Commission Agreement Template: Free Annex for Danish Contracts

Commission agreement template: the short answer

A commission agreement is a written annex to the employment contract that sets out what earns commission, when a sale counts, rates, quota, statements, payment, clawbacks, holiday and absence, leaving and changes. Download our free Word template, fill in the fields in brackets and adapt it to your collective agreement. The template is written for companies employing salespeople in Denmark under Danish law.

Download the commission agreement template (Word, free)

The template is a starting point, not legal advice. Adapt it to your collective agreement and employment contract, and have it reviewed if you are in doubt.

Most commission-paid salespeople in Denmark are salaried employees covered by the Danish Salaried Employees Act (funktionærloven), and the template is built around those rules. It has 13 sections with fields in lavender brackets, options where you choose the solution that fits, and short guidance notes in italics that you delete before the agreement is signed. A Danish version with the same content is available too. It is part of our free commission and sales compensation templates.

What should a commission agreement include?

Danish law has no set form for commission agreements. But pay, allowances and other pay components and the payment intervals must be stated in writing (section 3 of the Danish Employment Contracts Act, ansættelsesbevisloven), and several rules in the Salaried Employees Act and the Holiday Act assume you have a method you can point to. The table shows the sections of the template:

Section	What it covers	Why it matters
1. Parties and effective date	Who, which role, from when	Makes the agreement part of the employment
2. Commission basis	Which sales earn commission, and on what	The most common source of disagreement
3. When a sale counts	Signed, invoiced or paid	Decides the month, the risk and what happens on leaving
4. Rates and model	Flat rate, tiers, accelerator and cap	A worked example makes everyone read it the same way
5. Quota and period	Targets and how they are set	New annual targets generally do not require notice
6. Calculation and statement	When, how and the right to see the data	Transparency prevents disputes
7. Payment	Pay period and pay code	Connects the agreement to payroll
8. Cancellation and clawback	Window and offset	Advances can only be offset against pay
9. Holiday and absence	Holiday, sickness and leave	The law requires commission during paid absence
10. Notice and leaving	Notice period, release from duty and commission after leaving	The most expensive place to disagree
11. Changes	Notice and transition	Material changes require individual notice
12. Disagreement	Who, how and where	A fixed route before it becomes a case
13. Signatures	Both parties	Documents that the agreement was accepted

1. Parties and effective date

Name, CVR number, job title and the date the agreement applies from. Also state whether it replaces an earlier commission agreement and that it prevails over the contract on commission. Then there is no doubt about which document applies.

2. Commission basis

Describe exactly which sales earn commission (products, customers, territory) and on which amount: net revenue, gross margin or contract value. Also state what does not earn commission and how shared sales are split. Use the same terms as in your CRM and accounts, so the rep and payroll read the numbers the same way.

3. When a sale counts

The template gives three options: when the customer has signed, when the customer has been invoiced, or when the customer has paid. Signature gives the fastest commission but more cancellations. Payment gives the company the least risk, but moves the customer's payment risk to the rep and often leads to disagreement when the rep leaves. Choose a point you can document in your systems.

4. Rates and commission model

The template has a table for a tiered model with three tiers and a cap, plus fields for a flat rate and an accelerator. Write a worked example into the agreement. Example: with 4% up to DKK 150,000, 7% up to DKK 300,000 and 10% above, a basis of DKK 420,000 gives 6,000 + 10,500 + 12,000 = DKK 28,500. With a cap of DKK 25,000, DKK 25,000 is paid. If there is any doubt about how tiers are calculated, a worked example is the fastest way to find out.

5. Quota and period

State the period (month, quarter or year), the quota, and that quota is set for one year at a time. The Danish Chamber of Commerce (Dansk Erhverv) writes that where new bonus targets are set every year, the new targets generally do not need notice unless they differ materially from earlier ones. Also state whether quota is reduced during paid absence, so holiday and sickness do not cost the rep a tier.

6. Calculation and statement

Agree when commission is calculated, which system is the source, and when the rep receives a written commission statement. State that the rep may see the data behind their own sales, and how and within what deadline an error is reported. A fixed deadline brings order, but it cannot cut off claims the employee has under the law.

7. Payment and pay code

When is commission paid: with the salary for the same month or the month after? Also state whether commission counts towards pension. In the payroll system, commission is recorded under a pay code that comes from your payroll system or provider. Agree the setup before the first payment.

8. Cancellation and clawback

State within what window a cancellation or non-payment means commission lapses, for example 3 months. Under section 9(2) of the Salaried Employees Act, an advance on commission can only be covered by pay owed to the employee, i.e. offset against salary and commission. The template uses the same principle for clawing back paid commission: the amount is only offset against later commission and salary and is not claimed back. Whether commission already earned and paid can be claimed back depends mainly on the agreement, so write the rule clearly. For more detailed clause text, see our commission clawback policy template and the guide to commission clawbacks.

9. Commission during holiday and absence

Here you need a method, because the law requires commission to be included:

• Holiday: with paid holiday, the rep is entitled to compensation for the commission lost because of the holiday (section 17 of the Danish Holiday Act, ferieloven). The Danish Maritime and Commercial High Court set the compensation at 12.5% of the previous year's commission (2019), and the Danish Supreme Court accepted a scheme where 12.5% of the previous year's commission was included together with fixed base salary (2016). The template offers the 12.5% model or an average per working day. See holiday pay on commission in the glossary.
• Sickness: pay during sickness must include the commission the employee would presumably have earned (section 9(3) of the Salaried Employees Act). The template uses an average over the last 12 months, which you can change. See commission during sick leave.
• Pregnancy and leave: commission follows the right to pay. Half pay under section 7 of the Salaried Employees Act means half the estimated commission, unless a collective agreement or the contract gives more.

Also state whether commission on deals that close during the absence is part of the estimated amount or paid on top. Otherwise it becomes a point of dispute.

10. Commission on notice and leaving

During the notice period, the rep earns commission as normal. If released from duty, pay must include the commission they would presumably have earned. For sales that close after the rep has left, the employee is entitled to commission on sales they worked on to the extent that follows from law and practice, and the rest depends mainly on the agreement. The template proposes a clear rule: sales mainly brought about by the rep that close within a fixed period after leaving earn commission. A bonus may be covered by section 17a of the Salaried Employees Act and belongs in a separate bonus agreement. See also commission upon termination.

11. Changes to the commission scheme

A material change that leaves the rep worse off, for example lower rates, a new basis or a new cap, must be notified individually with the employee's notice period. Changes to pay information must also be notified in writing no later than the day they take effect (section 5 of the Employment Contracts Act). Also agree which scheme applies to deals in the pipeline at the changeover. A general reservation that the scheme can be changed does not necessarily remove the duty to give notice.

12. Disagreement

Agree that disagreement is first discussed with the manager or HR, and that the rep may involve a union representative or trade union. State whether disputes are settled under the collective agreement or by the courts. Keep statements and agreement versions: the limitation period is generally 3 years (section 3(1) of the Danish Limitation Act, forældelsesloven).

13. Signatures

Both parties sign and receive a copy each. Keep the signed agreement with the employment contract.

How to use the template

1. Choose the model: delete the models and options you do not use.
2. Fill in the fields: every lavender field in brackets must be completed.
3. Write a worked example: use the rep's own numbers. To work through the model first, use our free commission Excel template, which has the same three models.
4. Check the collective agreement and contract: a collective agreement can give better terms than the law, for example pay during leave.
5. Have it reviewed: if in doubt, ask a lawyer or your employers' organisation to read it.
6. Delete the guidance: the italic notes are for you, not for the agreement.
7. Sign and keep it: keep every version so you can always show which rules applied to a payout.

Common mistakes in commission agreements

• The basis is described with words like "sales" or "revenue" without saying what is deducted.
• It does not say when a sale counts, so the month and leaving become negotiations.
• No method for holiday, sickness and leave, so the calculation has to be invented when the situation arises.
• Clawback with no window and no offset rule.
• A reservation that "the scheme can be changed at any time", which in practice does not replace notice.
• The agreement has not been updated even though the plan has changed several times.

For the wider rules on commission pay in Denmark, see commission pay in Denmark in the glossary.

Prowi and commission agreements

An agreement only works if the calculation follows it every month. Prowi calculates commission continuously from CRM data according to the rules in your plan, reps see their earnings in a mobile app, and once admins approve the statements, the approved amounts go on to payroll, straight into Zenegy or as a payroll file for systems such as Danløn and Visma Dataløn. Adjustments and clawbacks are handled as rules. Book a demo to see your own agreement set up.

FAQ

Does a commission agreement have to be in writing in Denmark?

Yes, in practice. Pay, allowances and other pay components must be stated in writing (section 3 of the Employment Contracts Act), and changes must be notified in writing no later than the day they take effect. A written agreement is also the best protection against disputes.

What should a commission agreement include?

At a minimum the basis, when a sale counts, rates or model, quota and period, statements and payment, clawback, commission during holiday and absence, commission on leaving and rules for changes. The template has a section for each.

Can an employer claim commission back?

An advance on commission can only be offset against pay and commission owed to the employee (section 9(2) of the Salaried Employees Act). For paid commission on cancelled sales, it depends mainly on the agreement. The template proposes offsetting only against later commission and salary.

How much notice is needed to change a commission agreement?

A material change that leaves the rep worse off must be notified with the employee's individual notice period. For salaried employees, that is between one and six months depending on length of service under section 2 of the Salaried Employees Act.

Is the commission agreement template free?

Yes. You can download the Word file and use it freely. It is a starting point, not legal advice, so adapt it to your collective agreement and contract.

Sources

• Danish Salaried Employees Act (funktionærloven), LBK no. 1002 of 24/08/2017 (retsinformation.dk, in Danish), sections 2, 7, 9 and 17a
• Danish Holiday Act (ferieloven), LBK no. 152 of 20/02/2024 (retsinformation.dk, in Danish), section 17
• Danish Employment Contracts Act, act no. 501 of 16/05/2023 (retsinformation.dk, in Danish), sections 3 and 5
• Danish Limitation Act section 3 (danskelove.dk, in Danish)
• Danish Supreme Court, judgment of 31 March 2016, case 66/2015 (lovguiden.dk, in Danish)
• Danish Maritime and Commercial High Court, judgment of 12 June 2019, BS-20938/2018 (lovguiden.dk, in Danish)
• Dansk Erhverv: Changing and renewing commission and bonus schemes (in Danish)

This article is general information, not legal advice. Check your collective agreement and employment contract.