A Commission Draw Agreement is essential for businesses operating in Canada that compensate sales personnel through a combination of recoverable draws and commissions. This document is typically used when an employer wishes to provide sales representatives with consistent income through regular draw payments while maintaining a commission-based compensation structure. The agreement details how draws are advanced, how commissions are calculated and reconciled against the draws, and the obligations of both parties. It ensures compliance with Canadian employment standards and tax regulations, while protecting both the employer's and employee's interests. The document is particularly important for industries with variable sales cycles or seasonal fluctuations, where regular draw payments help stabilize income for sales personnel while they build their sales pipeline.
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1. Parties: Identification of the employer and employee/contractor parties to the agreement
2. Background: Context of the agreement and relationship between the parties
3. Definitions: Key terms used throughout the agreement including 'Draw', 'Commission', 'Sales', 'Territory', etc.
4. Draw Amount and Payment: Specification of the periodic draw amount and payment schedule
5. Commission Structure: Detailed explanation of commission rates, calculation methods, and earning criteria
6. Draw-Commission Reconciliation: Process and frequency of reconciling draws against earned commissions
7. Repayment Terms: Terms for repayment of draws that exceed earned commissions
8. Sales Reporting: Requirements for reporting sales and tracking commission earnings
9. Payment Schedule: Timing of commission payments and draw adjustments
10. Term and Termination: Duration of the agreement and conditions for termination
11. Post-Termination Obligations: Obligations regarding final reconciliation and repayment of outstanding draws
12. General Provisions: Standard legal provisions including governing law, amendments, and notices
1. Performance Targets: Specific sales targets or quotas when performance metrics are tied to the commission structure
2. Additional Bonus Structure: Details of any additional bonus programs or incentives beyond standard commission
3. Territory Definitions: When specific geographic or customer territories are assigned
4. Non-Solicitation: Restrictions on soliciting customers or employees, if applicable
5. International Sales: Special provisions for international sales including currency conversion and territorial rights
6. Training and Support: When specific training or support obligations are part of the agreement
7. Expense Reimbursement: If separate expense reimbursement terms are included
8. Intellectual Property: When dealing with proprietary sales materials or methods
1. Schedule A - Commission Rates: Detailed breakdown of commission rates by product, service, or customer type
2. Schedule B - Draw Calculation: Formula and examples of draw calculations and reconciliation
3. Schedule C - Sales Territory: Detailed description of assigned sales territory or customer accounts
4. Schedule D - Product List: List of products or services covered by the commission agreement
5. Schedule E - Performance Metrics: Detailed performance targets and measurement criteria
6. Appendix 1 - Commission Calculator: Spreadsheet or formula for calculating commissions
7. Appendix 2 - Reporting Templates: Standard forms for sales and commission reporting
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