What is a commission policy?
A commission policy is a company's shared rulebook for commission. It sets the rules that apply to every rep regardless of role: who is covered, when commission is earned and paid, how clawbacks and corrections work, what happens when someone leaves, and how disagreements are resolved.
The policy sits above the individual plans. Rates and targets can change from year to year, while the policy keeps the rules around them the same for everyone.
Policy, plan and agreement
| Document | Content | Applies to |
|---|---|---|
| Commission policy | Shared rules and processes | All reps |
| Commission plan | Rates, targets, quotas and periods | A role or team, usually one year at a time |
| Commission agreement | The individual rep's signed terms | One rep |
Smaller companies often combine all three in one document. What matters is that the rules are written down somewhere and that the agreement refers to them.
What a commission policy should include
- Eligible roles and when a new hire joins the plan.
- Earning point: at signature, invoice or payment.
- Payout: how often, and when the statement is approved.
- Crediting when several reps worked on the same deal.
- Clawbacks and corrections: which events, for how long, and how amounts are deducted.
- Leavers: what happens to deals in the pipeline and earned commission.
- Disputes: deadline for objections and who decides. See commission dispute.
- Changes: how, and with what notice, the policy and plans can be changed.
Example
The policy says commission is earned when the customer has paid and that a 90-day clawback applies. A rep on 10% closes a deal, and the customer pays $8,000. The rep receives $8,000 × 10% = $800 with the next payout. The customer cancels after 45 days, within the 90 days, so the $800 is deducted on the following statement. Because the rule is in the policy, there is nothing to argue about.
Danish considerations
- Written terms: pay terms must appear in the employment contract. Refer to the policy in the commission agreement so it becomes part of the terms.
- Changes: a material change to pay may require notice. Check the rules before changing a plan mid-year.
- Transparency: the EU Pay Transparency Directive sets requirements for openness about pay, and variable pay counts. See the guide to the directive and commission.
FAQ
What is the difference between a commission policy and a commission plan?
The plan sets rates and targets for a role in a period. The policy sets the shared rules around the plans, such as earning point, clawbacks and disputes, and applies to everyone.
Do reps need to sign the commission policy?
The policy should be part of the rep's terms, for example by having the commission agreement refer to it and the rep confirm receipt.
How often should the policy be updated?
Review it when plans are renewed, usually once a year, and whenever a case comes up that the policy does not cover.
Is there a template?
Yes, start with our commission plan template, which covers most of the points above.
Commission policy in Prowi
In Prowi, the policy becomes rules in the system: commission is calculated live from CRM data, clawbacks and corrections show on the rep's statement, and every period goes through approval before the amount is sent to payroll. That way, practice follows policy. Book a demo.
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.