What is commission-only pay?
Commission-only pay (straight commission) means the whole salary is commission. There is no fixed base salary. The rep earns a percentage of the revenue or gross margin they generate, so pay follows results completely.
In Denmark, base salary plus commission is the most common setup for salespeople. Commission-only pay exists, but is mostly used for agents, brokers and some sales roles where the rep controls much of the work.
Commission-only or base plus commission?
| Commission-only | Base + commission | |
|---|---|---|
| Fixed base salary | No | Yes |
| Risk for the rep | High, pay moves with sales | Lower, the base is secure |
| Payroll cost for the company | Follows sales completely | Fixed part regardless of sales |
| Typical use | Agents, brokers, some field reps | Most B2B reps |
Example
A commission-only rep earns 12% of the gross margin on their orders.
| Month | Gross margin | Calculation | Pay |
|---|---|---|---|
| Strong month | DKK 350,000 | DKK 350,000 × 12% | DKK 42,000 |
| Weak month | DKK 150,000 | DKK 150,000 × 12% | DKK 18,000 |
The swing is the whole point and the whole risk. It can be smoothed out with a commission draw that is offset against later commission.
Danish rules that apply
- Employee or self-employed? A self-employed agent who negotiates sales for a company on commission is typically covered by the Danish Commercial Agents Act. See commercial agent and travelling salesperson.
- The Salaried Employees Act can apply. Employees who mainly work in buying or selling are covered by the Danish Salaried Employees Act (funktionærloven) when they work on average more than 8 hours a week under the employer's instructions (section 1). That also applies to commission-only pay.
- Commission during absence. For salaried employees, payments during sickness, notice and similar are based on the commission the rep would probably have earned (section 9(3)). See commission during sick leave.
- Holiday. Commission is pay and counts towards holiday pay. See holiday pay on commission.
- Collective agreements and written terms. If the rep is covered by a collective agreement, it may set requirements for pay. Pay terms must appear in the employment contract. See commission agreement.
FAQ
Is commission-only pay legal in Denmark?
Yes, it can be agreed. But it does not change the rules that apply to employees, such as the Salaried Employees Act rules on commission during absence, and a collective agreement may set requirements for pay. Have the agreement checked by a lawyer or your employers' association.
What happens if the rep sells nothing in a month?
Without a draw or guarantee, commission for that month is DKK 0. That is why a draw can make sense, at least at the start.
Who is commission-only pay right for?
Experienced reps with short sales cycles and a lot of control over their own sales. For new reps or long sales cycles, base plus commission is usually easier to live with.
Commission-only pay in Prowi
When all pay is commission, the rep has to trust the number. Prowi calculates commission live from CRM data, shows it in the mobile app and passes approved amounts on to payroll. The full guide to commission pay covers more models. Book a demo.
Prowi is not a law firm. This text describes the general rules; collective agreements and the specific contract can give other rights.
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.