Sales Contractor (Company) Agreement
Situations may often arise where a short term, renewable contract, and
engagement of sales staff on a temporary basis, can assist a business in
keeping its workforce in line with market demands.
It may not be necessary or appropriate in such situations for a business to
acquire sales staff by engaging individuals as employees. This Sales
Contractor (Company) Agreement allows a contractor to provide sales staff
to a business rather than the business engaging employees to do so.
If you wish to use this document in a scenario that involves personal data,
standard clauses for data protection and data processing
are available in our
GDPR & Data Protection Group.
This form of agreement therefore provides flexibility for a business in its
engagement of sales staff. It is particularly useful in non-retail
situations where the contractor is required to actively seek customers and
sales and is rewarded by way of commission.
This document is designed to allow an individual to provide his/her sales
services to businesses through a personal service company (or other
intermediary company) used by the individual as opposed to the business
employing or contracting with them direct. Under this document the personal
service company or other intermediary company enters into the agreement as
The accompanying template, the Sales Contractor Agreement, is to be used
instead when the contractor entering into the agreement with the business
is an individual sole trader (working as a self-employed individual) rather
than an intermediary company.
This template provides that the business does not have to pay taxes,
national insurance contributions, pensions, benefits or similar, and that,
the business instead pays a standard fee plus commission to the contractor
company which then pays any sums due in respect of tax, national insurance
This form of agreement aims to reduce the risk (both to the individual and
the personal service or other intermediary company) that, under employment
law and any other applicable law, the individual is regarded as an
employee. Nevertheless, he might still be treated by HMRC, an employment
tribunal, or any other body, as an employee, and legislation (such as IR35
or other rules) might still apply in a way which impacts the individual’s
or his personal service company’s legal, tax or NIC position. Whether that
is so will depend not just on what is contained in the contract but also on
all other circumstances. Those circumstances may include the way in which
the contract is implemented, and all arrangements between the business, the
personal service or other intermediary company, and the individual.
HMRC provides some guidance on its website about employment,
self-employment, and IR35. Its decisions on these points are often based on
a “balancing exercise” in which it gives weightings to various factors.
However, neither the HMRC guidance nor case law are sufficiently precise to
enable anyone to predict how in any particular case the “balancing
exercise” would be carried out or what HMRC’s conclusion would be about
that particular case. For that reason we recommend that before you decide
to use or adapt this form of agreement, you take professional advice in
relation to your particular circumstances as to any impact on the company
and the individual of employment law, IR35, tax, and NIC rules.
Further guidance on tax and employment status of an individual who works as
a contractor through an intermediary company can be found in the Guidance
Note relating to Self-employment and IR35 in this Group but we still
recommend that you take professional legal and tax advice before using this
form of document.
Nevertheless, a carefully worded contract ensuring the independence of the
personal service company contractor is still a key starting point. Unlike
an employee, the company is an independent contractor which is free to
provide any suitably qualified person rather than only the individual
having to do some or all of the work, it is free to determine when, where
and how work is completed (subject of course to the business’s
requirements), and it is free to take on other clients.
Optional phrases and / or paragraphs are enclosed in square brackets.
This Sales Contractor (Company) Agreement contains the following clauses:
2. Duration of the Agreement
3. Contractor’s Obligations
5. Sales and Commission
7. Late Payment
8. Tax Liabilities
9. Status of Contractor and its personnel
11. Confidential Information
12. Intellectual Property
14. Force Majeure
15. No Waiver
16. Assignment and Subcontracting
17. Third Party Rights
19. Company Property
21. Entire Agreement
22. Law and Jurisdiction
and an optional Schedule of Services.
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