Employee Commissions Policy and Procedures

Introduction

Commissions are incentive payments based on sales performance or other measurable work outcomes. This article explains commission structures, calculation methods, and payment schedules.

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Table of Contents

1. Commission Eligibility
2. Commission Structures
3. How Commissions Are Calculated
4. Commission Payment Schedule
5. Reporting Sales and Disputes
6. Commission Adjustments and Clawbacks
7. FAQs

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1. Commission Eligibility

Employees eligible for commissions typically hold sales or revenue-generating roles. Eligibility is defined in your employment agreement or commission plan document.

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2. Commission Structures

Common commission types include:

• Flat Rate: Fixed amount per sale.
• Percentage of Sales: Commission based on a specified % of the sale amount.
• Tiered Commission: Varying commission rates based on sales volume thresholds.
• Team Commissions: Shared among team members.

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3. How Commissions Are Calculated

Key factors affecting commission calculation:

• Gross Sales Amount
• Returns or cancellations
• Sales targets or quotas
• Commission percentage or rate

Example calculation:
If you sell $10,000 and your commission rate is 5%, your commission is $500.

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4. Commission Payment Schedule

Commissions are paid:

• Monthly/Quarterly, typically following the close of a sales period.
• Only for finalized and paid sales (no commission on pending or returned orders).

Commission payments appear on your paycheck or as a separate payment.

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5. Reporting Sales and Disputes

Employees should:

• Submit sales reports timely and accurately.
• Review commission statements each pay period.
• Report discrepancies to [contact person] within [X days].

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6. Commission Adjustments and Clawbacks

Corrections to commissions may occur due to:

• Returned products or canceled deals.
• Fraudulent sales.
• Errors in data entry.

Adjusted commissions will be reflected in future payments.

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7. Commission FAQs

Q: When will I see my commission payment?
A: Commissions are paid [monthly/quarterly] following the sales period close.

Q: Can I dispute a commission?
A: Yes, contact the commission administrator within [X days] of payment.

Q: Are commissions taxable?
A: Yes, commissions are taxable income and subject to payroll taxes.