Commission Approval Process: 4 Sign-Offs Before Payroll

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The commission approval process is the last point at which a wrong number is still an edit rather than an employment-law problem. Before sign-off, a £3,200 overpayment is a cell you change. After payroll runs, it is a conversation with a rep about repaying money they have already spent, a corrected Full Payment Submission to HMRC, and — if you handle it badly — a quarter of lost trust across the whole team. Most UK sales orgs treat approval as a formality: Finance emails a spreadsheet, a sales director replies "approved", payroll runs. That gets the sequence exactly wrong.

TL;DR

A commission approval process should have four distinct gates before payroll runs — rep review, sales manager, RevOps or the plan owner, then Finance — and they must run in that order, because only the manager knows the contract terms and only Finance knows the payroll mechanics. HMRC requires employers to report pay to HMRC on a Full Payment Submission on or before the employee's payday, so once a commission payment date passes, fixing it means an additional or corrected FPS rather than a quiet edit. Recovering an overpayment after it has been paid is governed by section 13 of the Employment Rights Act 1996, which restricts deductions from wages, so the cheap window closes the moment payroll is locked. The single highest-value check is comparing the calculated payout against the actual contract terms — opt-outs, ramps, cancellation clauses — before Finance submits. Build the approval calendar backwards from payday, not forwards from period close.

What is a commission approval process?

A commission approval process is the defined sequence of reviews and sign-offs that a commission run passes through between the close of a sales period and the submission of payroll. It covers who checks which part of the calculation, in what order, what evidence each approver sees, and who holds the authority to release the figures to payroll. In a 12-rep team it might take five working days; in a 60-rep team with splits, overrides and multiple plans it takes longer and needs explicit exception handling.

The reason it exists is narrow and practical: a commission calculation touches data owned by people who never speak to each other. The CRM record belongs to the rep, the contract terms belong to the manager who signed them off, the plan mechanics belong to RevOps, and the PAYE and National Insurance treatment belongs to Finance. No single one of those people can validate a payout on their own. An approval process is just the admission that the number needs four pairs of eyes, each looking at a different thing.

Approval is not a rubber stamp on a total. It is four different people checking four different things, and the order matters.

Why is the moment before payroll the only cheap place to fix a commission error?

Because the legal and administrative cost of a correction jumps sharply the second the money moves. According to HMRC's guidance on reporting payroll information, employers must send a Full Payment Submission reporting pay and deductions on or before the employee's payday. If you then discover a commission figure was wrong, HMRC's guidance on what payroll information to report sets out that you correct an earlier report on the next regular FPS or an additional one, using late reporting reason code H — and it needs to reach HMRC by the 19th of the tax month after the original submission for the correction to land in that month's PAYE bill. That is not catastrophic, but it is work your payroll team did not plan for.

The harder part is recovery. Section 13 of the Employment Rights Act 1996 gives workers the right not to suffer unauthorised deductions from wages, requiring a statutory provision, a contractual term, or prior written consent. Section 14(1)(a) excepts deductions made to reimburse an overpayment of wages — which is why most employers can, in principle, claw a commission overpayment back. But "in principle" does a lot of work there. Acas guidance on deductions from pay and wages advises employers to notify the worker as soon as possible before making a deduction they are not expecting and to agree how it will be recovered. In practice that means a negotiation, a repayment schedule, and a rep who now checks every statement with suspicion. We've written separately about recovering overpaid commission and why the recovery usually costs more than the money.

So the economics are simple. A catch at approval costs one person ten minutes. The same catch two days later costs a corrected FPS, a difficult conversation, and a dent in trust that outlasts the quarter.

Who should sign off on commission before payroll runs?

Four gates, in this order. The ordering is the part most teams get wrong — they ask Finance to validate whether the commission is right and ask the sales leader to validate whether it should be paid. Both are backwards.

Gate 2 is the one that earns its keep. Protecting a sales team is not only about helping them close — it is about shielding them from internal operational mistakes, and the person best placed to do that is the manager who negotiated the terms. In practice, the most common root cause of a clawback is Finance paying on gross total contract value in a rush to hit payroll, before the deal's opt-out window has closed. Commission should be calculated on the value actually locked in, never the signing-day headline, whenever a deal carries opt-out, ramp or cancellation clauses.

Gate 1 is the one most teams skip, and skipping it is why disputes happen. Reps don't lose faith because a number is occasionally wrong — they lose it when they can't see how it was built and a correction arrives with no warning. A 48-hour statement review window before sign-off converts a future dispute into a pre-payroll query, which is a completely different conversation. If your team is already running quarterly commission reviews, the monthly statement review is the shorter cousin of the same discipline.

A worked example: where the gates actually catch something

Take a 12-rep team on a £45k base plus £15k variable, paying 8% of recognised contract value with an accelerator to 12% above 100% of a £300k annual quota. November's run totals £82,400 across the team. Three things are wrong in the draft:

• A £96,000 three-year deal signed on 28 October carries a 30-day opt-out that doesn't close until 27 November. Paid on gross signing-day value at 8%, that's £7,680 of commission on money not yet locked in. Gate 2 catches it — the manager knows the clause exists because they approved it.
• One rep's accelerator triggered on a cumulative figure that included a deal already credited in September. Gate 3 catches it — only the plan owner is looking at year-to-date attainment across periods.
• A decimal slip has turned a £1,600 payout into £16,000. Gate 1 or Gate 4 catches it — the rep knows their own number, and Finance notices a line that breaks the payroll total. This is not hypothetical: a £16,000 commission paid instead of £1,600 can sit unnoticed by both the rep and the company for a week or two, which raises the obvious question of how many smaller errors never get spotted at all. We unpack that case in the £16,000 commission error nobody noticed.

Notice that no single gate caught all three. That's the argument for four gates rather than one thorough reviewer.

What should the approval calendar look like?

Build it backwards from payday, not forwards from period close. If payday is the 28th and the payroll cut-off is the 22nd, every gate has to finish before the 22nd — which means the data lock is the 17th, not "whenever sales finish updating HubSpot".

The lock at step 6 matters as much as any signature. HMRC requires employers to keep records showing they have reported accurately for three years from the end of the tax year they relate to, and warns that incomplete records can lead to an estimated bill and a penalty of up to £3,000. A spreadsheet that anyone can edit after approval cannot evidence what was approved. An immutable record of who approved what, when, and on what figures is the only version that survives a question six months later — the same reason commission reconciliation breaks down when the approved file and the paid file are different documents.

Frequently Asked Questions

Who is ultimately responsible for approving sales commission before payroll?

Finance holds the final release authority because Finance submits payroll and is accountable for the PAYE and National Insurance treatment, but Finance should be approving a figure that sales management has already validated against contract terms. Splitting "is this number right?" (sales and RevOps) from "can this be paid?" (Finance) is what stops each side assuming the other checked.

How long should a commission approval process take?

For a team of 5–30 reps on a monthly cycle, plan for eight to eleven working days between data lock and payroll cut-off, which usually means closing the data roughly two weeks before payday. The constraint is rarely the calculation — it's getting managers to review exceptions and reps to raise queries inside a fixed window.

Can an employer recover commission that was approved and paid in error?

Section 14(1)(a) of the Employment Rights Act 1996 excepts deductions made to reimburse an overpayment of wages from the general restriction on deductions in section 13, so recovery is generally possible. Acas advises notifying the worker as soon as possible and agreeing how repayment will happen, and employers should normally recover only the net amount the employee actually received rather than the gross figure.

Should reps approve their own commission statements?

Reps should review and query, not authorise. A documented review window gives them visibility and surfaces errors early, but the release decision stays with Finance — otherwise you have created an approval that no one can decline.

What should be recorded in a commission approval audit trail?

At minimum: the deal set as at data lock, the calculation applied to each deal, every approver with a timestamp, any adjustment made after an approval with the reason, and the final figure sent to payroll. HMRC's record-keeping requirements run to three years from the end of the relevant tax year, so the trail needs to be retrievable, not reconstructed from email threads.

Stop finding the error after payday

If your approval step is one email and one reply, the first person to notice a wrong commission figure is usually the rep — after they've been paid, when your only remaining options are a corrected FPS and an awkward repayment conversation. Commit calculates commission from HubSpot deals, routes it through approval before it reaches payroll, pays it through Xero, and keeps a full audit trail of who approved what and when. The 14-day free trial runs on your own plan, so you can see the gate catch something before payroll does.