Commission is the part of agency pay that most often lives in a spreadsheet on one person's laptop, gets recalculated from memory each month, and produces an argument in the first quarter of every year. It is also, since the UAE's wage rules changed on 1 June 2026, the element most likely to make payroll late. This guide covers how to structure commission at a small agency in Dubai, Riyadh or Beirut: what to pay it on, when it is earned, how it is treated for VAT and end-of-service, and how to hold the numbers so that nobody has to trust a spreadsheet.

Decide what commission is paid on

Four bases are common. They are not equally good.

BasisWhat it rewardsRisk
Invoiced revenueClosing and billingYou pay commission on money you have not collected
Collected cashClosing and collectingSalespeople chase finance for updates; delays feel arbitrary
Gross profit on the jobSelling profitable workRequires job costing you can actually produce
Retainer value at signatureWinning recurring revenueA three-month retainer that dies in month two was expensive

For an agency, gross profit on the job is the honest basis and cash collected is the safe one. Revenue-based commission is the standard starting point mainly because it is the only number most agencies can calculate reliably — which is a tooling problem, not a strategy.

A workable compromise used widely in the region: commission accrues on invoice, becomes payable on collection. The salesperson sees the number as soon as the work is billed, and the cash leaves only after the client's cash arrives. It removes the two worst outcomes — paying commission on a bad debt, and a team that cannot see what it has earned.

Set the rate against your actual margin

A media-heavy agency passing through AED 300,000 of ad spend and keeping AED 45,000 cannot pay 10% of revenue. Anchor the rate on gross profit, then express it however your team prefers.

Worked example, a Dubai agency:

Quote that to a salesperson as 6% of revenue if that is easier to explain, but calculate it from profit — otherwise the first heavily-subcontracted job of the year quietly costs you money. Typical Gulf agency ranges, as ranges rather than benchmarks: 5–10% of gross profit on new business handled by the whole team, 10–20% where one person originates, sells and manages the account, and lower recurring percentages on retainer renewals than on first-year signature.

The two rules that decide the treatment

Commission to an employee is payroll

If the person is on your work permit, commission is part of their wage. Three consequences:

The scheduling consequence is the important one: pay commission one cycle in arrears. September's commission goes into the October payroll, alongside October's salary, paid on 1 November. Trying to finalise September commission in time for a 1 October payment means closing the sales month by the 25th, which nobody does well.

Commission to anyone else is a supplier bill

A referrer, a freelance salesperson, a partner agency, an introducer — these are suppliers. They invoice you, you book a bill, and you pay it on your normal supplier terms.

Threshold: end-of-service gratuity in the UAE is 21 days of basic salary per year for the first five years and 30 days per year after that, capped at two years' pay, with the final settlement due within 14 days of the end of the contract. Commission never enters that calculation.

Write the plan down, in one page

Most commission disputes are definition disputes. A one-page plan per person, signed, covering:

  1. Basis — revenue, gross profit or collected cash, defined precisely.
  2. Rate, and any tiers or accelerators.
  3. What counts as originated — house accounts, inbound leads, renewals of accounts they did not win.
  4. When it is earned and when it is paid — accrual point and payment point, stated separately.
  5. Clawback — what happens if the client cancels in month two, or never pays.
  6. Leavers — whether commission on invoiced-but-uncollected work is paid after the last day. Say it explicitly; silence here is where relationships end badly.
  7. Cap or no cap — and if there is a cap, say so before someone hits it.

Review annually. A rate set when your gross margin was 60% is wrong when it is 45%.

Keep it out of the spreadsheet

The operational failure is always the same: commission is calculated in a spreadsheet that references invoice numbers by hand, someone edits a formula, and by March nobody can reproduce January. The fix is to hold commission where the deals and the payroll already are.

From the platform: Staks records commissions against the deals that earned them — a rate per record, tied to the won deal and the person who closed it — and then lets you push a selected set of commissions into a chosen payroll month in one action. From there the payroll run carries basic salary, bonus, commission, reimbursements and deductions, calculates net pay, and posts to the ledger as salary expense, so the commission on the P&L and the commission the salesperson sees are the same number by construction. Commissions can be approved, cancelled or reversed with the history intact, and payroll receipts can be emailed to employees. Staks does not connect to WPS or generate bank salary files — that stays with your bank — but it is the record the file should be built from.

Frequently asked questions

Should commission be paid on VAT?

No. Commission is calculated on the net value of the invoice, before VAT. VAT is the government's money passing through your account, not revenue.

What about commission on a retainer that runs for a year?

Two common structures: a percentage of each month as it is billed, which aligns the incentive with keeping the client; or a larger one-off at signature with a clawback if the retainer ends early. Monthly is simpler to administer and less contentious.

Can we pay commission in a different currency from salary?

You can agree it in any currency, but a UAE employee's wage is paid in AED through WPS. If the deal was invoiced in USD, fix the conversion rule in the plan — most agencies use the rate on the invoice date, which is also the rate stored on the transaction in the books.

Rules on wage composition are set by MOHRE and change; check your specific case rather than assuming that a low basic with high commission satisfies every requirement. The safer structure is a defensible basic with commission on top.

How do we handle commission when the client pays late?

This is exactly what the accrue-on-invoice, pay-on-collection structure is for. The salesperson can see the earned amount; the payment follows the cash. It also turns the sales team into a second collections team, which is not a bad outcome — see how to chase late payments in Dubai.

Commission works when the basis is written down, the calculation lives next to the deals, and the payment lands in a payroll run that closes on time. Start a 14-day free trial of Staks and move it out of the spreadsheet.