The Employee Commission Agreement is essential for businesses operating in Hong Kong that compensate employees partly or wholly through commission-based structures. This document is typically used when establishing or formalizing commission arrangements for sales positions, business development roles, or any position where performance-based pay is applicable. It ensures compliance with Hong Kong employment law while providing clear terms for commission calculations, payment schedules, and performance expectations. The agreement protects both employer and employee interests by documenting commission rates, eligibility criteria, payment terms, and dispute resolution procedures. It's particularly important in industries where variable compensation forms a significant part of employee remuneration and helps prevent misunderstandings about commission entitlements.
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1. Parties: Identification of the employer and employee, including full legal names and addresses
2. Background: Brief context of the employment relationship and purpose of the commission agreement
3. Definitions: Key terms used throughout the agreement, including 'Commission', 'Sales', 'Targets', 'Quarter', etc.
4. Appointment: Confirmation of employment position and effective date of the commission arrangement
5. Commission Structure: Basic framework of how commission will be calculated and earned
6. Payment Terms: Timing and method of commission payments, including any minimum guaranteed payments
7. Performance Targets: Required sales or performance levels to earn commission
8. Reporting and Documentation: Requirements for sales reporting and commission calculation verification
9. Clawback Provisions: Circumstances under which commission may need to be repaid
10. Termination Effects: Treatment of commission upon termination of employment
11. Confidentiality: Protection of sensitive information related to sales and commission structures
12. Governing Law: Specification of Hong Kong law as governing law
13. Entire Agreement: Standard clause confirming this document represents the complete agreement regarding commissions
1. Team Commission Structure: Include when employee manages a team and earns commission on team performance
2. International Sales: Include when employee deals with international clients or markets
3. Non-Solicitation: Include when protecting client relationships is crucial
4. Dispute Resolution: Include when specific dispute resolution procedures for commission calculations are needed
5. Training Requirements: Include when commission eligibility is tied to completing specific training
6. Probationary Period: Include when different commission terms apply during a probationary period
7. Multiple Product Lines: Include when different commission rates apply to different products/services
1. Schedule 1 - Commission Rates: Detailed breakdown of commission percentages and tiers
2. Schedule 2 - Performance Targets: Specific quarterly or annual sales targets and corresponding commission rates
3. Schedule 3 - Calculation Examples: Examples showing how commission is calculated in various scenarios
4. Schedule 4 - Reporting Templates: Standard forms for sales reporting and commission calculation
5. Schedule 5 - Product Categories: List of products/services and their respective commission rates if applicable
6. Appendix A - Definitions of Sales: Detailed definitions of what constitutes a valid sale for commission purposes
7. Appendix B - Territory Definition: Definition of geographic or client territory if applicable
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