Sales Contractor (Service Company) Agreement
This Sales Contractor (Service Company) Agreement is designed to allow your business to obtain sales staff on a contractor basis as opposed to employing them. There may arise situations where it may not be necessary or appropriate for your business to employ sales staff on a permanent basis.
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 agreement is particularly useful in non-retail situations where you require the contractor to actively seek customers and sales and you reward the contractor by way of commission. An Agreement such as this also allows for greater flexibility than permanent employment. A short term, renewable contract can assist your business in keeping its workforce in line with market demands.
This template is designed for use by a business obtaining the sales services of an individual who is working through a personal service company or other intermediary company. That company, as the “Contractor”, enters into the agreement with your business rather than your business contracting with, or employing, the individual direct. (The accompanying template, the Self-employed Sales Contractor Agreement, in the IR35 and Self-employment sub-folder, is to be used instead when the contractor entering into the agreement with your business is an individual rather than a company.)
This document aims to reduce the risk (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 as opposed to a self-employed contractor.
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 your 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 or the proposed contractor decide to use or adapt this Sales Contractor (Service Company) Agreement, you and he take professional advice in relation to the particular circumstances as to any impact on the company and the individual of employment law, IR35, tax, and NIC rules.
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 your business with any suitably qualified person rather than only the individual having to do the work, it is free to determine when, where and how work is completed (subject of course to the your business requirements), and it is free to take on clients in addition to your business.
This template provides that your business does not have to pay taxes, national insurance contributions, pensions, benefits or similar. Under this agreement, your business pays a standard fee plus commission and it is up to the contractor company to pay any sums due in tax, national insurance etc.
Optional phrases and / or paragraphs are enclosed in square brackets.
This Sales Contractor (Service 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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