Commission Sales Agreement (New Zealand)
Made pursuant to the Employment Relations Act 2000 (NZ) and subject to the Minimum Wage Act 1983 (NZ)
Date: [Contract Date]
BETWEEN:
[Employer Name] (NZBN [Employer NZBN])
[Employer Address]
(the Employer)
AND:
[Employee Name]
[Employee Address]
[Employee Email]
(the Employee)
The Employer engages the Employee in the role of [Job Title] and the parties agree that the Employee's remuneration will include a commission component as set out in this agreement, in addition to the base salary and statutory entitlements.
1. EMPLOYMENT DETAILS
1.1 Job Title: [Job Title]
1.2 Employment Type: [Employment Type]
1.3 Commencement Date: [Start Date]
1.4 Sales Territory / Product Lines: [Sales Territory]
1.5 This agreement is made under and subject to the Employment Relations Act 2000, the Minimum Wage Act 1983, the Holidays Act 2003, and the Wages Protection Act 1983.
2. BASE SALARY AND KIWISAVER
2.1 The Employee will be paid a base salary of [Base Salary], payable [Pay Frequency] by electronic funds transfer.
2.2 KiwiSaver: The Employer will make KiwiSaver employer contributions at the rate of 3% (or such higher rate as the Employee may elect) of the Employee's gross salary to: [KiwiSaver Scheme], in accordance with the KiwiSaver Act 2006.
2.3 The base salary is at or above the minimum wage rate applicable under the Minimum Wage Act 1983. The Employer will ensure the Employee's total earnings for any pay period are not less than the applicable minimum wage for all hours worked.
2.4 The Employer will deduct PAYE (Pay As You Earn) from all wage and commission payments in accordance with the Income Tax Act 2007 and will remit such amounts to Inland Revenue.
3. COMMISSION STRUCTURE
3.1 Commission Rate(s): [Commission Rate]
3.2 Commission Calculation Base: [Commission Base]
3.3 Eligible Sales and Exclusions: [Eligible Sales]
3.4 Commission Payment Timing: [Commission Payment Timing]
3.5 The Employer will provide the Employee with a written commission statement setting out the calculation of each commission payment.
3.6 Commission payments are subject to PAYE deduction and form part of the Employee's gross income for tax purposes under the Income Tax Act 2007.
4. SALES TARGETS AND KPIS
[Sales Targets]
4.1 Sales targets and KPIs will be reviewed annually. Any material changes to targets must be agreed in writing by both parties.
4.2 Failure to meet sales targets will be managed in accordance with the Employer's performance management process and the good faith obligations under the Employment Relations Act 2000. Dismissal for failure to meet targets must follow a fair and reasonable process.
5. LEAVE ENTITLEMENTS AND COMMISSION
5.1 The Employee is entitled to leave in accordance with the Holidays Act 2003, including: 4 weeks' annual leave per year; 10 days' sick leave per year (after 6 months' continuous employment); 3 days' bereavement leave; and public holidays as specified in the Holidays Act 2003.
5.2 Annual leave pay will be calculated at the greater of the Employee's ordinary weekly pay or average weekly earnings (which includes commission payments) as required by the Holidays Act 2003.
5.3 Commission during leave periods: [Leave Commission Policy]
6. TERMINATION AND COMMISSION ON DEPARTURE
6.1 Either party may terminate the employment by giving [Notice Period] written notice, in accordance with the Employment Relations Act 2000.
6.2 Commission on termination: [Termination Commission Policy]
6.3 The Employer may terminate the Employee's employment without notice for serious misconduct, subject to a fair and reasonable process in accordance with the Employment Relations Act 2000 and any applicable Employment Relations Authority determinations.
6.4 On termination, the Employer must pay any accrued but untaken annual leave at the greater of ordinary weekly pay or average weekly earnings, in accordance with the Holidays Act 2003.
7. CONFIDENTIALITY AND RESTRAINT
7.1 The Employee must keep confidential all proprietary information, sales data, customer lists, pricing, and trade secrets of [Employer Name] both during and after employment.
7.2 All customer relationships, leads, and sales opportunities developed in the course of employment belong to the Employer.
7.3 The Employee acknowledges that the customer relationships established during the employment are a significant asset of the Employer.
7.4 The Employee must handle all personal information in accordance with the Privacy Act 2020 (NZ) and the Information Privacy Principles.
8. GENERAL PROVISIONS
8.1 This agreement is supplemental to the Employee's individual employment agreement and is to be read together with it. In the event of any inconsistency, the provision more favourable to the Employee (consistent with the Employment Relations Act 2000 good faith obligations) will apply.
8.2 This agreement does not affect the Employee's statutory entitlements under the Employment Relations Act 2000, the Holidays Act 2003, the Minimum Wage Act 1983, and the KiwiSaver Act 2006, which cannot be excluded or reduced.
8.3 Dispute Resolution: Any employment relationship problem arising under this agreement will be dealt with in accordance with the Employment Relations Act 2000. The parties may seek mediation through the Ministry of Business, Innovation and Employment (MBIE) mediation service before referring matters to the Employment Relations Authority.
8.4 Governing Law: This agreement is governed by the laws of New Zealand, including the Contract and Commercial Law Act 2017 and the Employment Relations Act 2000.
8.5 Variation: Any variation to the commission structure or targets must be agreed in writing and signed by both parties, with reasonable notice given to the Employee.
EXECUTED AS AN AGREEMENT
Signed by the Employer:
[Signatory Name]
For and on behalf of [Employer Name]
Signed by the Employee:
[Employee Name]
Employer (Authorised Signatory)
________________
Signature
Employee
________________
Signature
What Is a Commission Sales Agreement (New Zealand)?
A Commission Sales Agreement in New Zealand appoints one party to promote or sell on the other's behalf and sets the commission, territory, and duties owed under the Companies Act 1993.
New Zealand's employment law framework imposes stronger minimum standards than many comparable jurisdictions. Under the Minimum Wage Act 1983, all employees — including those on commission-based remuneration — must receive at least the applicable adult minimum wage for all hours worked. An employer cannot pay a lower base salary in the expectation that commission will top it up; the base salary alone must meet the minimum wage requirement. The adult minimum wage rate is reviewed annually, and the commission sales agreement must provide for a base salary that remains at or above the minimum wage throughout the employment relationship.
The Employment Relations Act 2000 requires all employment agreements to be in writing and to be concluded in good faith. The good faith obligation under the ERA applies throughout the employment relationship and requires both parties to be active and constructive in maintaining a productive employment relationship. Changes to commission structures must be discussed and agreed in good faith, with reasonable notice given to the employee.
The Holidays Act 2003 is particularly significant for commission-based sales staff. Annual leave pay must be calculated at the greater of the employee's ordinary weekly pay or average weekly earnings (AWE) over the preceding 52 weeks. Because commission forms part of gross earnings, the AWE calculation will typically be higher than the base salary alone, and employers must account for commission payments when calculating holiday pay entitlements.
The Wages Protection Act 1983 governs the payment of wages and restricts the circumstances in which an employer may make deductions from wages. Any clawback of commission requires either the employee's specific written consent or authorisation in the employment or commission agreement.
KiwiSaver contributions are compulsory for all eligible employees. Both the base salary and commission payments form part of gross salary for KiwiSaver contribution purposes, and employers must make the compulsory 3% employer contribution on total gross earnings.
When Do You Need a Commission Sales Agreement (New Zealand)?
A written Commission Sales Agreement is essential whenever a New Zealand employer wishes to include a commission-based component in the remuneration of a sales employee. Without a written agreement, the terms of the commission arrangement will be determined by reference to emails, oral discussions, and implied terms — a situation that routinely gives rise to disputes at the Employment Relations Authority.
A Commission Sales Agreement is needed when employing business development managers, account executives, territory managers, insurance advisers, real estate agents, financial advisers, and any other sales staff whose total remuneration includes a variable commission component.
The agreement is particularly important in New Zealand because of the interaction between commission and the Holidays Act 2003. Many employers have historically underpaid holiday entitlements for commission-based staff by calculating annual leave pay at the base salary rate rather than at the average weekly earnings rate required by the Act. A well-drafted commission sales agreement addresses this issue directly by specifying how holiday pay will be calculated.
New technology and SaaS companies entering the New Zealand market with commission-based sales forces need a localised commission agreement that reflects New Zealand's specific employment obligations — including KiwiSaver compulsion, PAYE deduction requirements, and ERA good faith obligations — rather than adapting Australian or US commission plan documents.
Where clawback provisions are important to the employer — for example, in subscription software sales where a customer may cancel within the first year — the commission sales agreement must include an express written authorisation for wage deductions, as required by the Wages Protection Act 1983. Without this, a clawback deduction may constitute an unlawful withholding of wages.
What to Include in Your Commission Sales Agreement (New Zealand)
A well-drafted New Zealand Commission Sales Agreement should include the following key provisions to provide thorough legal protection and comply with applicable employment law.
Parties and NZBN — Identify the employer by full legal name and NZBN. Companies registered under the Companies Act 1993 must use their registered name (ending in Limited or Ltd). The employee should be identified by full legal name and residential address.
Employment Type and Minimum Wage Compliance — State the employment type (full-time or part-time) and confirm that the base salary is at or above the applicable adult minimum wage under the Minimum Wage Act 1983. The agreement should include a mechanism for the employer to review the base salary in line with annual minimum wage adjustments.
Base Salary and KiwiSaver — Document the annual base salary and the KiwiSaver scheme to which contributions will be made. Confirm that the employer will make at least 3% employer contributions on gross earnings (including commission) in accordance with the KiwiSaver Act 2006.
Commission Structure — Define the commission rate(s), the calculation base, eligible sales, payment timing, and the commission statement to be provided to the employee each payment period. Tiered structures must clearly define the revenue thresholds.
Holidays Act 2003 Compliance — Address how annual leave pay will be calculated, expressly referencing the requirement to pay the greater of ordinary weekly pay or average weekly earnings. This is the most common area of legal exposure for employers of commission-based staff in New Zealand.
Wages Protection Act 1983 — Any clawback clause must be clearly documented as the employee's written authorisation for wage deductions, satisfying the requirements of the Wages Protection Act 1983.
Governing Law — The agreement should be governed by the laws of New Zealand, with disputes resolved under the Employment Relations Act 2000 through the MBIE mediation service and, if necessary, the Employment Relations Authority. The forms-legal.com Commission Sales Agreement (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Commission Sales Agreement (New Zealand) (New Zealand) [Legal document template]. Forms Legal. https://forms-legal.com/new-zealand/business/contracts/commission-sales-agreement-new-zealand
"Commission Sales Agreement (New Zealand) (New Zealand)." Forms Legal, 2026, https://forms-legal.com/new-zealand/business/contracts/commission-sales-agreement-new-zealand.
@misc{formslegal-commission-sales-agreement-new-zealand,
author = {{Forms Legal}},
title = {Commission Sales Agreement (New Zealand) (New Zealand)},
year = {2026},
howpublished = {\url{https://forms-legal.com/new-zealand/business/contracts/commission-sales-agreement-new-zealand}},
note = {Free legal document template. Based on Companies Act 1993}
}Also available for these jurisdictions:
Frequently Asked Questions
No. Under the Minimum Wage Act 1983, all New Zealand employees are entitled to at least the applicable adult minimum wage for all hours worked, regardless of how much commission they earn. An employer cannot pay a base salary below the minimum wage and rely on commission to bring the total up to the required level. If an employee earns insufficient commission in any given pay period to bring their total earnings up to the minimum wage for hours worked, the employer must make up the shortfall from the base salary. The adult minimum wage rate is reviewed annually by the Government. Employers should requires the base salary in the commission agreement is at or above the applicable minimum wage at all times. Under New Zealand law, specifically the Companies Act 1993, parties should seek independent legal advice to confirm compliance with all applicable requirements and confirm the document meets the standards set by the relevant regulatory authorities.
The Holidays Act 2003 requires that annual leave pay be calculated at the greater of the employee's ordinary weekly pay or their average weekly earnings (AWE). AWE is calculated by dividing the employee's total gross earnings over the 52 weeks preceding the leave date by 52. Because commission payments form part of gross earnings, AWE for a commission-based employee will generally be higher than their ordinary base salary rate alone. This means that an employer who pays only the base salary rate for annual leave may be underpaying the employee. Employers with commission-based staff must track total gross earnings (including commission) over the relevant 52-week period to calculate the correct holiday pay rate. The Ministry of Business, Innovation and Employment (MBIE) has issued extensive guidance on the correct calculation of holiday pay following widespread underpayment issues in New Zealand.
Yes, but with important constraints under the Wages Protection Act 1983 and the Employment Relations Act 2000. The Wages Protection Act 1983 prohibits deductions from wages unless the employee has specifically agreed to the deduction in writing, or the deduction is authorised by a collective agreement or an enactment. A commission clawback clause in a written individual employment agreement or commission sales agreement can constitute the required written authorisation, provided the clause is clearly drafted and signed by the employee. Employers must also require that any clawback does not reduce the employee's net pay below the applicable minimum wage for any pay period. The Employment Relations Authority may scrutinise clawback provisions that appear unduly harsh or that were not clearly understood by the employee.
The entitlement to commission on termination depends on the terms of the commission sales agreement. Under New Zealand employment law, an employee is generally entitled to commission that has been earned — meaning the underlying sale has been completed and all conditions for commission have been satisfied — prior to the termination date, even if the commission has not yet been paid. Commission on sales not yet invoiced or settled at the termination date is generally not payable unless the agreement provides for it. The agreement should clearly define when commission is 'earned' and what happens to accrued but unpaid commission on termination. The Wages Protection Act 1983 requires all outstanding wages (including earned commission) to be paid on or before the employee's last day of employment, or within a reasonable time thereafter.
Under the KiwiSaver Act 2006, employers must enrol all eligible new employees in KiwiSaver unless the employee opts out during the opt-out window (2 to 8 weeks from the start of employment, or from first KiwiSaver deduction, whichever is later). Employers must deduct the employee's KiwiSaver contributions from wages (at the employee's elected rate of 3%, 4%, 6%, 8%, or 10%) and make an employer contribution of at least 3% of the employee's gross salary. The employer contribution obligation applies to both the base salary and commission payments — commission forms part of the employee's gross salary for KiwiSaver purposes. Inland Revenue administers the KiwiSaver scheme and employer obligations are set out in the KiwiSaver Act 2006. Under New Zealand law, specifically the Companies Act 1993, parties should seek independent legal advice to confirm compliance with all applicable requirements and confirm the document meets the standards set by the relevant regulatory authorities.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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