When is commission pay legally enforceable?

Commission and your employment contract

An employee’s right to commission generally stems from their employment contract or a written commission scheme. The contract should detail:

• How commission is calculated
• When it becomes due
• Conditions for payment (e.g. if the sale is completed or payment is received from the client)
• Whether commission is payable during notice or after termination

If a commission arrangement is not clearly documented, disputes may arise over interpretation.

Implied terms and custom and practice

Even if a commission scheme is not written into the contract, employees may be able to rely on implied terms — especially where commission has been paid consistently over time. This is known as “custom and practice”. The key factors are regularity, clarity, and longevity of the payments.

Performance targets, thresholds, and clawback clauses

Commission schemes often include thresholds that must be met before payments are triggered. Some also contain clawback clauses allowing the employer to recover commission in specific situations, such as client cancellation or misconduct. These terms must be clear and reasonable to be enforceable.

Common workplace disputes over commission

Disputes over unpaid or withheld commission

A common issue arises when commission is earned but not paid. This might occur where:

• The employee meets the criteria, but the employer refuses to pay
• The employer changes the scheme without consultation
• The employer withholds commission as part of a wider dispute

In such cases, the employee may have a claim for unlawful deduction from wages.

Changes to commission schemes or terms

Employers sometimes seek to revise commission terms due to financial pressures or changes in strategy. However, they cannot usually change key contractual terms without the employee’s consent. Imposing new terms unilaterally may constitute a breach of contract.

Commission during notice periods and after termination

Disputes often arise around whether commission is payable when an employee is serving notice or after they have left the business. Unless the contract clearly states otherwise, commission that was earned before termination may still be payable, even if it is paid later.

Disagreements over performance metrics or eligibility

Employers and employees may also disagree over how performance is measured, which deals qualify, or who is credited for the sale. Ambiguities in the scheme design or poor communication can lead to protracted disputes.

Legal rights around commission pay

Protection under the Employment Rights Act 1996

Commission payments that are contractually due are considered “wages” under the Employment Rights Act 1996. This means that if an employer withholds commission without justification, the employee can bring a claim for unlawful deduction from wages.

When unpaid commission may be an unlawful deduction from wages

If the commission has been earned in accordance with the contract or established scheme, and the employer withholds it without agreement or legal justification, this may amount to an unlawful deduction. Employees have the right to bring a claim to an employment tribunal within three months less one day of the last payment due.

Read more about: time limits in Employment Tribunal claims

Impact on holiday pay and other entitlements

Commission earnings can affect holiday pay. Where commission forms a regular part of earnings, recent case law suggests it should be included in the calculation of statutory holiday pay to ensure employees are not financially disadvantaged when taking leave.

What happens to commission after leaving a job?

Commission during garden leave or notice

If an employee is working their notice or placed on garden leave, they may still be entitled to commission, depending on the contract. Disputes can arise if the employer claims no commission is payable during this period, especially if the employee has already secured deals prior to leaving.

Entitlement to post-termination commission

Many disputes concern whether an employee is owed commission for deals completed after they leave, but which were generated during their employment. Whether payment is due will depend on the wording of the contract and when commission is deemed “earned”.

What if the contract is silent or unclear?

If the contract does not address post-termination commission or is ambiguous, a tribunal will look at the parties’ intentions, previous practice, and what is reasonable in the circumstances.

Resolving commission disputes

How to raise a workplace grievance

If you believe your commission has been unfairly withheld, the first step is usually to raise a formal grievance under your employer’s internal procedure. This creates a record and gives your employer the opportunity to resolve the issue internally.

Mediation, ACAS early conciliation, and tribunal claims

If a grievance does not resolve the issue, you may pursue ACAS Early Conciliation. This is a mandatory step before lodging an employment tribunal claim. If conciliation fails, you can bring a tribunal claim for unlawful deduction from wages or breach of contract, depending on the circumstances.

Time limits and evidence requirements

Claims for unlawful deduction from wages must usually be brought within three months less one day of the last payment owed. Claims for breach of contract must be issued within six years in the civil courts, or three months at the tribunal (if the contract has ended). Key evidence includes:

• Your employment contract or commission agreement
• Pay slips and commission statements
• Emails or documents about targets, calculations, and disputes

When to seek legal advice

If your commission has been withheld or changed

You should seek legal advice if your commission has been reduced or withheld, particularly if this affects a significant portion of your income. Legal advice can help clarify your rights and the best course of action.

If your employer is trying to vary your commission terms

If your employer is proposing changes to your commission scheme—especially without consultation—you may have grounds to challenge the variation or negotiate alternative terms.

If you’re leaving your job and commission is still owed

Before resigning or during your notice period, check your entitlements. Legal advice can help you assess whether you are owed further commission and whether it may be recovered as part of any exit package or settlement agreement.