NSW Commission / Referral bonus

[Jeffin]

Hi all, I am new to the community. This looks like a good place to get some advice.

Anyway, I recently started a small business in custom software development, but I am unable to pay salary for someone to promote my work as I haven't generated income yet. I have tied up with a firm that do the fulfillment bit for me.

My question is if it is legal to get someone to promote my business on commission basis only? How much should I give out as commission?
Also, if existing businesses were to refer their clients to me, is it legal to pay them back a referral bonus? What would be a standard bonus look like?

Thanks.

 

[Nighthelyn]

Dear Jeffin,

Your questions are hard to answer without more information. I will just refer you some resources:

1. Hiring someone purely on a commission basis - nothing wrong with that, except:

A. it is important that your arrangement does not foul with sham contracting - in other words you avoid actually hire an employee for regular hours and try to disguise it as commission only work so as to avoid paying superannuation and other entitlements. Independent contractors - Fair Work Ombudsman

B. You still need to check if the hire is governed by an award and your pay cannot be less than the minimum pay scheme. Piece rates & commission payments - Fair Work Ombudsman

2. Nothing wrong with having existing businesses refer clients to you with some form of benefit, except:

A. Under Australian Consumer Law, the situation where if you have an existing client who uses your services, and they get a commission or discount if any only if refer other business to you - this is known as referral selling and is illegal; Referral selling

B. I am not very clear what is your profession, but in some types of professions e.g. accountant and solicitor any referral in which the referrer gets a benefit of some sort such professional has an ethical and legal obligation to disclose it to the customer. I am not clear what is your scheme environment query with your professional body. As to how much can’t comment its purely by negotiations.

Good luck!

-Nighthelyn

 

[Jeffin]

Hi @Nighthelyn, thank you very much for your insight. I do not want to break the law, so I'll study this carefully. I think the question then would be what the difference is between commission-based role and a normal employee's role? My understanding is commission-based people are free to do whatever they want, no obligations. When they bring work, they get paid a percentage of the revenue or profits.

The law about referral selling is interesting. I haven't heard of it before. I thought we were all free to refer someone to a business for kickbacks. For example, I referred my friends to HelloFresh for credit back for my future purchases. How is that possible then?