What is a commission agreement?
A commission agreement is the written agreement that sets out how an employee or agent earns, is credited with and is paid commission. It can sit in the employment contract or in an appendix that is updated when the plan changes. The calculation rules themselves are often called the commission plan.
What does Danish law require?
- In writing: under the Danish Employment Contracts Act, pay and other pay components, and pay periods, must be stated in writing no later than 7 days after the start date. If information is missing, the employee can be awarded compensation, generally up to 13 weeks' pay.
- Mandatory rules: the Danish Salaried Employees Act (funktionærloven) and the Holiday Act contain rules on commission during absence, notice and holiday that an agreement cannot worsen for a salaried employee.
Checklist: what the agreement should state
| Item | Example |
|---|---|
| Basis | Invoiced revenue excl. VAT, paid within 60 days |
| Rate and tiers | 6% up to 100% of target, 9% above |
| Territory | New customers in Jutland and Funen |
| Earning and payout | Earned on invoicing, paid with salary the month after |
| Corrections | Credit notes and cancellations offset in the next statement |
| Absence | Average of the last 12 months during sickness and parental leave |
| Holiday | How lost commission is assessed |
| Leaving | Post-termination commission for 3 months on late-stage deals |
| Draw | Recoverable or non-recoverable |
| Changes | Plan runs for a calendar year; changes notified in writing |
Common mistakes
- "Revenue" without saying whether it means order, invoice or payment.
- No rule for clawback or credit notes.
- No rule for deals shared between two reps.
- The plan changes mid-year without notice.
See the individual Danish rules in commission during sick leave, holiday pay on commission and commission after resignation. The DI (Confederation of Danish Industry) on commission pay page is also a good overview.
The agreement in Prowi
In Prowi the agreement's rules are built as a plan and tested in Commission Studio on your own data before reps see it. Reps can always see how each amount was calculated.
Prowi is not a law firm. This page describes the general Danish rules; collective agreements and individual contracts can give other rights. Talk to your employers' association or a lawyer when money is at stake.
In Prowi
Every term on this page is a rule you can write into a commission model in Prowi. The model reads the deal from HubSpot the second it closes, applies the rule, and the rep sees the result on their phone before the day is over.