Commission Guide for Employers in New Zealand

Commission is a type of pay given to employees when they make sales or bring in new business. It’s common in industries like retail, real estate, and sales. Unlike a fixed salary, commission is performance-based, which means pay goes up or down depending on results.

For New Zealand businesses, commission matters because it can motivate staff and boost results, but it also needs to be handled correctly under employment law. Employers must make sure contracts are clear, pay is calculated fairly, and tax obligations are met. When managed well, commission can help attract talent and reward performance. When managed poorly, it can create confusion, stress, and disputes.

In this guide you’ll learn:

• What commission is and how it works in New Zealand
• The difference between salary, training wages, and commission pay
• How sales commission is taxed and managed
• Best practices for setting up commission-based jobs

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What Is a Commission?

Commission is money paid to an employee on top of their base wage or salary. It usually comes from sales, but it can also apply to leads, sign-ups, or other business outcomes. Some roles are fully commission-based, while others use a mix of salary and commission.

A retail manager in Auckland told us that offering commission lifted their team’s energy during peak shopping seasons. Staff worked harder, and sales went up, but only once the rules were made clear and simple.

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How Does Commission Work in NZ?

Commission in New Zealand is agreed upon in the employment agreement. It must be written down clearly so both employer and employee understand:

• What actions earn commission (e.g. a sale, contract signed, or target met)
• How the amount is calculated (fixed percentage or sliding scale)
• When and how it is paid (weekly, monthly, or after invoices are settled)
  
  

Some jobs are salary plus commission, while others are commission-only. In New Zealand, even commission-only roles must meet the minimum wage when averaged over the pay period. Employers cannot pay below this.

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Salary, Training Wage, and Commission Pay

It’s useful to understand how commission fits with other types of pay:

• Salary: A fixed amount paid regularly, no matter sales.
• Training Wage: A lower rate sometimes paid during training periods, though it must still meet employment law standards.
• Commission Pay: Variable pay based on performance, either added to salary or on its own.

Many employers choose a mix of base salary plus commission to balance security and motivation.

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How Is Commission Taxed in NZ?

Commission money is taxed the same as other income in New Zealand. PAYE (Pay As You Earn) tax is deducted by the employer before the employee gets paid. If the commission is large or irregular, it can move the employee into a higher tax bracket for that pay period.

Employers should:

• Use the correct commission calculator
• Keep clear records of payments
• Explain tax deductions to staff so they aren’t caught by surprise

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Commission-Based Jobs in New Zealand

Commission-based jobs are common in:

• Real estate
• Retail sales
• Recruitment
• Call centres
• Financial services
  

In Auckland, we’ve seen many commission-based jobs work from home, especially in recruitment and telesales. Some roles don’t require experience, while others are specialised. Employers should be upfront in job ads about whether roles are salary plus commission or commission-only.

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Best Practices for Employers Using Commission

To avoid disputes and build trust, New Zealand employers should:

• Put it in writing: Employment agreements must clearly show how commission is calculated.
• Stay compliant: Always meet minimum wage and employment standards.
• Be transparent: Explain how and when commission is paid.
• Support training: Staff perform better when they understand the product and sales process.
• Review regularly: Update commission structures as markets and goals change.

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Key Takeaways for Employers

• Commission is a performance-based payment that must be written into the employment agreement.
• Employers in New Zealand must ensure commission pay meets minimum wage laws.
• Commission is taxed like other income through PAYE.
• Clear rules, fair structures, and good communication prevent disputes.
• A mix of salary and commission often works best for balancing stability and motivation.

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