Variable earnings paid from sales or other measured results and brought into payroll as a separate earning line or calculation input.
Commission is variable pay tied to sales, revenue, units, or another measured result instead of to a fixed salary amount or a simple hourly total.
In payroll, commission matters because the amount often comes from a sales or compensation system first and then has to be approved, imported, classified, taxed, and shown clearly on the paycheck. That makes it a payroll term, not just a sales-compensation term.
Commission matters because it affects:
Commission also creates review risk. If payroll receives the wrong approved amount or uses the wrong earning code, the paycheck can be materially wrong even when hours and salary are correct.
Commission usually enters payroll after the underlying results have already been calculated elsewhere. In practice, payroll may:
That separation is useful because it makes clear that the earnings did not come from ordinary hourly or salary pay.
| Term | What it means in payroll |
|---|---|
| Commission | Variable pay tied to measured results such as sales or production |
| Bonus pay | Extra compensation that is not necessarily tied to a commission plan |
| Regular pay | Ordinary wages or salary for the period |
| Draw against commission | Pay arrangement that advances pay before final commission earnings are settled |
A salesperson receives:
$2,400$850Payroll records the commission as a separate earning line. The pay stub may show:
$2,400$850$3,250That format helps the employee see that the higher paycheck came from commission results, not from a salary change.