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 UK 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 demands.
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 Guidance Note 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 requirements).
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 1993.
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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