A written contract that explains your sales commission terms is important if you ever have to go to court over a payment dispute. But if a sales representative never received specific payment terms, a court may consider other ways to determine when a Michigan employer owes a salesperson a paid commission. It may come down to examining previous communications between a sales rep and the employer.
FindLaw explains that when a sales representative is hired, generally payment terms are described in an employment contract. A commission or an incentive schedule is usually attached to the contract. These documents are among the first things to consult when a salesperson has a payment dispute with an employer. If the employment contract does not state commission terms, then the dispute becomes more complicated.
In the absence of clear payment terms, a court will consider other ways in which payment terms have been established, such as communications between the salesperson and the company. These communications may reveal, either directly or indirectly, the obligations of the company and the sales rep, such as how company policy dictates when the company considers a sale complete.
Looking at prior communications can work for or against a sales rep. Some communications are clear about when a sales representative receives a commission. However, vague or unclear inquiries and responses can be a problem. For instance, a company says a sales rep cannot be paid because a client did not send in payment for a service or goods. If the salesperson does not challenge this assertion, a court might conclude that the sales rep accepted the response, and thus no payment is owed.
Because the absence of a contract or clearly documented payment terms can create such complicated disputes, it is best to seek a written contract up front. Commission disputes can take many different forms, so only read this information for educational benefit and not as legal counsel for your situation.