That's the way it's done. Luke Garbutt's transfer details are in the public domain because they were set by a tribunal panel. This is how that breaks down:
£600,000 initial transfer fee
£150,000 after 5 first team appearances
£150,000 after 10 first team appearances
£150,000 after 20 first team appearances
£150,000 after 30 first team appearances
£150,000 after 40 first team appearances
£200,000 on England appearance
Leeds receive 20% of profit on future transfer fee