Should I pay a Bonus or Commission?

Let's look at the difference in how bonuses and commission are structured.

A bonus is usually paid when a particular target is achieved. A bonus can be linked to a single objective, or multiple business objectives – around revenue, profits or productivity, for example. In larger organisations, a bonus scheme can relate to local targets and/or be linked to overall company performance. A bonus scheme can also be used for retaining staff – you agree to pay a bonus after a certain period of time if targets are met, for example. 

Commission involves paying a percentage of what the contract won is worth. As a result, there is a clear link between the amount of business the employee brings in and the amount of financial reward. However, if lots of employees are involved in the sales process it may be difficult to correctly allocate the commission. You must be clear about which areas of the business are involved.

If you would like further information on Commission v Bonus payments or you would like to discuss this further please contact us on 020 7330 0000 or email abglondon@abggroup.co.uk.