The Draw Against Commission Agreement is essential for businesses operating in South Africa that employ commission-based sales personnel. This document is particularly relevant when companies want to provide their sales force with a steady income stream through advanced payments while maintaining a commission-based compensation structure. The agreement must comply with South African legislation, including the Labour Relations Act, Basic Conditions of Employment Act, and relevant tax laws. It typically includes detailed provisions for commission calculations, draw amounts, reconciliation periods, and deficit handling procedures. This type of agreement is commonly used in industries with longer sales cycles or seasonal fluctuations, where sales representatives need consistent income despite irregular commission payments.
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1. Parties: Identification of the employer/principal and the employee/agent
2. Background: Context of the agreement and brief description of the business relationship
3. Definitions: Key terms used in the agreement including 'Draw', 'Commission', 'Sales', 'Reconciliation Period'
4. Appointment: Terms of appointment and scope of authority
5. Commission Structure: Details of commission rates, calculation methods, and qualifying sales
6. Draw Mechanism: Amount of draw, frequency of payments, and recovery terms
7. Reconciliation Process: Timing and method of reconciling draws against earned commission
8. Payment Terms: Schedule of payments, method of payment, and handling of deficits
9. Obligations of the Parties: Duties and responsibilities of both parties
10. Records and Reporting: Requirements for maintaining sales records and commission calculations
11. Duration and Termination: Term of agreement and conditions for termination
12. Final Settlement: Process for settling outstanding draws and commission upon termination
13. General Provisions: Standard legal clauses including governing law, notices, and amendments
1. Performance Targets: Include when minimum sales targets or performance metrics are required
2. Territory Assignment: Include when the agent is assigned specific geographic or customer territories
3. Non-Competition: Include when restricting the agent's ability to work with competitors
4. Intellectual Property: Include when the agent will have access to proprietary information or materials
5. Training and Support: Include when specific training or support services will be provided
6. Expenses: Include when addressing reimbursement of business expenses
7. Insurance Requirements: Include when the agent must maintain specific insurance coverage
8. Compliance with Industry Regulations: Include when specific industry regulations apply (e.g., financial services, real estate)
1. Commission Rate Schedule: Detailed breakdown of commission rates, tiers, and any variations
2. Draw Calculation Example: Sample calculations showing how draws and reconciliation work
3. Sales Territory Map: If applicable, maps or descriptions of assigned territories
4. Product Price List: Current pricing and commission-eligible products or services
5. Performance Metrics: Detailed performance expectations and measurement criteria
6. Reporting Templates: Standard forms for sales reporting and commission calculations
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