PRACTICE NOTES
Practice Note
This Practice Note outlines the nature of commission arrangements and common methods of calculation. It reviews scheme structures, the need to address written particulars of employment and compliance with the national minimum wage, and whether a scheme is contractual or discretionary.
It also considers employees’ rights to commission during employment, confirms that the Unfair Contract Terms Act 1977 (UCTA 1977) does not apply, and looks at termination rights and the claims an employee might bring. The Note describes the burden of proof in discretion-based disputes, highlights other potential causes of action, and points readers to materials on the taxation of commission.
Many employers—especially those with staff in sales—use commission schemes. Under these arrangements, some or all of an employee’s remuneration is paid as commission rather than basic salary. Commission is generally contingent on sales performance: the greater the sales achieved, the higher the
Employment