Why a written agreement matters
A handshake deal works until it does not. When commissions are at stake, clear written terms prevent disputes, protect both parties, and establish a professional relationship. Even with platforms like Zepys that handle much of the commercial infrastructure, understanding the key elements of a commission agreement is important.
Essential clauses
Relationship definition
Clearly state that the agent is an independent contractor, not an employee. This has significant legal and tax implications in Australia. The agent controls how, when, and where they work. You control what product they sell and the terms they sell on.
Commission structure
Define exactly how commission is calculated, when it is earned, and when it is paid. Include:
The commission percentage or formula. Whether commission is based on gross or net revenue. Payment timing (monthly, upon deal closure, after a holding period). Treatment of refunds, cancellations, and chargebacks. Any clawback provisions and their duration.
Territory and scope
If the agent has a defined territory or market segment, specify it. If the arrangement is non exclusive, state that clearly. Include any restrictions on selling competing products if applicable.
Intellectual property and confidentiality
Your sales materials, customer lists, pricing information, and business strategies are confidential. Include provisions preventing the agent from sharing this information with competitors or using it for competing activities.
Clarify who owns customer relationships. In most commission agreements, the business retains ownership of customer data and relationships, while the agent retains their personal network.
Performance expectations
While you cannot mandate how an independent contractor works, you can set minimum performance standards as a condition for maintaining the agreement. "Agents who do not generate any revenue within 90 days may be removed from the program" is reasonable.
Termination
Define how either party can end the agreement. Typical terms include 30 days written notice from either side. Include provisions for what happens to pending deals and earned but unpaid commissions upon termination.
Governing law
Specify that the agreement is governed by Australian law and the relevant state jurisdiction.
Australian specific considerations
Be careful about sham contracting laws. If your commission arrangement looks too much like employment (fixed hours, exclusive engagement, provision of equipment, control over how work is done), it may be reclassified as employment by the Fair Work Ombudsman.
Genuine commission agent arrangements involve freedom in how work is performed, non exclusivity, and the agent bearing their own business costs.
The bottom line
A clear commission agreement protects both you and your agents. Cover the key elements, be specific about commercial terms, and ensure the arrangement genuinely reflects an independent contractor relationship. When in doubt, have a lawyer review your agreement before distributing it.