Commission-only sales agent agreement in Australia: what to put in writing

Commission-only pay can be lawful in Australia, but the rules depend on whether the salesperson is an employee or an independent contractor. An employee can be paid commission-only when their award or enterprise agreement says they can be paid that way, and an employee with no award or agreement must still get at least the National Minimum Wage. A genuine independent contractor negotiates their own rate, so the deal needs to be written down clearly.

If you are engaging an independent sales agent, Claim Done drafts a commission / sales-agent agreement from your answers for a flat A$49. It covers the rate, when commission is earned and paid, clawback, expenses, territory, term and ending.

Can you pay someone commission only?

The Fair Work Ombudsman says commission is usually a fee or a percentage of an employee’s sales, and can sit on top of normal pay or make up the whole wage. For employees:

• commission-only pay is allowed when an award or enterprise agreement says the employee can be paid that way, and the award or agreement can set its own rules about how commission is paid
• employees not covered by an award or agreement can be paid commission, but they still need to be paid at least the National Minimum Wage.

If your salesperson is an employee, check their award or agreement first. A contractor agreement is not the right document for an employee.

Employee or contractor: check this first

This agreement is for an agent who works as an independent contractor. Contractors usually negotiate their own fees and can work for more than one client at a time, says the Fair Work Ombudsman’s independent contractors page. The same page lists factors used to work out which one a worker is:

• how much control the business has over how the work is done
• who holds the financial responsibility and risk
• who supplies the tools and equipment
• whether the worker can delegate or subcontract the work
• how the hours of work are set
• whether there is an expectation of work continuing indefinitely.

Which test applies depends on the type of business doing the hiring:

If your business does not fit either row, check with the Fair Work Ombudsman. The Ombudsman says there usually won’t be one deciding factor, and that an ABN or invoices do not automatically make someone a contractor. Under the whole of relationship test, a contractor carries the risk of making a profit or loss on each job and can delegate or subcontract the work.

The ATO says the “independent contractor” label in a contract does not decide the relationship, and the business is responsible for classifying the worker for tax and super. Its table lists payment by commission among the employee traits and payment for a specific result as the contractor trait, though no single feature decides it. An agent that is a company, trust or partnership is a contracting relationship for tax and super.

Sham contracting risks

The Fair Work Ombudsman’s sham contracting page says it is illegal to tell a worker they are a contractor when the business does not reasonably believe it. It is also illegal to knowingly say something false to convince an employee to become a contractor for the same work, or to dismiss or threaten to dismiss an employee so they can be re-engaged as a contractor. Courts can impose penalties for sham contracting.

A signed agreement does not fix a sham. business.gov.au says a written agreement calling someone a contractor does not override an employment relationship or remove tax and super obligations. Write it to match how the agent will really work.

Superannuation on commissions

For employees, the ATO’s qualifying earnings page says all commissions paid to an employee count when working out super guarantee. The minimum is 12% of qualifying earnings, as at November 2026. From 1 July 2026, super is paid for each payday and generally needs to reach the fund within 7 business days, according to the ATO.

A contractor can be owed super too. The ATO’s page on super for independent contractors says a contractor paid mainly for their labour is an employee for super guarantee purposes, whether or not they have an ABN. That applies when the contract is mainly for their labour, pays for their personal skills rather than a specified result, and the work cannot be delegated. Paying the contractor an extra amount equal to the super rate is not a super contribution. On tax, contractors generally handle their own, and nothing is withheld unless they do not quote an ABN or agree to withholding.

What a commission agreement should set out

The business.gov.au guide to preparing a contract says the contract should show the fee structure and calculations, whether the fee includes GST, and the timing of payments. For a commission deal, cover:

1. Both parties’ full names, and a statement that the agent is a genuine contractor, not an employee.
2. What the agent sells, and to what kind of customers.
3. The rate: a percentage, a flat amount per sale, or tiers, with the actual figures.
4. What counts as a sale and when commission is earned: on the signed order, when the customer pays, or on delivery.
5. When and how earned commission is paid.
6. Refunds and clawback: whether commission is reversed if a sale is refunded, cancelled or never paid.
7. Expenses: whether the agent covers their own selling costs or the business reimburses agreed costs.
8. Territory and exclusivity, if any. A court may not enforce an exclusivity clause that is too restrictive or unreasonable.
9. The term, and how either party can end it, with notice and what happens to commission on sales already in progress.
10. Changes in writing, signed by both parties.

How the Claim Done agreement is laid out

• Date and parties: the business (the Principal) and the agent (the Agent).
• Appointment and the products or services: what is sold and to whom.
• Commission: the rate or structure, exactly as you give it.
• When commission is earned: the one trigger you choose.
• Payment of commission: how and how often, plus clawback if chosen.
• Expenses, and territory and exclusivity only if you set one.
• Term and termination.
• Independent contractor: the parties’ intention, and a note that classification depends on the real arrangement and the law.
• General, then a dated signing block for each party.

You download it straight away. Nothing is sent for you.

Signing, records and what to keep

Both parties sign and each keeps a copy. Keep every commission statement, the sales behind it, any clawbacks and expense claims. The ATO says most business records must be kept for 5 years, showing the date, amount, description and GST information, in English. If the salesperson is an employee, the Fair Work Ombudsman says time and wages records, including incentive-based payments, must be kept for 7 years.

If a dispute comes up

Go back to the signed terms first. On a refunded or unpaid sale, the trigger for earning commission and the clawback clause are where to start. Under the contractor rights and protections rules, a contractor can ask the Fair Work Commission to cancel or change an unfair term if the contract was made on or after 26 August 2024, the term is a workplace relations matter such as pay, and their earnings are below the contractor high income threshold. A worker who thinks they are in a sham arrangement can contact the Fair Work Ombudsman.

Mistakes to avoid

• Writing into the contract exactly how the agent must do the work. business.gov.au notes this can indicate employment.
• Leaving “earned” undefined, so nobody knows whether a cancelled order still pays.
• Agreeing a rate by phone and never writing the figures down.
• Changing the rate without a written variation signed by both.

Ready to put the deal in writing? Start your commission agreement for A$49 and sign it with your agent. Claim Done is not a law firm and does not give legal or tax advice.