Commission, Piecework and Leave Loading
Calculate earnings for workers paid by results. Tiered commission applies each rate only to its slice of sales, never the top rate to the full total. Leave loading is 17.5% of 4 weeks' ordinary pay, not of annual salary.
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Three printable worksheets that build from foundations to mastery, or build your own from any module’s questions.
Imagine you're a real estate agent who just sold a $1.2 million house. You don't get paid an hourly wage, you get a cut of the sale price. But what happens in a slow month when nothing sells? And what about factory workers paid per item they produce, is it fair that a faster worker earns more than a slower one doing the same job? These payment systems reward output, not time. Before we do the maths, think: what are the advantages and risks of being paid this way?
Before calculatingwrite your gut feeling. We will revisit this at the end of the lesson.
Three distinct payment models: commission (% of sales), piecework (quantity × rate per unit), and leave loading (17.5% of 4 weeks' ordinary pay). The key skill is identifying the model before calculating.
Flat commission: $C = S \times r$ (convert % to decimal). Retainer + commission: $R + (S \times r)$. Piecework: $n \times r_p$. Leave loading: $0.175 \times (W \times 4)$. Tiered commission: apply each rate only to sales within that tier.
Key facts
- The formulas for flat commission, retainer + commission, and tiered commission
- The piecework formula: items × rate per item
- That leave loading is 17.5% of 4 weeks' ordinary pay
Concepts
- Why tiered commission applies each rate only to its slice, not to the full total
- Why leave loading is based on 4 weeks' pay, not the annual salary
- How to convert a percentage rate to a decimal before multiplying
Skills
- Calculate flat and retainer-based commission earnings
- Work through a tiered commission structure step by step
- Calculate piecework pay and annual leave loading
A flat commission means the worker earns only a percentage of their total sales, there is no guaranteed base. For example, a commission rate of 3.5% on $45,000 of sales gives $45,000 × 0.035 = $1,575.
A retainer plus commission means the worker receives a fixed weekly or monthly retainer plus a percentage of sales on top. In HSC questions, always check whether the commission is applied to total sales or only to sales above a threshold read carefully.
Flat commission: earnings = rate% × total sales. Retainer plus commission: earnings = retainer + (rate% × sales). No guaranteed minimum with flat commission. Always multiply by the decimal form of the percentage.
Pause, copy the flat commission formula (earnings = rate% × total sales) and the retainer-plus-commission formula (earnings = retainer + rate% × sales), and note that with flat commission there is no guaranteed minimum into your book.
Quick check: A commission rate of 4.5% as a decimal is:
We just saw flat commission (earnings = rate% × total sales) and retainer-plus-commission (fixed retainer + rate% × sales). That raises a question: what if a company applies a higher commission rate to sales above a threshold, how do you calculate pay when different portions of sales attract different rates? This card answers it → tiered commission splits sales at each boundary; only the sales within each tier are multiplied by that tier's rate, then all tier amounts are summed.
Tiered commission applies different rates to different portions of total sales. For example: 2% on the first $20,000, 3.5% on the next $30,000 (up to $50,000), and 5% on any sales above $50,000.
If a salesperson achieves $65,000 in sales, you do NOT apply 5% to the whole $65,000. Calculate each tier separately:
| Tier | Sales in tier | Rate | Commission earned |
|---|---|---|---|
| Tier 1 | $20,000 | 2% | $400 |
| Tier 2 | $30,000 | 3.5% | $1,050 |
| Tier 3 | $15,000 | 5% | $750 |
| Total | $65,000 | $2,200 |
Tiered commission: apply each rate only to the sales within that tier’s range. For sales above tier 1: multiply (sales − tier 1 limit) × higher rate, then add the tier 1 amount. Build a running total tier by tier.
Pause, copy the tiered commission method: identify each tier boundary, multiply only the sales within each tier by that tier's rate, and sum the tier amounts, never apply the highest rate to the full sales figure into your book.
True or false: Leave loading is calculated as 17.5% of the worker's annual salary.
Worked examples · 4 in a row, reveal as you go
Daniela works as a car salesperson. She receives a weekly retainer of $620 and a commission of 2.8% on all sales. In one week she sells $84,000 worth of cars. Calculate her total earnings for the week.
James earns commission on a tiered structure: 3% on the first $15,000 of monthly sales, 4.5% on sales from $15,001 to $40,000, and 6% on sales above $40,000. In March he achieves $55,000 in sales. Calculate his total commission.
Wei earns $1,240 per week in ordinary time. Calculate his annual leave loading.
A farm worker is paid $2.35 per crate of strawberries picked. In one shift they pick 186 crates. Calculate the worker's pay for the shift.
Fill the gap: An employee earns $980 per week. Their annual leave loading is $ (4 weeks' pay × 17.5%).
Common errors · the 3 traps that cost marks
Match the payment type to its description:
Quick-fire practice · 3 calculations
A salesperson receives a retainer of $540 plus 3.2% commission on sales. In one week, they make $48,000 in sales. Calculate their total earnings.
A worker is paid $2.45 per box packed. They pack 172 boxes in a day. Calculate the day's pay.
An employee earns $1,120 per week in ordinary time. Calculate the annual leave loading paid on 4 weeks of leave.
Top 3 list: Write THREE key decisions you need to make before calculating commission (e.g. identifying whether it is flat, tiered, or on sales above a threshold).
Look back at what you wrote in the Think First section. The real estate agent earns nothing in a slow month under flat commission, but a retainer structure would provide a base. Piecework rewards speed but can disadvantage workers during machinery breakdowns or poor harvests, factors outside their control.
What has changed? What did you get right? What surprised you?
Pick your answer, then rate your confidence. Each retry pulls a fresh mix from the bank.
SA 1. A salesperson receives a retainer of $540 plus 3.2% commission on sales. In one week, they make $48,000 in sales. Calculate their total earnings. (2 marks)
SA 2. A worker is paid $2.45 per box packed. They pack 172 boxes in a day. Calculate the day's pay. (1 mark)
SA 3. An employee earns $1,120 per week in ordinary time. Calculate the annual leave loading paid on 4 weeks of leave. (2 marks)
Comprehensive answers (click to reveal)
Drill 1: Commission = $48,000 × 0.032 = $1,536. Total = $540 + $1,536 = $2,076.00
Drill 2: 172 × $2.45 = $421.40
Drill 3: 4 weeks' pay = $1,120 × 4 = $4,480. Loading = $4,480 × 0.175 = $784.00
SA 1 (2 marks): Commission = $1,536 [1]; total = $2,076 [1]
SA 2 (1 mark): 172 × $2.45 = $421.40 [1]
SA 3 (2 marks): 4 weeks' pay = $4,480 [1]; loading = $4,480 × 0.175 = $784 [1]
Five timed questions on commission, piecework and leave loading. Beat the boss to bank a tier. Replays welcome.
⚔ Enter the arenaClimb platforms by answering questions on commission, piecework and leave loading. Pool: lessons 1–3.
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