Commission disputes in employment contracts: latest legal regulations

Commission disputes are among the most common forms of disputes arising in employment and business relationships, particularly where the parties disagree on the method of calculation, entitlement conditions, or payment timing of commissions. In practice, due to unclear contractual provisions or incentive policies, many employees have difficulties in protecting their lawful interests, resulting in prolonged disputes between employees and employers.

I. How do commission disputes affect employment relationships?

Commission disputes can have a direct and significant impact on employment relationships, especially when disagreements arise between employees and employers regarding financial benefits. In practice, such disputes often stem from the parties’ failure to clearly define commission calculation methods, eligibility requirements, or payment schedules, leading to a lack of transparency in the implementation of employment contracts. 

When disputes persist, they not only undermine trust between the parties but also negatively affect employee morale, work performance, and the overall workplace environment. In many cases, if not resolved promptly, commission disputes may lead to formal labor disputes, resulting in substantial costs, time consumption, and legal risks for both employees and employers. 

II. Overview of commission disputes

1. What is a commission dispute?

A commission dispute is a conflict arising between an employee and an employer concerning entitlement to commissions, the method of calculation, eligibility conditions, or the timing of commission payments under an employment contract, mutual agreement, or the employer’s salary and bonus policy.

2. Is commission considered part of salary?

In many cases, commissions may be regarded as part of an employee’s salary if such payments are stipulated in the employment contract or the employer’s remuneration policy.

Pursuant to Article 90 of the Labor Code 2019, salary includes the salary corresponding to a job position, salary allowances, and other additional payments. If commissions are connected to work performance and are expressly recognized in the employment contract or internal compensation policy, they may constitute an additional payment forming part of salary.

However, if commissions are discretionary, non-fixed payments that are not clearly provided for in the employment contract or salary policy, they may be classified as bonuses under Article 104 of the Labor Code 2019 and are not necessarily considered part of salary.

3. In which industries do commission disputes commonly occur?

Commission disputes frequently arise in industries where compensation is linked to sales performance, brokerage activities, or revenue generation, including:

• Real Estate: Brokerage commissions for property sales and leasing transactions.
• Insurance: Commissions payable to insurance agents and sales consultants.
• Sales and Commerce: Sales representatives, business development personnel, and e-commerce professionals.
• Finance and Banking: Credit consultants, card issuance personnel, and fundraising agents.
• Tourism and Services: Travel agents, tour operators, hotel booking agents, and airline ticket agents.

III. Legal regulations governing commission disputes

1. Conditions for employees to receive commissions

The conditions under which an employee is entitled to commissions are generally determined by the employment contract, agreements between the parties, or the employer’s compensation policy.

Pursuant to Articles 96 and 104 of the Labor Code 2019, employers have the authority to establish salary, bonus, and additional compensation policies, including commission structures. Accordingly, employees are entitled to commissions when they satisfy the applicable conditions, such as achieving sales targets, meeting performance quotas, or generating valid transactions as specified in the relevant policies.

Therefore, entitlement to commissions is not automatically prescribed by law but depends on lawful agreements and internal regulations established by the employer.

2. Do salary payment principles apply to commissions?

Salary payment principles apply to commissions where commissions are considered part of salary or an additional payment under the employment contract.

Pursuant to Article 94 of the Labor Code 2019, salary payments must comply with fundamental principles, including direct payment, full payment, timely payment, and non-interference with an employee’s lawful discretion over the use of earnings. Furthermore, Article 90 of the Labor Code 2019 provides that salary includes additional payments, which may encompass commissions if agreed upon in the employment contract or compensation policy.

3. What is the procedure for resolving commission disputes?

• Step 1: Employees and employers may first engage in direct discussions to clarify the basis for commission payments, including employment contracts, compensation policies, sales performance records, payroll documents, and other relevant agreements, with a view to reaching an amicable resolution.
• Step 2: Pursuant to Article 188 of the Labor Code 2019, individual labor disputes concerning wages or commissions must generally undergo mediation by a labor mediator before a lawsuit may be filed with a court, except in cases expressly exempted by law. Accordingly, employees involved in commission disputes are generally required to submit a request for mediation to a labor mediator.
• Step 3: The labor mediator will organize a mediation session in accordance with legal procedures and prepare a mediation record reflecting either a successful settlement or an unsuccessful mediation outcome. If the parties comply with a successful mediation agreement, the dispute is deemed resolved.
• Step 4: If mediation fails, the mediator does not conduct mediation within the prescribed period, or a party fails to comply with a successful mediation agreement; the employee may initiate legal proceedings before the competent People’s Court under Articles 188, 190, and 191 of the 2019 Labor Code.
• Step 5: Upon receiving a valid case file, the court will review, accept, and adjudicate the dispute in accordance with the provisions of the Civil Procedure Code.

4. How is personal income tax applied to commissions?

Commissions constitute taxable income arising from business activities, sales, brokerage services, or employment relationships and are therefore subject to Personal Income Tax (“PIT”) under Article 3 of the Law on Personal Income Tax 2025.

Specifically:

• Under Clause 1, Article 3, income from business activities includes income generated from the production and sale of goods, provision of services, brokerage activities, and business cooperation arrangements.
• Under Clause 2, Article 3, income from salaries and wages includes salaries, wages, remuneration, and other benefits received by employees.

Accordingly, commissions arising under an employment contract or from service-related activities are considered taxable income for PIT purposes.

As a general principle, commission income is aggregated into the taxpayer’s total taxable income and taxed in accordance with applicable regulations, except for cases eligible for tax exemption under Article 4 of the Law on Personal Income Tax 2025.

Commission income is generally not exempt from PIT and must be declared and withheld in accordance with the law, depending on whether it constitutes business income or employment income.

IV. Questions regarding commission disputes

1. What is the statute of limitations for filing a commission dispute claim?

The statute of limitations for resolving commission disputes is prescribed under Article 190 of the Labor Code 2019. Accordingly, an employee has the right to initiate legal proceedings before a court within one (01) year from the date on which the employees discovers the acts that they believes has infringed upon their lawful rights and interests, such as an employer’s failure to pay, underpayment of, or refusal to pay commissions.

In addition:

• The statute of limitations for requesting mediation by a labor mediator is six (06) months from the date of discovering the violation.
• The statute of limitations for requesting resolution by a Labor Arbitration Council is nine (09) months from the date of discovering the violation.

Where force majeure or objective obstacle occurs, the period during which such event or obstacle exists shall not be included in the calculation of the statute of limitations.

2. Can an employee claim interest for late payment of commissions?

Employees may claim interest on overdue commission payments if they can demonstrate that the commission constitutes lawful income under the employment contract, compensation policy, or collective labor agreement.

Pursuant to Articles 94 and 96 of the Labor Code 2019, employers are obligated to pay salaries fully and on time. If salary payments or salary-related payments (including commissions, if they are recognized as salary supplements) are delayed, employees have the right to demand full payment and compensation for damages arising from the delay in accordance with the parties’ agreement or applicable legal provisions.

In dispute resolution practice, courts may also consider applying Clause 1, Article 357 and Clause 2, Article 468 of the Civil Code 2015 regarding liability for delayed monetary obligations. Under these provisions, the party responsible for late payment may be required to pay interest on the overdue amount for the period of delay, provided that the employee submits a valid claim and supporting evidence.

3. Can commission payments be claimed if there is no written contract or clear agreement regarding commissions?

Within an employment relationship, Article 90 of the Labor Code 2019 provides that salary includes additional payments. Accordingly, if an employee can prove that commissions formed part of compensation linked to job performance, for example, through sales achievements, KPI results, completed transactions, or a consistent history of commission payments, the employee may still have grounds to demand payment even in the absence of an explicit contractual provision.

Furthermore, under Clause 1, Article 275 and Clause 1, Article 280 of the Civil Code 2015, civil rights and obligations may arise from agreements or the actual conduct of the parties. Thus, evidence such as mails, text messages, payroll records, bank transfer histories, sales reports, or prior commission payments, may all be used to substantiate the employee’s claim.

4. Can a commission dispute be filed directly with the court?

Pursuant to Clause 1 and Point b, Clause 7, Article 188 of the Labor Code 2019, individual labor disputes relating to salaries, bonuses, commissions, and other forms of income are generally subject to mandatory mediation before litigation, except where the law expressly exempts the dispute from mediation.

Under Point b, Clause 7, Article 188, an employee may request court intervention where:

• The dispute falls within a category exempt from mandatory mediation;
• Mediation has been conducted but was unsuccessful; or
• The statutory mediation period has expired without mediation being conducted.

Accordingly, commission disputes, as individual labor disputes, may be brought directly before a competent court where they fall within an exemption from mediation or where mediation has failed in accordance with Point b, Clause 7, Article 188 of the Labor Code 2019.

5. Is it advisable to obtain legal advice in a commission dispute?

Seeking legal advice is highly advisable in commission disputes, particularly where employment contracts, compensation policies, sales performance records, or KPI evidence are unclear or disputed.

Lawyers and legal advisors can assist employees or employers by:

• Reviewing employment contracts and relevant documents;
• Assessing the strength of available evidence;
• Identifying the applicable legal framework under the Labor Code 2019; and
• Developing an appropriate dispute resolution strategy, whether through negotiation, mediation, or litigation.

Moreover, obtaining legal assistance at an early stage helps minimize procedural errors, particularly regarding limitation periods, evidentiary requirements, and burdens of proof.

V. Why choose NPLaw for advice on commission disputes?

When commission disputes arise, selecting a reputable legal advisor such as NPLaw enables parties to proactively manage legal risks and protect their rights effectively.

NPLaw has extensive experience in advising on and resolving labor disputes, particularly matters involving salaries, bonuses, and commission payments. Its legal team assists clients with reviewing employment contracts, evaluating evidence, identifying legal grounds, and developing dispute resolution strategies in accordance with the Labor Code 2019.

In addition, NPLaw provides comprehensive support throughout the entire dispute resolution process, from negotiation and mediation to court proceedings, helping clients avoid procedural errors and ensuring that their lawful rights and interests receive maximum legal protection.

The information provided above is for reference purposes only. For specific legal advice tailored to your particular circumstances, please contact NPLaw for prompt assistance.