to return money paid to them and any penalties that may apply.

For example, your employee receives a bonus for exceeding their sales target. However, you find out that they made fraudulent claims in their final reports. With this discovery, you can enforce the clawback clause and have that bonus money repaid to your company with any other additional penalties.

A commission cap is a limit on how much an employee can earn in commissions for a specific pay period. Caps can be monthly, quarterly, or yearly. Once employees reach their cap, they can no longer receive a commission on their work until the next period. Some employers use caps to help manage commission expenses, create financial stability for the company, and more.

If you’re unsure which commission plan to use for your employees, seek legal counsel or discuss the agreement with your HR team.

How do I write a Commission Agreement?

LawDepot’s Commission Agreement template and questionnaire help you create a valid employee agreement. Once you select the type of compensation your employee will receive, continue with the following steps:

1. Add the employment details

Include your and your employee’s names, addresses, and emails. Then, add information about what kind of business you or your company operate and your employee's employment type. This can be either:

Full-time
Part-time
Contract or seasonal

2. Define the employee’s role

Listing your employees' job titles and duties in your contract is essential. These details ensure they clearly understand what will be expected of them in the role. To be even more thorough, include any work hours if necessary.

Next, add a start date and the state where your employee will work. The location will customize your document to follow the state laws and make a binding agreement.

3. Document commission details and structure

Add what salary or wage will be given to your employee if it applies to the role. Then, define the commission details and structure for their work. This will include:

When the commission will be earned by the employee (i.e., upon payment of goods or services or upon delivery of goods or services)
Sales targets your employee is required to meet
How the commission will be calculated
How often you’ll calculate the commission and pay your employee
Any bonuses or incentives
Any clawbacks events
Any commission caps

4. Outline a termination clause

Employers can include a clause that documents their ability to end the contract at any time. This is known as at-will employment, which means an employer may dismiss an employee without notice or cause as long as the reason for termination is not illegal. This clause also applies to employees who may resign without notice or reason.

Please note that Montana is the only state that does not allow at-will employment.

It’s best practice to check state laws for any requirements to follow during employee termination, such as providing a Termination Letter.

5. Include any final details

Depending on the role, you can include any benefits your employee may receive and a probationary period if it applies to the job. Additionally, if you’re reimbursing an employee for out-of-pocket expenses, this should be included in your contract for future reference.

Before finishing your contract, create a confidentiality or non-solicitation clause if it applies to your employment practices to strengthen the agreement and protect your business.

Finally, add your signing date if you have one in place, or leave it open until you choose one. Then, if you wish to include an acknowledgment page for your employee to sign, select this option to add one to your contract. An acknowledgment helps show that an employee has received, read, and understood the terms of the Commission Agreement when they sign.

Pricing

Free 7-Day Trial Subscription: Unlimited access to all documents for one week. After one week, renews at $49 per month. Cancel any time.

1-Year Pro Subscription: $155.88 for one year of unlimited access to all documents. Renews annually. Cancel any time.

Single Document License: Buy a single document for a one-time charge of $7.50 – $119, depending on the document.

Essentials Access: Get unlimited access to a category of documents. After one free week, pay monthly. Or, buy unlimited access for one year that renews annually. Cancel any time.

Real estate documents: $35/month or $107.88/year
Estate planning documents: $35/month or $107.88/year
Business documents: $45/month or $131.88/year