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.
Practise this lesson
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 calculating — write 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.
What to write in your book
- Flat commission: $C = S \times r$. Always convert % to decimal: 3.5% → 0.035.
- Retainer + commission: $\text{Total} = R + (S \times r)$.
- If commission is on sales above a threshold: subtract the threshold from total sales first.
Quick check: A commission rate of 4.5% as a decimal is:
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 |
What to write in your book
- Tiered commission: calculate each tier separately. Find how much of total sales falls within each bracket before applying the rate.
- Write it as a table: Tier | Amount | Rate | Commission. Then sum the commission column.
- Never apply the highest rate to total sales — that is the most common tiered commission error.
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.
What to write in your book
- Piecework: quantity × rate per unit. Units must match (kg with $/kg, items with $/item).
- Leave loading: 17.5% of 4 weeks' pay. Formula: $0.175 \times (W \times 4)$. Based on weekly wage, not annual.
- Leave loading is paid in addition to the normal leave pay — it is a bonus, not a replacement.
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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