Commission, also known as ‘bonus payments’ or ‘incentive payments’, is a sum payable to an employee based on their sales performance, often calculated as a percentage of the total sales made by an employee.
While commission is usually paid to an employee in addition to a base salary, it is possible for an employee to be solely paid on commission.
When can I be paid on solely commission?
An employee may be paid solely on commission if the applicable award or enterprise agreement permits the employer to do so. In certain industries where incentive schemes are perceived as closely connected to employee performance, such as the real estate industry and car sales industry, the relevant awards or enterprise agreements often include clauses permitting commission-only salaries. When paid solely on commission, the employee must be earning the equivalent to or higher than, the national minimum wage or a relevant award wage.
If no award or enterprise agreement applies to the employee, it is still possible for the employer to pay the employee on a commission only basis pursuant to a contract. This is again subject to the requirement that the employee is guaranteed to receive equal or higher than minimum wage.
What if my employer wants to alter my current remuneration package to commission only?
Whether your employer can switch your existing remuneration package (typically comprising of a base salary and an incentive scheme) to a commission-only package will depend on the terms of your contract, as well as the relevant enterprise agreement or award with the default position being that any change must be agreed. If you are unsure of whether you are obliged to accept this change or can refuse it, you would be well advised to seek legal advice.
I was told I would earn high figures, but I’m not even coming close!
Scenario: You were looking for a new job. At a job interview, an employer told you that if you accepted an offer of employment with them, you would be paid on a commission-only basis, and would earn approximately $200,000 per annum. You accepted the offer based on this representation, and resigned from your existing job which paid $120,000 per annum. You are now working for the employer, and earning significantly less than was represented to you during the interview stage.
If you have found yourself in a scenario similar to above, your employer may have breached provisions of the Australian Consumer Law (ACL). In particular, your employer may be liable for engaging in misleading or deceptive conduct by representing that you would earn a very high remuneration rate, or misleading you about the nature/probability of earning this rate, and you have suffered loss or detriment owing to the fact that you resigned from your previous employment. If this is the case, do not hesitate to seek legal advice about your rights.