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Commission Based Employment Contract Template for Canada

A comprehensive employment agreement governed by Canadian law that establishes the terms and conditions of a commission-based employment relationship. The contract details the commission structure, performance expectations, and payment terms while ensuring compliance with federal and provincial employment standards. It includes provisions for base salary (if applicable), commission calculations, sales targets, territory assignments, and essential employment terms such as confidentiality and non-solicitation clauses. The document is specifically designed to protect both employer and employee interests while providing clear guidelines for commission-based compensation within the Canadian legal framework.

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What is a Commission Based Employment Contract?

This Commission Based Employment Contract is designed for use in Canadian business environments where employees are compensated primarily or partially through sales commissions. It is particularly relevant for organizations engaging sales professionals, real estate agents, insurance brokers, and similar roles where performance-based compensation is standard practice. The document ensures compliance with Canadian federal and provincial employment standards, tax regulations, and labor laws while providing a clear framework for commission calculations, payment terms, and performance expectations. It includes essential protections for both employer and employee, addressing critical aspects such as territory rights, customer relationships, and intellectual property. This agreement is typically used when hiring new sales staff or converting existing employees to a commission-based structure, and can be customized based on provincial requirements and industry-specific needs.

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

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

2. Background: Context of the employment relationship and purpose of the agreement

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

4. Appointment and Term: Position title, employment status, and duration of employment

5. Duties and Responsibilities: Primary job responsibilities, reporting structure, and performance expectations

6. Commission Structure: Details of commission calculations, rates, and payment terms

7. Base Salary and Benefits: Any guaranteed base compensation and standard benefits package details

8. Payment Terms: Timing and method of commission payments, including any holdbacks or adjustments

9. Targets and Quotas: Sales or performance targets that affect commission earnings

10. Hours of Work: Expected working hours, flexibility, and overtime provisions

11. Confidentiality: Protection of company confidential information

12. Non-Solicitation: Restrictions on soliciting customers or employees

13. Termination: Conditions and process for ending the employment relationship

14. Governing Law: Applicable jurisdiction and legal framework

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

1. Probationary Period: Terms of initial probation period - include if applicable to the role

2. Training and Development: Professional development requirements and support - include for roles requiring specific certifications

3. Expense Reimbursement: Terms for business expense claims - include for roles involving travel or client entertainment

4. Non-Competition: Restrictions on working for competitors - include for senior roles or those with access to sensitive information

5. Remote Work: Terms for working from home or remote locations - include if remote work is permitted

6. Territory Assignment: Geographic or account territory definitions - include for field sales roles

7. Intellectual Property: Ownership of work product - include for roles involving creative or technical development

8. Company Vehicle: Terms for use of company vehicles - include if a vehicle is provided

9. Draw Against Commission: Terms for salary advances against future commissions - include if draw system is used

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

1. Schedule A - Commission Rates: Detailed breakdown of commission rates, tiers, and calculation methods

2. Schedule B - Sales Targets: Specific performance targets and quotas for commission eligibility

3. Schedule C - Benefits Package: Details of health benefits, insurance, and other perks

4. Schedule D - Territory Map: Geographic territory or account assignments if applicable

5. Schedule E - Bonus Structure: Additional incentive or bonus programs beyond standard commission

6. Appendix 1 - Commission Calculator: Examples of commission calculations for different scenarios

7. Appendix 2 - Expense Policy: Detailed policies for business expense reimbursement

8. Appendix 3 - Sales Process: Required sales procedures and documentation requirements

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

Jurisdiction

Canada

Publisher

Genie AI

Cost

Free to use

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