Calculating Commission Payments before You Quit Your Job

Most sales / business development staff are paid a basic wage plus some form of commission or bonus (indeed, some people are paid on a commission basis only). The more products / services they sell, the more money they will make over and above their basic salary.

When you quit your job you probably want to calculate how much commission you think you're owed. The 2 main factors that govern what the final figure will be are the terms and conditions stated in your employment contract and the type of commission structure you're on.

Your Contract of Employment

Your employment contract may detail your initial commission structure. However, the longer you're with the same company and the more successful you are, this structure is likely to change. In this case, you should have been informed of these changes in written form without necessitating a change of contract. Dig these proofs out because you'll need them.

What type of commission are you on?

1. Simple Commission

Commission can be paid on sales in a number of ways. The most obvious is to pay commission as a percentage of value of the product or service sold. So for example, if a vacuum cleaner salesman sells 10 vacuum cleaners for £150 each and is on a commission of 5%, then he will be entitled to £75.

If you are on a similar "percentage of sale" commission structure then calculating how much you are owed at the end of your employment should be relatively easy.

2. Accumulative Commission

Slightly more complex is if you are on an "accumulator" commission package where you are paid say 3% for the first ten products / services sold in a set period and then a higher percentage for the next ten. This is also often used for revenue bands (e.g. 5% for the first £10,000 revenue you bring in, 10% for anything above £10,000) as opposed to number of products sold.

3. Pyramid Commission

Another form of accumulator commission is where for example, the manager of a sales force gets not only their own commission for items sold but also receives a share for the number of items sold by the rest of his / her team. Also known as "Pyramid commission", this is common in many companies and calculating the amount of commission one has earned can be tricky.

1. Is your personal commission Simple or Accumulative?
2. Is your team commission Simple or Accumulative?

4. Percentage of Profit Commission

The plot thickens even more if you are on a "percentage of profit" commission structure, especially if profit is related to both the profit on a given sale and the company's profit overall. For example, an Account Manager within an Internet firm may be paid commission on any profit made from the building of a client web site. In other words, profit made from one individual project. They may also be promised payment on the whole company's performance over a year. Commission thus becomes more a question of trust using figures that you may not have immediate access to.

Finally

Whatever the case, when calculating commission, ensure that:

1. You check your employment contract
2. You find and refer to any new commission structures that you've been notified of but may not form part of your original contract
3. In case of ambiguity or doubt, you speak to your boss or HR department