UAE Commission and Sales Compensation Guide: Structures and Compliance
Complete guide to commission structures in UAE including base plus commission, tiered rates, accelerators, clawback provisions, and WPS compliance for sales teams.
Quick Summary: Complete guide to commission structures in UAE including base plus commission, tiered rates, accelerators, clawback provisions, and WPS compliance for sales teams.
Commission-based compensation is common in UAE sales roles. All commission structures must be clearly documented in the employment contract and paid through the Wage Protection System (WPS). This guide covers commission structures, calculations, and compliance requirements.
There is no tax on commission in the UAE, making it an attractive market for sales professionals.
| Aspect | Details |
|---|---|
| Legal Status | Must be documented in contract |
| Payment | Through WPS |
| Tax | None (0% income tax) |
| Gratuity | Generally not included |
| Dispute Resolution | MOHRE if contractual |
Types of Commission Structures
Overview
| Structure | Description | Common In |
|---|---|---|
| Straight Commission | 100% commission, no base | Real estate, insurance |
| Base + Commission | Fixed salary + variable | Most sales roles |
| Tiered Commission | Increasing rates at thresholds | Software, B2B sales |
| Revenue Share | % of revenue generated | Partnerships |
| Profit Share | % of profit on deals | Trading, brokerage |
| Residual/Recurring | Ongoing % of renewals | SaaS, subscriptions |
Base + Commission Ratios
| Role Level | Base : Commission |
|---|---|
| Junior sales | 70:30 |
| Mid-level sales | 60:40 |
| Senior sales | 50:50 |
| Enterprise sales | 40:60 |
| Top performers | 30:70 |
Commission Calculation Methods
Method 1: Percentage of Sales
Commission = Total Sales × Commission Rate
Example: Sales AED 500,000 × 2% = AED 10,000 commission
Method 2: Percentage of Gross Profit
Commission = (Sale Price - Cost) × Commission Rate
Example:
- Sale price: AED 100,000
- Cost: AED 60,000
- Gross profit: AED 40,000
- Rate: 15%
- Commission: AED 6,000
Method 3: Tiered Structure
| Sales Tier | Commission Rate |
|---|---|
| AED 0 - 100,000 | 2% |
| AED 100,001 - 250,000 | 3% |
| AED 250,001 - 500,000 | 4% |
| AED 500,001+ | 5% |
Example Calculation (Sales: AED 400,000):
- Tier 1: 100,000 × 2% = 2,000
- Tier 2: 150,000 × 3% = 4,500
- Tier 3: 150,000 × 4% = 6,000
- Total: AED 12,500
Method 4: Target-Based
Commission = Base Commission × (Actual ÷ Target)
Example: Target AED 500,000, Actual AED 600,000 (120%), Base commission AED 10,000 → Earned: AED 12,000
Accelerators and Decelerators
Accelerators (Over-Achievement)
| Achievement | Multiplier |
|---|---|
| 100-110% | 1.0x |
| 110-120% | 1.2x |
| 120-150% | 1.5x |
| 150%+ | 2.0x |
Example with Accelerator
| Component | Calculation |
|---|---|
| Target | AED 500,000 |
| Actual | AED 650,000 (130%) |
| Base commission | AED 10,000 |
| First 100% | AED 10,000 × 1.0 = 10,000 |
| 100-120% | AED 2,000 × 1.2 = 2,400 |
| 120-130% | AED 1,000 × 1.5 = 1,500 |
| Total | AED 13,900 |
Decelerators (Under-Achievement)
| Achievement | Rate |
|---|---|
| 90-100% | 100% |
| 80-90% | 80% |
| 70-80% | 50% |
| Below 70% | 0% |
Contract Documentation
Essential Elements
| Element | Details |
|---|---|
| Commission structure | How it's calculated |
| Qualifying criteria | What counts as sale |
| Payment timing | When commission paid |
| Clawback provisions | Return conditions |
| Dispute resolution | How disputes handled |
Qualifying Criteria
Commission is typically payable on sales that meet:
- Contract signed by customer
- Payment received by company (or invoice raised)
- Not cancelled within grace period (e.g., 30 days)
- Within employee's assigned territory/accounts
Payment Terms
- Commission calculated on calendar month/quarter basis
- Paid within 15 days of period close
- On termination: commission on closed deals up to termination date
Industry-Specific Structures
Real Estate
| Component | Details |
|---|---|
| Commission rate | 2-3% of property value |
| Split with agency | 50-70% to agent |
| Payment timing | Upon deal completion |
| Registration required | RERA certification |
Insurance
| Component | Details |
|---|---|
| New policy | Higher % (10-30%) |
| Renewal | Lower % (2-10%) |
| Residual | Ongoing commissions |
| Clawback | If policy cancelled |
Technology/SaaS
| Component | Details |
|---|---|
| New business | Higher rate |
| Expansion revenue | Moderate rate |
| Renewal | Lower or SPIFFs |
| Annual contracts | Preferred |
Recruitment
| Component | Details |
|---|---|
| Placement fee | 10-25% of salary |
| Commission to recruiter | 10-40% of fee |
| Guarantee period | 3-6 months |
| Rebate | If candidate leaves |
Commission Payment
WPS Compliance
| Requirement | Details |
|---|---|
| Payment method | Through WPS |
| SIF coding | Variable pay section |
| Documentation | Keep calculation records |
| Timing | Per agreed schedule |
Payment Timing Options
| Option | Details |
|---|---|
| Monthly | With regular payroll |
| Quarterly | End of quarter |
| Upon receipt | When customer pays |
| Split | Partial on sale, rest on receipt |
Commission and Gratuity
| Component | In Gratuity? |
|---|---|
| Basic salary | Yes |
| Fixed allowances | No |
| Commission | Usually No |
| Bonus | Usually No |
If commission is fixed, guaranteed, and paid regularly (monthly), it might be included. Consult legal advice.
Clawback Provisions
What is Clawback
Recovery of commission paid if:
- Customer cancels order
- Customer doesn't pay
- Deal terms change
- Contract voided
Typical Clawback Terms
| Situation | Clawback |
|---|---|
| Cancellation within 30 days | 100% |
| Cancellation 30-90 days | 50% |
| Non-payment by customer | 100% |
| Contract modification | Pro-rata |
Recovery Method
- Deduction from future commission payments
- Not to exceed 50% of any single payment
- Balance recoverable from final settlement
Important: All clawback provisions must be clearly documented in the employment contract or commission plan document.
Commission Disputes
Common Disputes
| Issue | Resolution |
|---|---|
| Calculation error | Review with sales ops |
| Credit attribution | Clear territory rules |
| Deal timing | Define closing criteria |
| Payment delay | Escalate to HR |
Resolution Process
| Step | Action |
|---|---|
| 1 | Raise with manager |
| 2 | Sales operations review |
| 3 | HR involvement |
| 4 | Written decision |
| 5 | MOHRE if unresolved |
Best Practices to Avoid Disputes
- Clear documentation of commission structure
- Simple calculation methods
- Timely payment per schedule
- Regular communication on performance
- Transparent tracking systems
Frequently Asked Questions
Automate Commission Calculations
NeuralHR helps you design, track, and calculate sales commissions with performance integration and WPS compliance.
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NeuralHR Team
VerifiedUAE HR Compliance Experts
Our team of HR professionals and legal experts specializes in UAE labor law compliance, with extensive experience helping businesses navigate MOHRE regulations, Emiratisation requirements, and workforce management in the UAE and GCC region.
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