Commission Based Employment Contract Template for United Arab Emirates

This document establishes a commission-based employment relationship in compliance with UAE Federal Decree-Law No. 33 of 2021 (UAE Labor Law) and related regulations. It outlines the terms and conditions of employment where compensation is fully or partially based on commission earnings, including commission calculation methods, payment terms, performance expectations, and employment benefits. The contract ensures compliance with UAE labor laws while protecting both employer and employee interests in a commission-based arrangement, incorporating necessary provisions for wage protection system compliance and free zone regulations where applicable.

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What is a Commission Based Employment Contract?

The Commission Based Employment Contract is essential for businesses operating in the UAE that compensate employees fully or partially through commission-based arrangements. This document is specifically designed to comply with UAE Federal Decree-Law No. 33 of 2021 and related employment regulations, establishing clear terms for commission-based work while protecting both employer and employee interests. It is particularly useful for sales-oriented positions and roles where compensation is tied to performance metrics. The contract includes detailed commission structures, calculation methods, payment schedules, and performance expectations, while ensuring compliance with UAE labor laws, including mandatory benefits and wage protection system requirements. This agreement is commonly used when hiring sales professionals, real estate agents, insurance brokers, and other roles where variable compensation forms a significant part of the total remuneration.

What sections should be included in a Commission Based Employment Contract?

1. Parties: Identification of the employer and employee with full legal names and addresses

2. Background: Brief context of the employment relationship and purpose of the agreement

3. Definitions: Key terms used throughout the contract, including specific commission-related terminology

4. Appointment and Duration: Terms of employment, position title, and contract duration (fixed-term or unlimited)

5. Duties and Responsibilities: Detailed description of the employee's role, targets, and performance expectations

6. Commission Structure: Detailed explanation of commission calculations, rates, and qualifying criteria

7. Base Salary and Benefits: Any fixed salary component and standard benefits as per UAE labor law

8. Payment Terms: Timeline and method of commission payments, including WPS compliance

9. Working Hours and Location: Standard working hours, workplace location, and any flexibility arrangements

10. Leave Entitlements: Annual leave, sick leave, and other leave entitlements as per UAE labor law

11. Confidentiality: Protection of company information and trade secrets

12. Non-Competition: Restrictions on working with competitors during and after employment

13. Termination: Conditions for contract termination by either party and notice periods

14. Governing Law: Specification of UAE law as governing law and jurisdiction

15. General Provisions: Standard legal clauses including amendments, entire agreement, and severability

What sections are optional to include in a Commission Based Employment Contract?

1. Probation Period: Include when a probation period is required (up to 6 months under UAE law)

2. Travel Requirements: Include when the role involves regular business travel

3. Team Management: Include when the employee will have supervisory responsibilities

4. Training and Development: Include when specific training or certifications are required

5. Intellectual Property: Include when the role involves creation of IP or creative work

6. Remote Working: Include when remote work arrangements are permitted

7. Performance Review: Include when formal performance review processes affect commission rates

8. Clawback Provisions: Include when commission payments may need to be returned under specific circumstances

What schedules should be included in a Commission Based Employment Contract?

1. Schedule 1 - Commission Calculation Framework: Detailed formulas and examples of commission calculations

2. Schedule 2 - Sales Targets and Territories: Specific sales targets, geographic territories, or account assignments

3. Schedule 3 - Benefits Package: Detailed breakdown of additional benefits and allowances

4. Schedule 4 - Key Performance Indicators: Specific KPIs and their impact on commission rates

5. Appendix A - Company Policies: Reference to relevant company policies affecting commission-based employees

6. Appendix B - Product/Service Price List: Current price list for products/services (if relevant to commission calculations)

7. Appendix C - Reporting Templates: Standard templates for sales and commission reporting

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Publisher

Genie AI

Sector

Sales

Cost

Free to use

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