Sales Contractor (Self-Employed) Agreement
This Sales Contractor Agreement is designed to allow a business to engage
individuals to work as sales staff on a self-employed contractor basis as
opposed to employing them. Situations may often arise where it may not be
necessary or appropriate 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
GDPR & Data Protection
This form of agreement 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. An agreement such as this also allows for
greater flexibility than permanent employment. A short term, renewable
contract can assist a business in keeping its workforce in line with market
This template states that the individual is not employed by your business
but self employed and it provides that your business does not have to pay
taxes, national insurance contributions, pensions, benefits or similar.
Instead it provides that your business pays a standard fee plus commission
and that it is up to the individual contractor to pay any sums due in
respect of tax, national insurance etc.
The terms of this template aim to reduce the risk that the individual
contractor might be deemed to be a de-facto employee of your business
rather than (and as intended) a sole trader working on a self-employed
basis as a contractor. However, whether he is treated by HMRC, an
employment tribunal, or any other body, as a self-employed contractor will
depend not just on the content of this contract. It will also depend on all
other circumstances, including the practical implementation of the
contract, and the arrangements between, and conduct of, your business, the
individual, and any person engaged by individual to do any of the sales
work for the individual.
HMRC provides some guidance on its website about self-employment, but its
decisions as to whether someone is self-employed 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
make it possible to predict how this “balancing exercise” would be carried
out or what the position will be in any situation. For that reason we
recommend that you take professional employment law, tax, and NIC advice in
relation to your particular circumstances before deciding to use or adapt
this form of agreement.
Further guidance on tax and employment status of individuals who act as
contractors or sub-contractors can be found in the
relating to Self-employment and IR35, 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
individual contractor is a key starting point. As a self-employed
contractor rather than as an employee of your business, he is, for example,
free to provide a suitably qualified person in his place rather than do
some or all of the work personally, and is free to determine when, where
and how work is completed (subject of course to your business’s
There is also a version of this template, the
Sales Contractor (Company) Agreement
, to be used when the contractor entering into the agreement with your
business is a personal service company (or other intermediary company)
rather than the individual providing the sales services for you. Please see
the information page accompanying that version for guidance about tax,
employment status, and IR35, where the contractor engaged is such an
intermediary company, and the sales services are carried out for the
intermediary by the individual who is engaged by that company.
The services that the individual provides can include referring customers
or orders to your business. It does not (and should not) include accepting
any order or entering into any contract of sale with a customer on behalf
of your business, and so the individual will not be a “commercial agent”
for the purposes of the Commercial Agents (Council Directive) Regulations
Optional phrases and / or paragraphs are enclosed in square brackets.
This Sales Contractor 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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