Commission Based Employment Contract South Africa – Probation Period Clause

Commission Based Employment Contract South Africa with Probation Period Clause

Summary A business employing a permanent staff member on a commissioned basis, with provision for a probation period, should use a written contract of employment to agree on the commission structure and generally establish the terms of employment.

Why do I need a Contract of Employment? The requirement for a written contract of employment in South African labour law is clear. Section 29 of the Basic Conditions of Employment Act requires that every employee must be appointed in accordance with a written contract of employment. A written employment contract also helps to establish the parameters so that the employee knows what his/her rights and responsibilities are.

Who should use an Employment Contract? If your business employs staff on a commission basis, and you want to provide for a probation period to assess whether the prospective employee is suitable for the job, then a written employment contract should be considered. If there’s no probation offered, then consider the Commission-based Employment Contract with no Probation period included.

See also: Employment Contract – Salaried with probation

What does the agreement say? This Agreement of Employment consists of: the employer and employee’s details; commencement of employment and probation period; remuneration; pension and medical aid; employee’s duties; working hours; leave; termination.

What does the contract look like? This sample employment agreement, including the commission-based remuneration schedule, can be printed onto ten pages.

What do you need to do to use the Employment Contract?

• Read the terms of the employment document to ensure that it suits your requirements. Make changes as required.
• Add in the relevant details as indicated as blanks in the employment agreement, sign the document, and get your new employee to sign as well.
• Note – it is also advisable to implement a set of Policies and Procedures in your workplace, detailing various other company procedures, policies and general terms of employment not covered in the Employment Contract.

Are the Terms of Appointment still valid if the employee doesn’t sign it? Yes, it is. It is clearly preferable for the employee to sign the terms of employment. But if he/she refuses to sign it, the employment contract remains valid.

My employee can’t read or write. How do I get him/her to sign the employment contract? When a person is illiterate, s/he can “mark” a document, eg with an “X” or a fingerprint, and South African law recognises this as being his/her signature. But make sure that the terms of the agreement are clearly explained before requiring him/her to mark the document.

Appointing a new employee – what documents do I need? When you’re appointing a new employee the following documents may be considered:

• Employment Contract (this is a statutory requirement)
• Job Description
• Employee Secrecy Agreement
• Restraint of Trade Agreement
• General Policies and Procedures of Employment

If you’re looking for examples of employment contract templates, then have a look at our Employment Contracts Pack.

Feel free to browse our Employment Documents for more sample employment agreements and documents.

Also known as: Contract of Employment; Conditions of Employment; Employment Agreement; Terms and Conditions of Employment; Commission-based Employment Contract; Terms of Appointment; Commission Agreement

An in depth look At the Commission based Contract of Employment:

Introduction

In this in-depth look, we will explore the concept of an employment contract, specifically focusing on commission-based contracts with a probationary period. We will discuss the significance of probation, the key elements and basic conditions of such contracts, compliance with employment laws, remuneration, performance evaluation, rights and responsibilities of both the employer and employee, as well as termination and contract renewal. for such employee.

By the end, you’ll have a comprehensive understanding of commission-based employment contracts and the various aspects associated with them.

Understanding Employment Contracts

An employment contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of their working relationship. It defines the rights, obligations, and expectations of both parties and serves as a foundation for a fair and harmonious work environment.

Commission-Based Employment Contract with Probation

A commission-based employment contract with a probationary period is a specific type of contract where an employee’s compensation is primarily based on commissions earned from sales or services rendered. These employees can be referred to as an independent contractor.

The probationary period, typically at the beginning of the employment and consisting of basic conditions, allows the employer to determine and assess the employee’s suitability for the position and the level of work performed by the new hire before making a long-term commitment to a new employee. Once probation is successfully completed by new employees, the employees will become a permanent employee of the business to which it renders services.

The following factors are also looked at under this agreement: the employee’s performance review, the breakdown of the employee’s entire income, flexible working times and other working time the person works, the basic conditions of employment of the employees that renders services to the company, the effective date of employment or the employees, their relationship with any other employee and many other clauses.

Probationary Period and Its Importance

The probationary period provides an opportunity for the employer to evaluate the employee’s performance, work ethic, and overall suitability for the role. During this period, the employee’s progress and adherence to the company’s policies and expectations as well as basic conditions of employment are closely monitored. It allows both parties to determine if the employment relationship is a good fit and serves as a safeguard for both the employer and the employee.

Key Elements of a Commission-Based Employment Contract

A commission-based employment contract should clearly define the terms of remuneration, including the commission structure, sales targets, and any additional benefits or incentives. It should also specify the duration of the contract, working hours, expectations regarding performance, and any probationary period clause if it applies.

Commission-only employees typically have flexible working times and the way their work is performed, or services rendered may be left to the employee’s discretion and are not usually controlled by the employer.

Compliance with Employment Laws and Regulations

Employment contracts must comply with relevant labour law and regulations, such as the National Minimum Wage Act, the Labour relations Act and the Employment Act. These laws protect the rights of employees, ensure fair labour practices, and Employment Act states the minimum standards for employment conditions. Employers should ensure that the terms and conditions outlined in the contract align with the provisions of these laws, particularly with the Employment Act.

Benefits and Remunerations in the Employment Contract

The employment contracts should clearly outline the benefit and remunerations offered to the employee. This includes details about base salary, commissions, bonuses, allowances, and any other perks or benefit provided by the employer. Clarity regarding the calculation and timing of commission payments is crucial as the employee is economically dependent on the employer and this will help to avoid misunderstandings and disputes.

Performance Evaluation and Reviews

Regular performance evaluation and reviews play a vital role in commission-based employment contracts. These evaluations provide feedback to the employee, identify areas for improvement, and acknowledge exceptional performances. They also serve as an opportunity to align expectations, set new targets, and discuss professional development opportunities.

Rights and Responsibilities of the Employer and Employee

The employment contract should clearly define the rights and responsibilities of both the employer and the employee. This includes obligations related to confidentiality, non-competition, intellectual property, and adherence to company policies. It should also outline the employer’s responsibility to provide a safe and inclusive work environment, and the employee’s obligation to perform their duties diligently and professionally.

Termination and Renewal of the Contract

The contract should address the conditions under which either party can terminate the employment relationship. It should specify the notice period required for termination and any applicable severance or exit provisions. Additionally, the contract should outline the procedures for contract renewal and any adjustments to terms and conditions that may occur upon renewal.

Conclusion

Commission-based employment contracts with a probationary period provide employers with an opportunity to assess an employee’s suitability for a role before making a long-term commitment. These contracts should adhere to employment laws, clearly define remuneration and benefit, incorporate performance evaluations, and establish the rights and responsibilities of both parties. By ensuring compliance and transparency, commission-based employment contracts can foster a mutually beneficial working relationship.

FAQs

1. What is a probationary period in an employment contract?
   • Answer: A probationary period is a specified period at the beginning of an employment contract during which the employer assesses the employee’s suitability for the role before making a long-term commitment.
2. What are the key elements of a commission-based employment contract?
   • Answer: Key elements of a commission-based employment contract include the commission structure, sales targets, duration of the contract, working hours, performance expectations, and any applicable probationary period clause.
3. What laws and regulations should employment contracts comply with?
   • Answer: Employment contracts should comply with relevant labor laws and regulations, such as the National Minimum Wage Act and the Employment Act, to ensure fair labor practices and guard employee rights.
4. How are performance evaluations conducted in commission-based employment contracts?
   • Answer: Performance evaluations in commission-based employment contracts involve regular assessments of an employee’s performance, providing feedback, setting new targets, and discussing professional development opportunities.
5. Under what conditions can an employment contract be terminated?
   • Answer: Employment contracts can be terminated based on conditions specified in the contract, which typically include a notice period and may involve severance or exit provisions. The exact conditions may vary depending on local labor laws and the terms of the contract.

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