Definition of Profit Sharing
What does the term "profit sharing" mean? What is meant by the term "profit sharing"?
A "profit sharing" agreement is an agreement in which a business agrees to share some percentage of their profits with eligible individuals or businesses.
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iPhoneApp Inc. has wording in the contract of all of their employment contracts that says that the employees will get 15% of any of the profits generated from their applications. This money will be split based on seniority, and is on top of standard wages. This would be a "profit sharing" agreement.
The employees, as you may guess, would not be entitled to any money if the applications were losing money or breaking even.
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