Service Agreements & Contracts

Free Commission Agreement Template (PDF)

A commission agreement is a contract between a company and an independent sales representative that sets how the rep is paid for the sales they bring in: the commission rate, what it's calculated on, when it's earned and paid, and what happens to commissions when the relationship ends.

When to use it

Use a commission agreement when you bring on an independent sales rep, agent, or business developer who is paid per sale rather than a salary. Most commission disputes come from three unanswered questions: is it calculated on the invoice or on cash collected, who gets credit for a sale, and what's owed after the rep leaves. This template answers all three in writing.

What's typically included

• Company, rep, and effective date
• A clear statement that it's for an independent rep, not an employee
• Products, territory, and non-exclusive engagement
• Commission rate and how net amount is calculated
• Commission earned only when the customer pays
• Monthly payment with statements
• Deductions for refunds and credits
• Rules for crediting a sale
• No authority to set prices or bind the company
• Expenses
• Independent contractor status and Form 1099
• Confidentiality
• Termination and post-termination commissions
• Signature blocks for company and rep

How to fill it in

• Decide what the commission is calculated on. "Net amount collected" (this template's default) protects the company from paying commission on unpaid or refunded sales; a rep may push for "invoiced amount" instead.
• Spell out how a rep gets credit for a sale, such as registering the lead first, so two reps can't claim the same customer.
• Set the post-termination rule clearly: commissions on orders already placed, and whether any tail period applies after the rep leaves.
• If the rep will be your employee rather than an independent contractor, don't use this template: many states, including California and New York, require a written commission plan for employees with specific terms.

This template is a general starting point, not legal advice — customize it and have it reviewed for your situation.

Frequently asked questions

When is a sales commission considered earned?

Whenever the agreement says it is. That's why it matters to put it in writing. This template makes a commission earned when the company actually receives the customer's payment, which is common and avoids paying commission on sales that never get paid.

Do I have to pay commission after a sales rep leaves?

Generally you owe commissions already earned under the agreement. Whether you owe commission on later orders from the rep's customers depends on the agreement, and this template lets you set a tail period. Some states also have laws protecting independent sales reps' commissions after termination.

Can I use this for an employee paid on commission?

It's not designed for that. Several states require employers to give commissioned employees a written plan with specific terms, and wage laws limit deductions from employees' pay. Use a plan built for your state's employment rules.

Can a commission agreement be signed electronically?

Yes. Under the U.S. ESIGN Act and state UETA laws, an e-signed commission agreement is as valid as a paper one. DocuAgree records each party's consent and produces a certificate of completion.