South Africa
Commission Agreement
R749
Create a clear commission agreement that records how commission is earned, calculated, approved, paid, adjusted, clawed back, and terminated for sales, referrals, introductions, or performance-based work.
A Commission Agreement is used where one party earns payment based on sales, referrals, introductions, targets, revenue, collections, or completed transactions. It can be used for employees who earn commission in addition to salary, independent sales agents, brokers, freelancers, introducers, referral partners, and business-development representatives. The agreement should clearly define when commission is earned, how it is calculated, what evidence is used, when it is paid, and whether commission can be adjusted, withheld, reversed, or clawed back.
South African legal context (2026 checklist)
Commission disputes often arise because the parties do not define the trigger for earning commission. The agreement should state whether commission is earned when the lead is introduced, when a contract is signed, when an invoice is issued, when the customer pays, or when the transaction is completed. If the commission earner is an employee, commission may form part of remuneration and must be dealt with consistently with employment law, payment rules, payslip requirements, deduction rules, and minimum employment standards. If the person is labelled an independent contractor or sales agent, the agreement should still reflect the true working relationship and avoid disguising employment. Where customer data or direct marketing is involved, POPIA and consumer-protection obligations should be addressed.
- South African common law of contract
- Basic Conditions of Employment Act 75 of 1997
- Section 29: Written particulars of employment, where the commission earner is an employee
- Section 32: Payment of remuneration
- Section 33: Information about remuneration
- Section 34: Deductions and other acts concerning remuneration
- Section 35: Calculation of remuneration and wages
- Section 40: Payments on termination
- Labour Relations Act 66 of 1995
- Section 185: Right not to be unfairly dismissed or subjected to unfair labour practice
- Section 186: Meaning of dismissal and unfair labour practice
- Section 200A: Presumption as to who is an employee
- Basic Conditions of Employment Act 75 of 1997, section 83A: Presumption as to who is an employee
- Code of Good Practice: Who is an Employee
- National Minimum Wage Act 9 of 2018, where the commission earner is an employee
- Income Tax Act 58 of 1962
- Value-Added Tax Act 89 of 1991
- Tax Administration Act 28 of 2011
- Consumer Protection Act 68 of 2008, where customers or consumers are involved
- Protection of Personal Information Act 4 of 2013, especially where customer personal information or direct marketing is involved
- Electronic Communications and Transactions Act 25 of 2002, where electronic communications, online sales, or electronic signatures are used
- Competition Act 89 of 1998, where exclusivity, territory allocation, restraints, or competitor restrictions may be relevant
- Property Practitioners Act 22 of 2019, where the commission relates to estate agency or property practitioner services
- Financial Advisory and Intermediary Services Act 37 of 2002, where the commission relates to financial services or advice
- National Credit Act 34 of 2005, where credit-related intermediary or referral activity is involved
Use this as a starting point only. Verify current gazetted amendments, tribunal rules, and SARS / DOL circulars that may apply to your matter.
Typical questions we'll walk you through
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What is the full legal name of the company, client, or principal?
What is the full legal name of the person or business earning commission?
Is the commission earner an employee, independent contractor, sales agent, broker, freelancer, or referral partner?
What products, services, deals, leads, customers, territories, or transactions will attract commission?
What must happen before commission is earned: signed contract, paid invoice, delivery, customer acceptance, or successful referral?
What commission rate or formula will apply?
Will commission be a fixed amount, percentage, tiered rate, sliding scale, bonus, or target-based payment?
Will VAT be included or excluded when calculating commission?
Will commission be calculated on gross sales, net sales, profit, collected revenue, or another amount?
When will commission become due and payable?
How often will commission be paid: weekly, monthly, quarterly, or per transaction?
What records, reports, invoices, sales data, or proof of payment must be used to calculate commission?
Will commission be payable on renewals, repeat business, upgrades, cross-sales, or referrals?
Will commission continue after termination for deals introduced before termination?
Will any clawback, reversal, refund, cancellation, bad debt, chargeback, or customer non-payment rule apply?
Can commission be withheld or adjusted if the customer cancels or fails to pay?
Are there minimum sales targets or performance requirements?
Will the commission earner have exclusivity over a territory, customer group, or product line?
May the commission earner represent competitors or other businesses?
Will confidentiality, restraint of trade, non-solicitation, or non-circumvention clauses apply?
Will the commission earner process customer personal information or perform direct marketing?
What tax, PAYE, VAT, UIF, or invoicing arrangements apply?
How may either party terminate the agreement?
What commission must still be paid after termination?
How will disputes about commission calculations be resolved?
Who will sign the agreement on behalf of each party?
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