Why a written agreement matters
Handshake deals work until they do not. When money is involved, especially variable commissions that can grow to significant amounts, clear written terms protect both you and your agents.
A good commission agreement prevents disputes, sets expectations, and creates a professional relationship that agents take seriously.
Essential elements to include
1. Commission rate and structure
State the exact percentage or dollar amount the agent earns per sale. Be specific about what counts as a "sale" for commission purposes. Is it at the point of order, payment, or delivery? Does a refund reverse the commission?
If you offer tiered rates (higher commission for higher volumes), spell out each tier clearly with specific thresholds.
2. Payment schedule and method
Agents need to know when they get paid. Monthly is standard, but fortnightly or weekly payments can be a competitive advantage. Specify the payment method (bank transfer, platform payout) and any minimum payout thresholds.
On Zepys, commission tracking and payouts are handled by the platform, which simplifies this significantly for both parties.
3. Territory or scope
Define where the agent can sell. Is it a geographic territory, a specific industry vertical, or an open market? Exclusive territories attract agents but limit your flexibility. Non exclusive arrangements let you engage multiple agents in the same market.
4. Product and pricing authority
Clarify what the agent can and cannot do regarding pricing. Can they offer discounts? Can they bundle products? Can they negotiate terms? Clear boundaries prevent agents from making commitments your business cannot honour.
5. Duration and termination
Specify whether the agreement runs for a fixed term or is ongoing with notice provisions. Include how either party can end the relationship and what happens to pending commissions after termination.
A common approach is 30 days written notice from either side, with all commissions on sales made before the termination date still payable.
6. Intellectual property and confidentiality
Your sales materials, customer lists, pricing data, and business strategies should remain confidential. Include a clause that prevents agents from sharing proprietary information or using it for competing products.
7. Relationship clarification
State clearly that the agent is an independent contractor, not an employee. This matters for tax, superannuation, and legal liability purposes. The agent is responsible for their own tax obligations, insurance, and expenses.
Common mistakes to avoid
Do not make the agreement so complex that agents will not read it. Two to four pages is usually enough. Avoid one sided terms that create an imbalance of risk. And never include clauses that effectively make the agent an employee while calling them a contractor, as this creates legal exposure under Australian employment law.
Templates and platforms
If you are engaging agents through Zepys, the platform provides standard terms that cover the essential elements. This reduces your legal costs and ensures both parties have clear, consistent expectations from the start.
For custom agreements, have a commercial lawyer review your template once, then use it for all future agents. The upfront legal cost pays for itself many times over in avoided disputes.