Commission Structure Template For Australian Startups And SMEs

What Is A Commission Structure Template (And Why Your Business Needs One)?

A commission structure template is a written framework that sets out how you calculate, earn, approve and pay commissions to your staff (or sometimes contractors).

Even if you’re a small team, a template is valuable because it forces you to define the details that usually cause arguments later, such as:

• What counts as a “sale” for commission purposes
• When commission is earned (sale signed? invoice paid? after cooling-off?)
• Commission rate or formula
• How returns, refunds, and chargebacks are handled
• How targets, accelerators, and caps work (if any)
• What happens when someone resigns or is terminated

It also helps your managers apply commission rules consistently. Consistency matters because inconsistent commission decisions can lead to disputes, lower morale, and sometimes legal risk.

In practice, your commission structure template should not sit alone. It usually works together with your Employment Contract and any workplace policies you use to operationalise how commissions are tracked and approved.

Step-By-Step: How To Build A Commission Structure That Works

Commissions should be designed around your business model, your sales cycle, and your risk profile (for example, whether refunds are common, or whether you’re selling long-term subscriptions).

Here’s a practical build process you can use.

1) Start With The Behaviour You Want To Incentivise

Before you choose a rate, clarify what “good performance” looks like for your business. For example:

• High-volume sales (many small deals)
• High-margin sales (protecting profitability)
• Long-term customer retention (minimising churn)
• Cross-selling or upselling (increasing average order value)
• Collecting payment (reducing bad debts)

If you pay commission on the wrong trigger (for example, on “contract signed” when you’re a business with high cancellations), you may pay out commission for revenue you never actually keep.

2) Define The Commissionable Event

This is the most important definition in your commission structure template.

Common commission triggers include:

• On contract signed: fast incentives, higher risk if deals fall over
• On invoice issued: aligns to billing, still risky if invoices go unpaid
• On payment received: protects cash flow, but can feel “slow” to staff
• On delivery/completion: useful for project work where scope changes

There’s no single correct answer. The key is to pick one trigger and define it clearly (including who verifies it and what system is used).

3) Choose A Commission Model (Percentage, Tiered, Or Hybrid)

Your model should fit your margins and sales cycle. We break down common models in the next section, but the practical point is: keep it simple enough to explain in one minute, and precise enough that two different people would calculate the same commission result.

4) Decide How You’ll Handle Adjustments (Refunds, Returns, Chargebacks)

If customers can cancel, seek refunds, or dispute charges, your commission structure template should say how you handle that. Options include:

• Clawback: commission is reversed in the next pay cycle
• Holdback: you withhold a portion of commission for a period, then release it if the sale “sticks”
• No clawback: simpler, but higher cost to the business

This is also where you want your customer-facing terms to align with your internal incentives. If your sales team is paid for pushing aggressive outcomes, your business still needs to comply with the Australian Consumer Law (ACL) and avoid misleading conduct in advertising and sales conversations.

5) Build In Governance: Approval, Disputes, And Audit Trails

Commissions tend to become controversial when the numbers are unclear.

Strong commission governance usually includes:

• How commission is recorded (CRM, spreadsheet, payroll notes)
• Who approves it (direct manager, finance, director)
• When it is calculated and paid (e.g. monthly, quarterly)
• How a worker can raise a dispute (and timeframes)

If you ever need to defend a decision, having clear records can be the difference between a quick resolution and a prolonged dispute.

Common Commission Models In Australia (Pros, Cons, And When To Use Them)

Most startups and SMEs use one of the models below, or a hybrid of several.

Flat Percentage Of Sales

How it works: A fixed percentage is paid on each sale (for example, 5% of revenue).

Why businesses like it: Easy to explain, easy to calculate, and feels fair.

Watch-outs: If your margins vary across products or customer types, this model can accidentally reward low-margin deals more than you intended. It can also encourage discounting unless you control how “revenue” is defined (gross vs net of discounts, GST, shipping, etc.).

Gross Profit Commission

How it works: Commission is based on gross profit (sale price minus cost of goods sold), not revenue.

Why businesses like it: Aligns incentives with profitability and reduces “discount to close” behaviour.

Watch-outs: It’s more complex to calculate and can cause disputes if your costs are not tracked cleanly.

Tiered / Accelerator Commission

How it works: Commission increases after certain targets are hit (for example, 4% up to $50k monthly sales, then 7% above $50k).

Why businesses like it: Encourages high performance and can be cost-effective if targets are set carefully.

Watch-outs: You need to define the measurement period, whether targets reset, and whether “sandbagging” is a risk (delaying deals to hit tiers in a later period).

Commission + Base Salary (Hybrid)

How it works: A base salary provides stability, with commission as an incentive layer.

Why businesses like it: Helps with retention and is often easier to manage than pure commission models.

Watch-outs: Make sure your total remuneration makes sense for your business budget, and the role is clearly defined so expectations don’t drift.

Team-Based Commission

How it works: A commission pool is shared across a sales team (or sometimes sales + delivery teams) based on a formula.

Why businesses like it: Encourages collaboration and reduces internal competition.

Watch-outs: High performers may feel under-rewarded. Your template should spell out how the pool is allocated and what happens if someone joins or leaves mid-period.

Referral Commission (Internal Or External)

How it works: Someone gets a set amount or percentage when they refer a customer who converts.

Why businesses like it: Good for service businesses and professional networks; easy to apply to partnerships.

Watch-outs: Define who owns the client relationship and how repeat purchases are treated. If you’re paying non-employees (e.g. partners), you’ll want the arrangement documented carefully.

Commission Structure Template: What To Include (A Practical Checklist)

Below is a practical “fill-in-the-blanks” checklist you can use as a commission structure template. You can adapt it for employees, contractors, sales agents, or a mix (but be careful: the legal position can differ depending on the relationship).

1) Parties And Role

• Business name and ABN/ACN
• Worker name
• Role title and team
• Start date and (if relevant) probation period
• Whether the worker is an employee or contractor (and the agreement this template sits alongside)

If you’re uncertain whether someone is genuinely a contractor or actually an employee in substance, it’s worth getting advice early, because commission “arrangements” won’t override the true legal relationship.

2) Definitions (Do Not Skip This)

Define the key terms you’ll use in calculations, such as:

• Commissionable sale: what counts and what doesn’t
• Net revenue: whether it excludes GST, discounts, refunds, merchant fees, shipping
• Qualified lead: if leads matter (e.g. inbound/outbound rules)
• Territory or account ownership: who “owns” a client

Most commission disputes come down to definitions that were assumed, not written.

3) Commission Rate And Calculation Method

• Commission rate(s) (flat or tiered)
• How tiers work (thresholds, time period, measurement rules)
• Any caps (maximum commission payable) and whether caps can be changed
• Examples worked through with numbers (optional, but very helpful)

4) When Commission Is Earned vs When It Is Paid

• Trigger event for earning commission (e.g. payment received)
• Payment cycle (e.g. monthly, paid in arrears)
• What happens for late payments
• What happens if an invoice is partially paid

This section is essential for cash flow management. If you’re paying commissions monthly but your customers pay in 60 days, you can end up funding commission out of pocket.

5) Adjustments, Clawbacks, And Disputes

• Refund/return rules
• Chargeback rules
• Time period within which adjustments can be made
• Dispute process and required documentation

6) Leave, Absences, And Part-Period Calculations

• How commission works if someone is on annual leave, parental leave, or unpaid leave
• How targets are pro-rated if someone starts mid-month
• What happens if a deal closes while someone is absent

If you have employees, it’s also worth ensuring your approach to leave and entitlements is consistent with your broader payroll and HR processes (for example, how you manage annual leave payments).

7) What Happens When Someone Leaves (Resignation Or Termination)

This is where a lot of businesses get caught off guard.

Your template should spell out:

• Whether commission is payable for deals in progress at the termination date
• Whether commission is payable if the customer pays after termination
• Any requirement for the worker to still be employed on the payment date (if you use that approach)
• How commissions are treated in final pay runs (and when final pay will be processed)

These terms need to be handled carefully. A “you get nothing if you resign” clause can create disputes if it conflicts with other contractual promises or is applied inconsistently.

If you’re paying out notice rather than having someone work it, ensure your position is clear and consistent with payment in lieu of notice obligations and what the contract says about entitlements.

8) Variation Rights (How You Can Change The Structure)

Many businesses need the flexibility to adjust commission structures as they grow.

Your commission structure template should state:

• Whether the business can vary commission rates or rules
• How much notice you’ll give (e.g. 14 days)
• Whether changes apply prospectively only (recommended) rather than retrospectively

As a practical matter, changes should be communicated clearly in writing and ideally accompanied by a revised schedule or policy document.

Legal And Compliance Issues To Watch (So Your Commission Plan Doesn’t Backfire)

A commission structure template is partly a financial tool, but it’s also a legal risk-management tool.

Here are the key legal issues Australian startups and SMEs should keep in mind.

Minimum Pay And Award Compliance Still Matter

If your sales team are employees, commission arrangements don’t automatically replace your obligations under the Fair Work Act and any applicable modern award or enterprise agreement.

For example, issues can arise if:

• commission is treated as “instead of” minimum wages
• record-keeping is poor
• an employee’s earnings fluctuate below minimum entitlements in slow periods

Even if your workplace is largely incentive-based, you still need to set up the role and contract properly so you’re not accidentally underpaying someone.

Tax, Super And Payroll Settings Need To Match Your Plan

Commission payments can affect your payroll processes. Depending on the arrangement and the worker’s status, you may need to account for PAYG withholding, superannuation, payroll tax, and how amounts are treated for GST and invoicing (particularly where you use contractors or external referral partners).

This article is general information only and not legal or tax advice. Because the right setup depends on your business and your team’s circumstances, it’s a good idea to get tailored advice from a lawyer and/or accountant before you implement or change a commission plan.

Misleading Sales Conduct Can Create Consumer Law Risk

Aggressive commission structures can sometimes encourage over-promising.

From a business perspective, that’s risky because the Australian Consumer Law (ACL) can apply to your marketing and sales representations. If your sales team misrepresents what a customer will receive, you may face refunds, disputes, and reputational damage.

That’s why your commission structure should align with your customer-facing terms and your internal training, including clear rules around what can and can’t be promised.

Keep Privacy In Mind If You Use CRMs And Lead Lists

Commission tracking often involves collecting and sharing information about customers and leads (names, contact details, purchase history, and pipeline value).

If you collect personal information, you may need a Privacy Policy and appropriate internal processes for handling and accessing that data.

This also matters if you have contractors or external referral partners with access to your CRM-your agreements should clearly address confidentiality and permitted use.

Be Careful With “Set And Forget” Verbal Commission Promises

In fast-moving startups, it’s common to agree to commissions in a Slack message or on a call.

The risk is that informal promises can still create expectations, and sometimes contractual obligations, particularly if they’re relied on.

To reduce misunderstandings, it’s best to document commissions in a consistent format and tie it back to the worker’s broader contractual documents.

Unfair Or Unclear Terms Can Create Real Dispute Risk

If your commission structure is extremely one-sided, unclear, or frequently changed without notice, you can lose trust quickly-which affects performance and retention.

While every business needs flexibility, the best commission plans are:

• clear and measurable
• consistent across similar roles
• aligned with your sales cycle and refund risk
• updated thoughtfully as the business grows

What Legal Documents Pair Well With A Commission Structure Template?

A commission structure template is usually one part of your legal toolkit. Depending on how your sales function works, you may also need:

• Employment Contract: This sets the overall employment relationship, and can include commission schedules or refer to your commission policy. For many SMEs, the cleanest approach is a contract plus a commission schedule that can be updated. (This should be consistent with your Employment Contract.)
• Contractor Agreement: If you engage sales contractors, your agreement should cover payment terms, confidentiality, IP, and how commission is earned and invoiced.
• Terms of Trade / Customer Contract: If commission is affected by refunds, cancellations, or payment timing, your customer terms should clearly define those concepts too. For many B2B businesses, solid Terms of Trade can help keep your revenue (and therefore commission) more predictable.
• Non-Disclosure Agreement (NDA): Useful if you’re sharing pipeline information, pricing, or lead lists with external partners or prospective hires.
• Company Constitution / Shareholder Documents: If you’re growing and adding investors, a clear governance foundation helps decision-making around remuneration and incentive programs. For companies, a tailored Company Constitution can support that broader framework.

Not every business needs every document, but most businesses benefit from having the “core” documents in place early-especially once you start hiring and scaling revenue.

If your team is growing quickly, you may also want to think about an employee handbook or workplace policy set, particularly where you need consistent processes for performance, conduct, and accessing business systems. For some businesses, an Staff Handbook can be a practical way to pull those rules together.

Key Takeaways

• A commission structure template helps you define how commission is earned, calculated, and paid-reducing disputes and improving consistency as you grow.
• Strong commission structures start with clear definitions, especially what counts as a commissionable sale and when commission is triggered (signed, invoiced, paid, or delivered).
• Popular commission models include flat percentage, gross profit commission, tiered accelerators, and base-plus-commission hybrids-each has different cash flow and behaviour impacts.
• Build in rules for refunds, chargebacks, and clawbacks early, so your business isn’t paying commission on revenue you don’t keep.
• Your commission plan should work alongside your employment and customer contracts, and still needs to align with minimum pay and general employment obligations.
• Documenting commission arrangements properly (rather than relying on verbal promises) makes it much easier to manage performance and exit situations.

If you’d like help putting a commission structure template in place (or updating your contracts so everything aligns), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.