Incentive Payments (SQA National 5 Applications of Mathematics): Revision Note

Bonus & commission

What are bonus payments?

• Some employers give their employees bonuses for meeting certain criteria

• Reasons for awarding bonuses include:

  • achieving targets

  • exceptional performance

  • retaining the best employees

  • sharing company success

What is commission?

• Commission is a form of income usually linked to sales

• Employees might get paid a percentage of the sales they have contributed to

• There might be different levels of commission

  • e.g. 10% on sales between £20,000 and £40,000 and 20% in sales over £40,000

• Commission is normally paid in addition to a base pay

How do I calculate commission?

• STEP 1
  Identify how much of the sales that the commission is based on

  • The question might say commission is paid on sales that are above or over a certain amount

    • e.g. 3% commission on sales over £50,000

    • If a person made £60,000 sales then they would be paid commission on £10,000

  • Otherwise, commission might be paid for all sales

• STEP 2
  Multiply this amount by the rate of commission

  • The rate will be given as a percentage

    • e.g. 3% × £10,000 = £300