This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Explanation of commission rights after termination of employment in UK law. Covers entitlement rules, contractual clauses, unpaid commission claims, notice period issues, and Employment Tribunal procedures in England and Wales.
Commission-based pay is a common feature in UK employment contracts, particularly in sales, finance, recruitment, and client-driven roles. When employment ends, disputes often arise over whether an employee is still entitled to commission earned before termination or commission that becomes payable after termination.
In England and Wales, commission rights after termination depend primarily on the employment contract, statutory protections under the Employment Rights Act 1996, and general principles of contract law. These issues frequently lead to claims for unlawful deductions from wages or breach of contract before the Employment Tribunal or civil courts.
Meaning of Commission Rights After Termination
Commission rights after termination refer to an employee's entitlement to receive commission payments after their employment has ended. These rights may arise where:
- The employee generated sales or leads before termination
- The commission becomes payable after the employment ends
- Contractual terms define when commission is “earned” versus “paid”
- Deals are completed or invoiced after termination but were initiated during employment
The key legal question is whether the commission was earned during employment or is conditional on events occurring after termination.
Legal Basis for Commission Payments
Commission is treated as “wages” under UK employment law where it forms part of remuneration for work done. This is important because it means employees may be protected under the unlawful deductions from wages provisions of the Employment Rights Act 1996.
Commission rights are determined by:
- Employment contract terms
- Commission schemes or policies
- Implied contractual terms
- Established workplace practice
- Case law principles on remuneration
Tribunals and courts interpret these documents to decide whether commission remains payable after termination.
When Commission Is Still Payable After Termination
An employee may still be entitled to commission after employment ends in several situations.
1. Commission already earned before termination
If the employee completed all actions required to earn commission before termination, it is usually payable even if payment occurs later.
2. Commission linked to pre-termination work
Where the employee introduced a client or negotiated a deal before leaving, commission may still be due if the contract supports it.
3. Contractual “tail” commission clauses
Many contracts include clauses that allow post-termination commission where deals complete after employment ends, provided they were initiated during employment.
4. Deferred commission structures
Some schemes pay commission only after certain milestones, such as:
- Client payment received
- Contract signed
- Service delivery completed
If the employee met the qualifying conditions, payment may still be due after termination.
When Commission Is Not Payable After Termination
Commission is not automatically guaranteed after employment ends. It may not be payable where:
- The contract states commission is only payable to current employees
- Conditions for earning commission were not fully met before termination
- The commission is discretionary and not contractually guaranteed
- The scheme expressly excludes post-termination payments
Employers often rely on clear wording in commission schemes to limit post-employment liability.
Importance of the Employment Contract
The employment contract is the most important factor in determining post-termination commission rights.
Key clauses include:
- Definition of when commission is “earned”
- Timing of payment (earned vs paid basis)
- Eligibility requirements (e.g. being employed at payment date)
- Clawback provisions for cancellations or refunds
- Post-termination entitlement clauses
Ambiguity in contract wording is usually interpreted in favour of the employee, particularly where commission forms part of regular remuneration.
Commission and Unlawful Deductions From Wages
If an employer fails to pay commission that is contractually due, this may amount to an unlawful deduction from wages under the Employment Rights Act 1996.
Claims may be brought where:
- Commission was earned before termination but not paid
- Employer withholds payment without contractual justification
- Deductions are made without consent or legal basis
These claims are typically heard by the Employment Tribunal.
Commission During Notice Period
Commission rights may also apply during the notice period. Depending on the contract:
- Employees may continue to earn commission while working notice
- Employers may place employees on garden leave, affecting new sales activity
- Payment in lieu of notice (PILON) may affect commission eligibility
The treatment of commission during notice depends heavily on contractual wording.
Post-Termination Commission Clauses (“Tail Commission”)
Some employment contracts include “tail commission” provisions, which extend commission rights beyond termination.
These clauses may:
- Allow commission on deals completed after leaving
- Limit payment to deals initiated during employment
- Set time limits for post-termination eligibility
- Exclude commission entirely after termination
Courts interpret these clauses strictly based on wording, as they allocate financial risk between employer and employee.
Legal Disputes Over Commission
Disputes commonly arise in relation to:
- Timing of when commission is earned
- Whether targets or conditions were met
- Whether employment status affects entitlement
- Interpretation of ambiguous commission schemes
- Changes to commission structures before termination
These disputes often involve detailed analysis of contracts, emails, and sales records.
Employment Tribunal and Court Claims
Commission disputes may be brought in:
- Employment Tribunal (for unlawful deductions from wages or breach of contract within jurisdiction limits)
- Civil courts (for larger or complex contractual disputes)
The tribunal will assess:
- Contractual wording
- Commission scheme rules
- Evidence of sales activity
- Timing of termination
- Employer policies and communications
Time Limits for Claims
Employees seeking to recover unpaid commission must generally act within:
- 3 months less one day from the date of the last unlawful deduction (for tribunal claims)
Early conciliation through ACAS is required before proceeding to a claim.
Common Issues in Commission After Termination Cases
Frequent legal issues include:
- Employers requiring employees to be “in employment at payment date”
- Disputes over whether a sale was completed or merely initiated
- Cancellation or clawback of commission after termination
- Unclear definitions of “earned” commission
- Changes to commission schemes without proper notice
These issues are especially common in sales-driven industries.
Practical Importance of Commission Rights
Commission after termination can represent a significant financial entitlement. Clear understanding of rights helps to:
- Prevent unpaid earnings disputes
- Ensure fair treatment in redundancy or resignation
- Clarify entitlement during notice periods
- Reduce litigation risk for employers
It is one of the most frequently disputed areas of employment remuneration law.
Key Takeaways
Commission rights after termination of employment in the UK depend primarily on the employment contract and when commission is deemed to be earned. Employees may still be entitled to commission for work completed before termination or deals finalised afterwards if contractual terms allow it. However, eligibility is not automatic and is often restricted by commission scheme rules. Disputes commonly arise over timing, contractual wording, and eligibility conditions, and may be pursued as unlawful deductions from wages or breach of contract claims in the Employment Tribunal or civil courts.
