Legal Updates

A commission agreement with an employee that stipulates that it is not part of the employee-employer relationship will be honored even if the employee resigns

June 12, 2022

The employment agreement of the manager of the credit department with a body that provides credit had attached to it a commissions appendix that established a compensation mechanism in percentages that is directly related to the bringing of borrowers and investors by him. Later, a commission agreement was also signed with a company wholly owned by the employee which set a significantly higher commissions for bringing customers in a specific field - financing construction for real estate purchasing groups. When the employee resigned, the employer contended that the commission agreement is also terminated.

The Supreme Court held that the commission agreement is an independent agreement that cannot be revoked and is not part of the employment agreement. The language of the agreement is the first tool for interpreting the agreement and as long as it is clear, there is no need to examine external circumstances of the agreement. Here the agreement explicitly stated that the employee-owned company is entitled to commissions and that this is not a payment within the framework of an employee-employer relationship and therefore these agreements must be respected. Moreover, the commissions agreement here began with negotiations for the establishment of a new company and finally an agreement was reached on this mechanism and this also reinforces the conclusion that this is not part of the employee-employer relationship and termination of employment does not negate entitlement to commissions.