Here are 10 things you need to know about commission pay!

Mondo Education Updated on 2024-01-22

Wages are the remuneration paid directly by the employer to the employees in the form of money in accordance with the relevant regulations of the state or the provisions of the labor contract. According to the way wages are determined, wages can be divided into hourly wages, piecework wages, incentive wages, allowance wages, etc.

In the legal sense, commission is a type of piece-rate wage, and the basis and basis of commission is operating income, sales revenue or profit. In a certain sense, the commission wage system is the best embodiment of the principle of distribution according to work, where workers get more for more work, get less for less work, and get less for not working.

Legal basis:Article 6 of the Provisions on the Composition of Total Wages of the National Bureau of Statistics stipulates:Piece-rate wages refer to the labor remuneration paid according to the unit price of the work done. Including: (1) the implementation of the wage system of excess progressive piecework, direct unlimited piecework, quota piecework, excess quota piecework, etc., and the wages paid to individuals according to the fixed amount and piecework unit price approved by the labor department or the competent department;(2) Wages paid to individuals according to the lump sum method of work tasks;(3) Wages paid to individuals according to the turnover commission or profit commission method.

The commission system refers to the internal rules and regulations formulated by the employer regarding the commission payment. Although the internal rules and regulations of an enterprise are not voluntarily reached by both parties, once they are adopted by the workers' congress and have been publicized to the employees, they are binding and should be followed by both the employees and the employer. In fact, this system is an important supplement to the employment contract and should be part of the content of the employment contract.

A commission agreement refers to an agreement between the employer and the employee on the commission payment in addition to the employment contract. By its nature, the commission agreement should be an annex to the employment contract.

Legal basis:Article 4 of the Labor Law of the People's Republic of China stipulates:Employers shall establish and improve rules and regulations in accordance with the law to ensure that workers enjoy labor rights and fulfill labor obligations.

Article 50 of the Interpretation (I) of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases provides:In accordance with Article 4 of the Labor Law, the rules and regulations formulated by the employer through democratic procedures do not violate national laws, administrative regulations and policy provisions, and have been publicized to the employees, may be used as the basis for the people's court to hear labor dispute cases.

If the employer adopts the commission wage system, it shall specify in the labor contract the proportion of the commission, the base amount of the commission, the calculation method of the base amount, the method of payment, etc. In judicial practice, if there is no stipulation in the labor contract, it can be supplemented by a commission system or a commission agreement.

During the same period, if there is a conflict between the content of the labor contract and the content of the internal system, the content of the labor contract shall prevailWhen the content of the two is consistent or the content of the internal system exceeds the content of the labor contract, but does not violate the mandatory provisions of national laws and regulations, the internal system shall become a supplement to the labor contract.

Legal basis:Article 17 of the Labor Law of the People's Republic of China stipulates:The labor contract is legally binding immediately and the parties must fulfill their obligations under the labor contract.

Commission wages are different from bonuses and have consideration. Although commission wages and bonuses are a form of sharing profits between enterprises and workers, bonuses refer to the excess labor remuneration paid to employees and the labor remuneration for increasing income and reducing expenditure, and is an auxiliary form of hourly or piecework wages.

Compared with commission wages, the bonuses given by employers to employees based on their own economic benefits belong to the scope of the enterprise's internal self-management rights, and the company can measure whether and how to pay them according to its own benefits.

The commission wage belongs to the basic consideration for the labor provided by the employee, which is related to the work results of the employee, and the employer must pay the full amount if the conditions for the payment of the commission are met.

The commission wage is usually calculated according to the employer's commission system or the commission agreement signed between the employee and the employer. The commission wage is divided according to the amount of profit or turnover completed by the employee according to a certain commission ratio as labor remuneration, so the determination of the commission ratio is very important. Commissions include excess commissions and full commissions.

Excess commission, that is, the basic salary is retained as the fixed salary part, and the sales or profit is completed according to the corresponding regulations, and the excess part is withdrawn according to a certain proportion of the commission salary.

Calculation formula: income = basic salary + excess income commission ratio

Full commission, that is, the fixed basic salary is abolished, and the employee's income fluctuates completely with the amount of profit or sales revenue.

Calculation formula: Laborer's income = sales or profit commission ratio

Legal basis:Article 47 of the Labor Law of the People's Republic of China stipulates:Employers shall, in accordance with the characteristics of their production and operation and economic benefits, independently determine their wage distribution methods and wage levels in accordance with the law.

The full commission method is no basic salary commission, but the actual income of the employee may be very low due to the impact of sales or profits, how to protect the rights and interests of the employee in this case?

The minimum wage standard refers to the minimum labor remuneration paid by the employer on the premise that the employee has fulfilled his or her normal obligation within the statutory working hours, excluding the social insurance premiums and overtime wages paid by the employer for the employee.

The relevant content of the commission system or commission agreement shall not violate the mandatory provisions of the state on the minimum wage system. That is, if the labor remuneration of the worker is higher than the minimum wage standard, the law does not interfere, and once the labor income is lower than the minimum wage standard, the worker shall enjoy the minimum wage guarantee to maintain his basic living, working, study and Xi needs.

Legal basis:Article 48 of the Labor Law of the People's Republic of China stipulates:The State implements a minimum wage guarantee system. The wages paid by the employer to the employee shall not be lower than the local minimum wage.

The agreement on commission wages is an important part of labor rights and obligations, and commission wage disputes are disputes that arise in the course of performing labor contracts and should fall within the scope of labor disputes. In other words, a dispute over commission wages should first be arbitrated by the labor arbitration department, and the people's court can only accept the dispute between the employee and the employer if the parties are dissatisfied with the arbitral award and file a lawsuit with the people's court, and the people's court cannot directly accept the dispute over the commission payment between the employee and the employer.

Of course, if the employee holds evidence such as the certificate of arrears commission settlement issued by the employer, he can directly sue the people's court, and such disputes are disputes over recourse to labor remuneration, and the people's court can directly hear and make a judgment.

Legal basis:Article 79 of the Labor Law of the People's Republic of China stipulates:In the event of a labor dispute, the parties concerned shall first apply to the labor dispute arbitration commission for arbitration, and if they are not satisfied with the arbitral award, they may file a lawsuit with the people's court.

Article 50 of the Labor Law of the People's Republic of China stipulates:Wages shall be paid to the worker in monetary form on a monthly basis. Wages shall not be deducted or unjustifiably delayed.

Paragraph 4 of Article 27 of the Law of the People's Republic of China on Mediation and Arbitration of Labor Disputes stipulates:In the event of a dispute arising from arrears of labor remuneration during the existence of the labor relationship, the employee's application for arbitration shall not be subject to the limitation period for arbitration as provided for in the first paragraph of this Article;However, if the labor relationship is terminated, it shall be filed within one year from the date of termination of the labor relationship.

The review of the conditions for the payment of commission wages focuses on the agreement between the employee and the employer, such as whether the labor contract is agreed, whether the employer's commission system is stipulated, whether the commission agreement is stipulated, and whether there is any commission payment in the actual performance.

As to whether the commission needs to be paid after the sales proceeds, firstly, it is necessary to examine whether the payment of commission wages between the employee and the employer is premised on the sales receipts, and if there is a relevant agreement and it is legal and valid, it should be appliedSecond, if the parties have not agreed that the payment of the commission is based on the premise of the sales proceeds, and the employer has an agreed defense on the basis of the commission system, it is necessary to review the agreement on the commission system and whether the formulation has gone through democratic procedures and whether it is legal and validFinally, in the absence of an agreement between the employee and the employer, and there is no agreement in the employer's commission system, that the payment of commission is premised on the premise of sales receipts, it is generally determined that no sales receipts are required for the issuance of commissions.

The employment contract, the commission system and the commission agreement are the most direct evidence to prove the existence of commission wages, but when the employee is unable to provide the above evidence and the employer argues that the employee does not include the commission wage, how to provide evidence?

The employee shall bear the burden of proof for the cause of the occurrence of the commission wage, that is, the fact that the commission wage agreed upon by both parties is generated. Employees can prove that their salary composition includes commission wages by providing information such as labor contracts, wage schedules, employment notices, salary systems, etc. The people's court may require the employer to provide wage payment records such as wage schedules to ascertain the composition of the employee's wages, but if the employee fails to complete the burden of proof, even if the employer fails to provide wage payment records, it shall not bear the adverse consequences of failing to provide evidence. If the employer does not recognize the calculation and payment of commissions, and the employee has no evidence to prove the existence of a commission plan, relevant rules and regulations, and an agreement between the two parties, etc., the employee's claim shall be dismissed on the grounds of insufficient evidence due to the issue of the enterprise's distribution incentive mechanism.

Legal basis:Article 67 of the Civil Procedure Law of the People's Republic of China provides:It is the responsibility of the parties to provide evidence for their own claims.

Article 6 of the Law of the People's Republic of China on Mediation and Arbitration of Labor Disputes stipulates that:In the event of a labor dispute, the parties concerned have the responsibility to provide evidence for their own claims. If the evidence related to the disputed matter is in the possession and management of the employer, the employer shall provide it;If the employer does not provide it, it shall bear the adverse consequences.

Compared with ordinary workers, the company's senior managers are more likely to act as managers, replacing employers for operation and management. The remuneration of senior managers mainly reflects the incentive for them to perform their business management duties, which is related to the company's operating income, which is different from the consideration and guarantee of the labor remuneration of ordinary workers.

In handling cases where senior managers claim performance commissions, it is not appropriate to consistently apply the principle of tilted protection of employees, but it is necessary to consider the identity of senior managers. Senior managers and enterprises are relatively equal in status when agreeing on the commission plan, and the content of the agreement is more in line with the true intentions of both parties, and the autonomy of both parties should be respected. Therefore, in the absence of evidence to the contrary to prove that it is not a true expression of intent, the commission agreement between the senior management and the enterprise involves matters related to the sharing of operational risks, such as the agreement not to pay the performance commission in the case of negative profits of the enterprise, should be deemed valid.

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