Commission-Based Compensation Plans

2008-11-20 21:10:51 (GMT) (WiredPRNews.com - Business)

Many salespeople earn some (or all) of their compensation pursuant to commission-based compensation plans. Under such plans, payments often reflect a percentage of the salesperson’s overall sales. Commission-based schemes reward salespeople for achieving high sales and may increase a company’s profits.

But problems often arise in connection with commission payments. First, commission plans typically undermine company unity since salespeople essentially compete against one another. Also, in an effort to make sales, some salespeople strike deals with customers and then neglect to follow through on the accounting issues. Not only can this lead to internal disputes between a salesperson and members of the accounting department, but it can also lead to disputes between the salesperson’s employer and its customers.

The biggest problems typically occur when a salesperson leaves his employer. Disputes may arise over compensation for the salesperson’s final sales. Employers may also pursue litigation to prevent a former salesperson from “taking” customers if the salesperson previously signed an agreement not to compete with his former employer.

To prevent or mitigate these problems, Dallas employment lawyer Keith Clouse suggests that both employers and employees contemplating a commission-based compensation scheme seek the advice of counsel prior to finalizing an agreement. To speak with an employment law attorney regarding commission-based payments, contact the employment law attorneys at Clouse Dunn Khoshbin LLP at info@cdklawyers.com.