Can an Employer Withhold Commission if You Quit?
The question of whether an employer can withhold commission if you quit is complex and depends heavily on the specifics of your employment contract, the nature of your commission structure, and applicable laws in your jurisdiction. There's no simple yes or no answer. Let's break down the key considerations.
Understanding Commission Structures:
Commission structures vary widely. Some are based on sales closed before you leave, while others may include sales closed during a specific period after your departure (e.g., a trailing commission period). The specifics are crucial. Your contract should clearly define:
- Payment schedule: When are commissions typically paid? Is it monthly, quarterly, or upon completion of a project?
- Sales attribution: Which sales are credited to you? Are commissions based on the date of the sale, the date the contract was signed, or the date of payment?
- Trailing commission: Does your contract include a trailing commission period? This is a period after you leave employment where you still receive commission on sales you originated before your departure. The length of this period varies significantly.
- Performance requirements: Were there specific sales targets or quotas that needed to be met to earn commission?
- Unpaid invoices: How are unpaid invoices from sales you made handled?
Legal Considerations:
Laws governing commission payments vary by state and country. In many places, laws exist to protect employees from unfair withholding of wages, which often includes commission. These laws often specify timelines for payment after termination.
Scenarios and Outcomes:
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Commission earned before your departure: Generally, employers are legally obligated to pay you all commissions earned and attributable to your work before your last day of employment, regardless of whether you quit or were terminated. Failure to do so is a breach of contract and could lead to legal action.
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Commission earned after your departure (trailing commission): Whether you receive trailing commission depends entirely on your contract. If your contract explicitly includes a trailing commission clause, your employer is obligated to pay it. If not, it's unlikely you'll receive it.
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Commission on uncollected payments: The handling of unpaid invoices varies. Your contract might stipulate that you only receive commission after payment is received, even if the sale was closed during your employment. Alternatively, it may stipulate payment based on sales closed, regardless of subsequent payment status.
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Breach of contract: If your employer withholds commission that is clearly due based on your contract and applicable law, this constitutes a breach of contract. You might need to consult with an employment lawyer to pursue your legal options.
What to Do If Your Commission is Withheld:
- Review your employment contract carefully: Pay close attention to all clauses regarding commission payments, particularly concerning termination of employment.
- Gather documentation: Collect any documentation related to your sales, commission calculations, and payment history.
- Contact your employer: Attempt to resolve the issue amicably by discussing the discrepancy with your employer's HR department or manager.
- Consult with an employment lawyer: If amicable resolution fails, an employment lawyer can advise you on your legal rights and options.
In short: The answer to whether an employer can withhold commission if you quit depends entirely on the wording of your contract and the relevant laws in your location. Always carefully read and understand your employment contract, and consult with a legal professional if you have any doubts.
