I’ve been asked to explain the position on commission only arrangements with sales people so here goes. I don’t want my comments to be misinterpreted so let me just say that this post is in no way intended to put people off employing sales staff but it does explain the main options involved.
It’s a common catch 22 scenario. You need to grow your business but you can’t do it all. You know that you could grow the business quicker if you had a dedicated salesperson but there’s only one snag. You can’t actually afford to pay them a salary. So, a commission only arrangement sounds very attractive indeed – they are rewarded for their results and you don’t have to pay them anything if they don’t deliver. Brilliant.
There’s just one problem. It’s not legal to have an employee and only pay them commission, unless you guarantee that the commission equals or exceeds the National Minimum Wage. Otherwise you will be in breach of NMW regulations. So in other words, you can call it commission but it needs to be guaranteed commission so in effect, it’s a salary.