Generate a professional sales commission agreement with tiered commission structures, territory assignments, clawback provisions, and comprehensive payment terms. Define exactly when commissions are earned, how they are calculated, and protect both company and salesperson interests.
I built this commission agreement generator to help businesses and sales professionals establish clear, legally sound compensation structures from the start. Commission disputes are among the most common sources of employment litigation, often arising because the original agreement failed to define key terms like when a commission is "earned," how returns and cancellations affect payments, or what happens to pipeline deals when a salesperson departs. This generator addresses all of those scenarios and more.
This generator supports multiple commission structures including flat percentage rates, tiered and graduated rate schedules, base salary plus commission combinations, and draw against commission arrangements with both recoverable and non-recoverable options. The document includes detailed provisions for territory and account assignments, clawback periods for returns and chargebacks, performance reporting obligations, non-solicitation and confidentiality protections, and comprehensive termination procedures that address earned but unpaid commissions.
Every field updates the live preview instantly, so you can see exactly how your commission agreement will read before downloading. The generator also includes optional sections for sales quotas, performance accelerators, commission caps, and residual commission structures for recurring revenue. Whether you are hiring a W-2 employee or engaging an independent sales representative, this tool produces a professional agreement that protects both parties.
Key features include: dynamic commission structure tables that adjust based on your selected model, conditional territory exclusivity provisions, configurable clawback periods and triggering events, detailed payment timing and frequency options, and comprehensive signature blocks for both company and salesperson.
A commission agreement is a legally binding contract between an employer or company and a salesperson that outlines the terms of commission-based compensation. It specifies how commissions are calculated, when they are earned, payment schedules, and other terms governing the sales relationship.
A comprehensive sales commission agreement should include the commission rate or structure, the basis for calculating commissions, when commissions are considered earned, payment frequency and timing, territory assignments, clawback provisions, reporting obligations, confidentiality terms, termination procedures, and dispute resolution.
Commissions are typically calculated using a flat percentage of sales, tiered structures where rates increase at higher sales volumes, base salary plus commission combinations, or draw against commission arrangements. The calculation basis may be gross sales, net sales, collected revenue, or gross profit margin.
Clawback provisions allow a company to recover previously paid commissions if certain conditions occur after the sale, such as customer returns, order cancellations, chargebacks, or non-payment. Clawback periods typically range from 60 to 180 days after the original sale.
Commission rates generally cannot be changed unilaterally after signing without both parties agreeing. Most agreements require written consent from both parties to modify terms. Some agreements allow prospective adjustments with advance notice, but changes typically apply only to future sales.
When a salesperson leaves, they are typically entitled to commissions on sales earned before termination. Commissions on post-termination sales are generally not owed regardless of when the process began. Some agreements include partial commissions for pipeline deals closing shortly after departure.