Commission

How commission structures vary

The design space is wide: flat-rate commission (a fixed percentage of every sale), tiered rates that rise once thresholds are cleared, accelerators above quota and decelerators below it, and draws (advances against future commission) that smooth income for new starters. Each design pays for something different: flat rates reward volume, tiers reward stretch, and gates protect margin. The structure is a statement about what the business actually wants sold.

The rules that still apply

Commission-heavy pay does not switch off employment law. In Australia, award minimums still apply underneath commission arrangements and superannuation is generally payable on commission earnings; in every jurisdiction, the commission plan document decides the disputes, so what happens to pipeline deals when someone resigns, when clawbacks apply, and when a deal counts as "closed" should be written down before the first cheque, not litigated after it.

Where commission plans go wrong

Three classics: plans so complex nobody can predict their own pay (which deletes the incentive effect), targets reset so aggressively that last year's stretch becomes this year's floor (which trains sandbagging), and unpaid commission disputes on exit (which are the most common pay complaint sales people take to lawyers). A commission plan someone can calculate on a napkin, with exit treatment written down, avoids most of it.