Commission Agreement Template for Canada

A Commission Agreement sets out how and when someone gets paid for making sales or bringing in business. It's a contract that spells out the commission rate, payment terms, and performance targets between a company and its sales representatives, brokers, or agents.

Under Canadian contract law, these agreements need clear terms about when commissions are earned, what happens to pending deals if someone leaves, and any clawback provisions. They often include details about territory rights, non-compete clauses, and reporting requirements - key protections that help prevent disputes and ensure compliance with provincial employment standards.

Use a Commission Agreement when bringing sales representatives, agents, or brokers into your business. This contract becomes essential for real estate firms hiring agents, manufacturing companies engaging sales teams, or any business where people earn money based on their sales performance.

The timing is crucial: implement this agreement before the first commission-based transaction occurs. Canadian businesses need these agreements to comply with provincial employment standards, protect trade secrets, and establish clear commission structures. They're particularly important when dealing with independent contractors or when setting up new sales territories with performance incentives.

• Commission Contract Agreement: Basic agreement covering commission rates and payment terms for independent contractors or agents
• Commission Based Employment Contract: Full employment agreement combining base salary with commission structure for permanent employees
• Commission Compensation Agreement: Focuses on detailed compensation plans, including bonuses and incentive structures
• Commission Draw Agreement: Allows sales representatives to draw advance payments against future commissions
• Commission Split Agreement: Details how commissions are divided between multiple parties or team members

• Sales Representatives: The primary beneficiaries who earn commissions based on their sales performance and must comply with the agreement's terms
• Business Owners: Set commission rates, performance targets, and payment terms while ensuring compliance with employment standards
• HR Managers: Oversee implementation, maintain records, and handle commission-related disputes or adjustments
• Legal Counsel: Draft and review Commission Agreements to ensure enforceability and protection under Canadian law
• Payroll Teams: Process commission payments and maintain accurate records for tax and audit purposes
• Compliance Officers: Monitor adherence to industry regulations and internal policies regarding commission structures

• Commission Structure: Determine exact commission rates, payment schedules, and any performance tiers or bonuses
• Party Details: Gather full legal names, addresses, and roles of all parties involved in the commission arrangement
• Territory Definition: Map out specific geographic areas or market segments where the agreement applies
• Performance Metrics: Define clear, measurable targets and how sales attribution will be tracked
• Payment Terms: Specify payment timing, calculation methods, and any minimum thresholds
• Compliance Check: Review provincial employment standards and industry regulations affecting commission structures
• Documentation System: Set up tracking methods for sales, commissions, and payment records

• Party Identification: Full legal names and addresses of all parties, their roles, and signing authority
• Commission Structure: Detailed calculation methods, rates, and payment schedules
• Performance Terms: Clear metrics, targets, and conditions for earning commissions
• Territory Rights: Defined geographic or market boundaries for commission eligibility
• Payment Terms: Timing, method, and conditions for commission payments
• Duration & Termination: Agreement length, renewal terms, and ending conditions
• Non-Compete Clause: Reasonable restrictions on competitive activities
• Dispute Resolution: Process for handling disagreements under provincial law
• Governing Law: Specification of applicable Canadian jurisdiction

A Commission Agreement differs significantly from an Agency Agreement in several key ways. While both deal with business relationships, their scope and focus are quite distinct. Let's explore the main differences:

• Primary Focus: Commission Agreements specifically outline payment structures based on sales performance, while Agency Agreement establishes a broader legal relationship where one party acts on behalf of another
• Scope of Authority: Commission Agreements typically limit authority to sales activities and earning commissions, whereas Agency Agreements often grant broader powers to negotiate, enter contracts, and represent the principal
• Payment Structure: Commission Agreements focus exclusively on performance-based compensation, while Agency Agreements may include fixed fees, expenses, and various compensation methods
• Legal Obligations: Agency Agreements create fiduciary duties and broader legal responsibilities under Canadian law, while Commission Agreements primarily govern sales performance and compensation terms