IL - Commissions upon termination

Our company pays our sales reps commission when payment is received from the customer.

If the sales rep is terminated, are we required to pay commission when the payment is received from the customer even though the sales rep is officially gone?

If so, can we put a time limit on this as in 'the commission will paid upon receipt of payment from customer within the 30 days following termination. Any payment received from customers later than 30 days will not generate a commission payment to the terminated employee."

Because in most cases we've reassigned a new sales rep to the account and they begin looking for commission too since commission in NOT only paid on new business but all along on residual business as well.

2 answers  |  asked May 18, 2010 08:30 AM [EST]  |  applies to Illinois

Answers (2)

Ryan Nalley
The Commission belongs to the salesperson, despite when the money is earned, but you have to prove you made the sale.

posted by Ryan Nalley  |  Oct 22, 2010 11:49 PM [EST]
John Otto
It depends on when the commission is earned. If the commission is earned when the sale is completed, then you would owe the commission even if it hasn't been collected. If the commission is earned when payment is received from the customer, then I think a position that you don't pay the sales rep who is terminated before the commission is received could be defended. The key is to have a well-defined written policy, that is scrupulously followed in all cases, and to buttress its defensibility have the employees sign that they have read and consent to the policy.

posted by John Otto  |  May 18, 2010 10:41 AM [EST]

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