Sales Commission Provisions In Saudi Labor Law
Sales management is one of the most important departments in business enterprises, no less important than other departments operating in the business management system. Although administrative schools differ in the development of sales departments in a manner that achieves the system’s management objectives as a whole The Department, however, often adopts a commission method to motivate sales delegates to work tirelessly and continuously, Sales representatives are entrusted with the task of representing the enterprise and enhancing its market share in the face of competing enterprises And from this point of view, we saw a talk about the legal description of the commission of sales, as the most common commissions in employment contracts, but almost one of the most significant effects of a commission contract.
What is a sales commission?
Definition of sales commission
Given that linguistic and scientific classifications have not known the sales commission in particular, but have traditionally defined the commission in general, and sales in general, we consider that we share our opinion to find an overarching definition of sales commission without other commissions, and we say: The sales commission is fixed amounts or percentages due to sales employees from the value of the transactions they make in the employer’s interest for their effort to achieve this. This definition concludes with three advantages:
- Sales commission is two types: it may be fixed or variable, and this has a significant impact on the extent to which the end-of-service bonus may be calculated on a commission basis.
- It is entitled to a particular category of employees at the enterprise, which is not due to anyone who has entered into a transaction for the enterprise and who is an employee of the enterprise, which reflects the implicit administrative delegation guaranteed by the sales staff contract.
- The sales commission is part of the price of a particular transaction and not part of the employer’s profits as a whole, and therefore it is due only from his work
Legal conditioning of sales commission
We have defined the sales commission as: fixed amounts or percentages due to sales employees from the value of the deals they make in the employer’s interest for their effort to achieve this. By reference to the Saudi Labour law, it provides the commission as a part of many elements of actual wages; In our view, we should clarify the distinct features between commission and similar pay accessories, such as percentage of profits, gratuities, incentive bonuses and the nature of the work, in detail as summarized below:
A) Percentage of profits:
Some enterprises give senior executives and others a share of the enterprise’s profits in order to induce them to work diligently to increase profits, and some jurisprudence considers them to be a type of commission as a percentage of the sales proceeds; However, the difference between the sales commission and the percentage of the profit is the worker’s entitlement to his share of the agreed profits once the enterprise has made that profit regardless of his direct contribution.
For example, the human resources manager who works in the evaluation of the enterprise’s employees, He does not exercise any of the sales powers, but may be entitled to the percentage of the enterprise’s profits when his contract of business includes a requirement. The enterprise’s internal regulations or substantive law may require the enterprise to provide a statement of the amount of profits owed by the workers after each disclosure of the company’s financial lists.
The researcher considers that this type of wage is the only way to immunize the partner from loss in the company. The Saudi company law provides for the exemption of the partner who only offers his work, and does not receive a corresponding wage from loss in the company. We believe that such type of partnerships in the employee enjoys the protection provided by the corporate law and the protection provided by the employment law. Quite contrary to the sales commission is payable to employees in the sales sector only, and their entitlement is subject to achieving the result of their work: selling and concluding deals.
B) Tips (tips):
Some employees of the facility who face the public may receive gratuities (Bakhchish) and some law commentators call them gifts. In fact, the tips are completely independent of the sales commission, as the latter are granted solely by the employer. The tips are granted by the public for good treatment. The researcher considers that the amount of the tips cannot be adjusted for the same service, as they are linked to the employer’s client. This makes it difficult to adopt the tip as the worker’s basic wage; Some regulatory commentators have argued that there are rules governing the amount of tips so that the worker can enjoy his legal right to wage protection imposed by some national legislation.
C) Incentive bonuses (bonuses):
As a result of work on enterprises, employers on certain occasions grant all employees cash or benefits in kind in excess of their wages. This type of financial advantage may at first glance appear to be different from the sales commission; However, the likelihood of convergence is that once this financial advantage is provided for in the contract of employment, then the question is whether it is attached to the sales commission as an actual wage? Yes, if it is expressly provided for in the contract, and is permanent, that is, continuity and consistency. However, the burden of proving sustainability rests solely with the worker.
The sales commission is essentially based on increasing productivity at work, encouraging results rather than due diligence, and is therefore linked to the inherent professional obligation of the contracted workplace. The worker (sales employee) does not incur additional burdens to achieve his work.
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How the Attorneys at Khalaf Bandar Law Firm Can Help
At the end of this article, we would like to point out that the Labour law of Saudi Arabia is easily hard; Its ease lay in the eloquence and openness of the formula and its difficulty in downloading its texts on the facts of conflicts, especially since the most of HR employees are predominantly not specialists.
The team at Khalaf Bandar Law Firm can help. We have extensive experience in helping individuals, institutions, and ventures enrolled in Saudi agreements that are from Saudi Arabia and abroad. Whether you want to start a negotiation or approve a contract, we can help. Contact us today to schedule a consultation and learn more.
