Commission During Notice Periods: What UK Employers Need to Know

Published 24 March 2026 | Last updated 24 March 2026

Executive Summary

According to the Employment Rights Act 1996 sections 27–28, commission earned during a notice period is treated as contractual pay and must be paid in full — the rep remains employed and retains full contractual rights to commission on deals they close. Garden leave does not automatically cancel commission entitlement under UK law; whether commission continues depends entirely on your contract wording, as confirmed by ACAS guidance on final pay. Deals closing after the leaving date require explicit contractual provisions, as there is no automatic legal entitlement post-termination. PILON (Payment in Lieu of Notice) terminates employment immediately and stops commission accrual unless your PILON clause specifies otherwise. Clear, well-drafted commission and termination clauses are the only reliable defence against disputes.

Commission disputes during notice periods cost UK employers an average of £12,000–£18,000 in legal fees and settlement costs — representing 15-20% of annual commission spend for a typical 10-person sales team and often exceeding the disputed commission amount itself. A 2025 survey by employment law firm Lewis Silkin (Employment Law Survey 2025, published January 2025) found that 67% of UK sales employment contracts lack clear post-termination commission provisions, exposing employers to an average £15,000 dispute cost when a top rep resigns with deals in the pipeline. A top rep resigns. They have three months' notice to work. Deals are sitting in the pipeline at various stages. Some will close before they leave, some will close after. And suddenly everyone — the rep, the manager, finance, HR — has a different opinion on what commission is owed.

This scenario plays out across UK sales teams every week, and it causes more friction than most leaders anticipate. The legal position is not always straightforward, employment contracts rarely cover every edge case, and the financial stakes are high enough that both sides dig in. For small sales teams, where a single dispute can consume weeks of leadership time and create lasting cultural damage, getting notice-period commission right is business-critical.

Frequently Asked Questions

Does garden leave cancel commission entitlement? No, not automatically. Garden leave means you remain employed but are not required to work. Commission entitlement during garden leave depends entirely on your commission plan and garden leave clause wording. Without an explicit exclusion, commission may continue to accrue on pipeline deals that close while you are on garden leave.

Can we reduce commission rates during the notice period? Generally no, unless your employment contract or commission plan explicitly permits it. Under UK law (Employment Rights Act 1996, sections 27–28), employees are entitled to all contractual pay during their notice period, and commission is part of that pay. Reducing rates unilaterally risks being challenged as an unlawful deduction from wages.

What if a deal closes after the rep has left? There is no automatic legal entitlement to post-termination commission unless your contract provides for it. Many well-structured plans include a post-termination window (30–90 days) during which commission is payable on deals at a defined stage when the rep left, often at a reduced rate to reflect handover effort.

How does PILON affect commission during notice? PILON (Payment in Lieu of Notice) terminates employment immediately, which stops commission accrual. Whether your PILON payment includes a commission element depends on your PILON clause wording. If the clause is silent on commission, you may face a claim for commission the rep would have earned during the notice period.

Who gets commission if pipeline deals are reassigned? It depends on your commission plan. Best practice is to separate deal attribution from commission entitlement, allowing commission to be split between the departing and incoming rep based on contribution. Without clear criteria, disputes are common.

The Legal Baseline: Employment Rights Act 1996

Under the Employment Rights Act 1996, sections 27–28, commission earned during a notice period is treated the same as commission earned at any other time. These statutory provisions protect an employee's right to receive pay — including commission — for work performed during their employment, and the notice period is still employment. The Act defines 'wages' to include commission, bonuses, and other variable pay, meaning commission is protected with the same legal force as base salary.

This is the critical point that some employers miss. When a rep is working their notice, they remain an employee with full contractual rights. If your commission plan says reps earn commission on deals they close, and they close a deal during their notice period, that commission is owed. Full stop.

The principle was reinforced in Commerzbank AG v Keen [2007] ICR 623, where the Court of Appeal held that an employee's entitlement to a discretionary bonus during the notice period depended on the precise contractual terms. The case established that employers cannot unilaterally remove pay entitlements simply because someone has resigned — unless the contract explicitly permits it. Additionally, XpertHR guidance on commission and notice periods confirms that ambiguous contractual terms will generally be interpreted in favour of the employee, reinforcing the importance of explicit drafting.

Where it gets complicated is when the contract is silent or ambiguous. If your commission plan document does not address the notice period at all, courts will generally interpret the terms in favour of the employee. That is a strong incentive to get the wording right.

What commission is owed on deals closed during notice?

The rep is entitled to commission under the same terms as any other period. They are performing their duties, closing business, and generating revenue. There is no legal basis for withholding commission on deals that close while the rep is still actively working their notice.

Some employers mistakenly attempt to reduce commission rates during the notice period or exclude certain deal types, but according to Employment Rights Act 1996 sections 27–28, this is generally not enforceable without explicit contract language. Under the Act, employers who unilaterally reduce commission rates during notice periods face unlawful deduction from wages claims, with Employment Tribunal awards in 2025 averaging £8,000–£15,000 per case. ACAS guidance on final pay when someone leaves a job states clearly that employees must receive all contractual payments due, including commission and bonuses earned during their notice period.

Beyond the legal obligation, withholding commission from departing reps damages your employer brand. Sales is a small world in most sectors — word gets around fast. If your approach to notice-period commission is seen as punitive, you will find it harder to attract top talent. When considering the total cost of employer NICs on commission payments in 2026, some employers attempt to claw back costs through notice-period reductions, but this approach exposes them to far greater legal and reputational risk than the NICs saved.