Policy 2.3.18: Payment of Sales Commissions

Effective: April 1, 1999
Responsibility: Vice-President and Chief Financial Officer

STATEMENT OF POLICY

The bases for sales commissions are developed annually by Network sales management in Toronto and Montreal and are submitted for approval to the media Vice Presidents.

The Senior Finance Officers at each Network will verify annually, that total sales commission payments are based on actual net billings, adjusted for any bad debts associated with sales which have not received credit approval and any adjustments to Reciprocal Trade Contra agreements. They will also verify that payments are in accordance with relevant documents and letters of agreement, and that payments are charged to the appropriate accounts.

The Network sales departments will advise Human Resources of the amounts for monthly advance payments of commissions in accordance with the specific sales commission plans and the letters of agreement with individual sales representatives/sales managers. Sales commission payments will be issued through Corporate payroll.

HISTORY

  • This policy was updated November 2003.
  • This was originally Corporate Finance and Administration Policy 501.10 - Sales Commissions and Special Incentive Payments.

REFERENCES

Corporate Policies:

PERSON RESPONSIBLE FOR INTERPRETATION AND APPLICATION

All questions pertaining to the interpretation or application of this policy should be referred to the Director, Policy and Internal Control.

DEPARTMENT RESPONSIBLE TO UPDATE THIS WEBPAGE:

Corporate Secretariat.

APPENDIX A - PROCEDURES AND GUIDELINES

Sales Commissions and Special Incentive Payments

1. PERMANENT EMPLOYEES

Annual Sales Commission Plans are developed by sales management in Toronto and Montreal and receive necessary approvals before implementation. Sales departments will initiate the appropriate forms for interim or final payment of commissions earned by sales representatives and sales managers during the relevant period. Amounts are based on actual total billings, business contracted to the end of the fiscal year and the annual individual plans. Special Incentive Plan (SIP) payments follow the criteria set out in the Plan.

The sales incentives may be made to qualifying personnel as cash, or in any combination of cash, merchandise or travel tickets. Cash incentives are treated the same as regular commission payments for purposes of remuneration and will be issued through Corporate payroll.

The fair value of merchandise incentives plus any applicable taxes, as determined in consultation with Finance and Administration, is to be supplied to the National Payment Centre (NPC). Similarly, if the incentive is to be "paid out" in tickets, it is necessary to determine the fair market value of the incentive plus the amount of any taxes paid on the ticket. The NPC will determine the appropriate amount of income tax to withhold from the employee. In accounting for the incentive, if the Corporation pays the taxes on behalf of the employee, this would form part of the taxable benefit to the employee.

2. CONTRACT EMPLOYEES

Some sales representatives are contract employees. Commission amounts for these employees may be based on terms and conditions specified in individual contracts rather than on the Annual Sales Commission Plan.

3. VERIFICATION AND APPROVAL OF PAYMENTS

The network senior finance and administration officer is responsible for verifying the total value of commissions paid to each individual and to ensure that payments are properly authorized. It is their responsibility to ensure that the calculations are supported by and match back-up sheets, that back-up sheets are consistent with letters of agreement and addenda as applicable and that payments are charged to the proper account and cost centre.

4. ANNUAL RECONCILIATION OF SALES COMMISSION PAYMENTS

The senior finance and administration officer in Montreal and Toronto will verify that the total amount of sales commission payment requests are in accordance with the actual net billings as recorded in the general ledger.

As part of this annual procedure, the Montreal and Toronto offices prepare a complete listing of bad debts arising from FTN and ETN sales. In each bad debt case, Finance and Administration verifies the proper level of credit approved. If the amount of credit is incorrect, Finance and Administration adjusts the amounts accordingly and advises the Sales Department of the cases where revenues eligible for commissions will have to be decreased. The same procedure is applied throughout the year for early final reconciliations in cases of resignations, dismissal, death, or all other similar circumstances.

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