Employment Contract Template for Sales Roles (UK 2025)
Last updated: February 2025
When You Need This Contract
Sales role employment contracts require careful drafting of commission and bonus structures that are both motivating and legally sound. The contract must clearly define how commission is calculated, when it becomes payable, what happens to commission on deals in the pipeline when the employee leaves, and whether commission constitutes contractual pay that cannot be unilaterally varied. Ambiguity in commission terms is one of the most common causes of employment disputes in sales organisations.
Key Clauses
- Commission structure with clear calculation methodology and examples
- On-target earnings breakdown showing base salary versus variable pay
- Pipeline commission provisions for deals in progress at termination
- Territory or account assignment terms
- Clawback provisions for cancelled deals or returned products
What to Watch Out For
- Not specifying when commission crystallises and becomes payable, creating disputes about pipeline deals
- Making commission structure too complex without worked examples, leading to misunderstandings about expected earnings
Sample Clauses
- Sample commission clause: 'Commission shall be calculated at [X]% of the net revenue of deals closed by you. Commission becomes payable when the customer has paid in full. Deals in the pipeline at the date of termination shall be paid at [50]% of the normal commission rate if they complete within [90] days of your leaving date.'
- Sample OTE clause: 'Your on-target earnings (OTE) comprise a base salary of [amount] and target commission of [amount], giving total OTE of [amount]. Commission targets and OTE are reviewed annually and do not guarantee earnings at that level.'
FAQ
Is commission part of contractual pay under UK law?
If the contract includes a commission scheme, it forms part of the contractual terms. The employer generally cannot unilaterally remove or materially change the commission structure without the employee's consent. However, the contract can reserve the right to amend commission schemes with reasonable notice. Draft commission terms to balance flexibility for the business with certainty for the employee.
What happens to commission when a sales employee leaves?
This must be explicitly addressed in the contract. Without clear terms, the employee may have a claim for commission on deals they initiated but which complete after departure. Common approaches include paying pipeline commission at a reduced rate for deals completing within a set period, or cutting off commission at the termination date. The chosen approach should be clearly documented.
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Get Started FreeThis is guidance for UK businesses, not legal advice. Templates are illustrative. Consult a solicitor for complex matters.
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