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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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# A B C D E F G H I J L M N O P R S T U V W X Y Z

Commission pay

What is a commission pay?

Commission pay is a form of compensation where employees receive a percentage of revenue they generate for a company. This is often used in sales roles to incentivize good performance. To put it simply, the more money an employee earns, the more they receive in their paycheck.

Pay structures involving commissions can be a great way for companies to save money. With no need to pay high rates of base pay to attract great staff, they instead only lose a percentage of the money they make per sale. Commission pay also encourages employee retention as once people become great at earning money for a particular company, they’re less likely to leave. The important thing is for companies to set up a fixed structure of commission and make payments consistently.

To manage payroll when commission is involved, companies need to ensure compliance with local laws and tax rules. They also need to track any payments that are sent. To support this, it’s advisable that organizations use a cloud-based payroll solution such as Multiplier. This will automate calculations, ensure compliance, and safely store details of any payments.

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