Contractor agreement for a sales agent on commission

A self-employed agent who sells a business's goods for commission is a commercial agent under regulations that give the agent rights the business cannot contract out of, including a payment on termination that surprises every business that did not know about it. The agreement has to work within those regulations rather than around them: define the territory, the products and the agent's authority, set the commission and when it is earned, provide for orders and the customer's contract with the business, and deal with termination, notice and the compensation or indemnity the regulations require. I draft that agreement, for the business or for the agent, for a fixed fee of £595, delivered in five working days. HMRC's Check Employment Status for Tax tool is used to check status engagement by engagement; no document can guarantee the outcome.

Who this is for

Manufacturers, importers, wholesalers and brands in England and Wales appointing self-employed agents to sell their goods on commission, and agents who want an agreement that secures their commission and their rights.

What matters in a commission sales agent's agreement

The commercial agents regulations and what they require

A self-employed intermediary with continuing authority to negotiate the sale or purchase of goods on behalf of another is a commercial agent under the Commercial Agents (Council Directive) Regulations 1993, and the Regulations imply duties on both sides, a right to commission on transactions concluded during the agency and, in some cases, after it, a right to a written statement of terms, minimum notice periods, and a right on termination to an indemnity or compensation under regulation 17 that cannot be excluded; the agreement should comply with the Regulations, choose indemnity or compensation expressly (compensation applies if nothing is said), and recognise that an agent for services rather than goods is outside them.

The territory, the products and the agent's authority

The agreement should define the territory or customer group, exclusive or not, the products, the agent's authority (to solicit orders and negotiate within the business's price list and terms, or to conclude contracts, which the Regulations treat differently), and the business's reserved rights to sell directly and to appoint others; an exclusive agent is entitled to commission on sales in the territory even where the agent did not make them, and the agreement should say whether exclusivity is granted.

Commission, the trigger and the statement

The agreement should state the commission rate by product or customer, that commission is due when the customer has paid or when the business has executed the transaction as the Regulations provide, that it is calculated on net invoiced value excluding VAT, returns and credits, that the business will provide a commission statement each period showing the basis of calculation, which the Regulations require, and that the agent may inspect the records needed to check it; commission on repeat orders from customers the agent introduced, and on orders received after termination that are mainly attributable to the agent's work, should be addressed as the Regulations require.

Orders, pricing and the customer's contract

The agreement should say that the agent passes orders to the business for acceptance, that the business may refuse an order and must inform the agent of acceptance, refusal and non-execution as the Regulations require, that prices and terms are the business's and the agent may not vary them without authority, that the agent does not collect payment or hold stock unless the agreement allows, and that the contract for the goods is between the business and the customer; the agent should represent the products accurately and comply with the Bribery Act 2010 in dealings with customers' staff.

Termination, notice and the compensation the regulations give

The agreement should run for a fixed term or until terminated on notice, with the minimum notice the Regulations require (one month in the first year, rising to three), immediate termination for serious breach, and the indemnity or compensation payable on termination, including on the agent's retirement, illness or death and on expiry of a fixed term, with the agent required to claim within a year; an indemnity is capped at a year's average commission, compensation is not, and the choice should be made in the agreement with the business's accountants aware of the liability.

Status, exclusivity and restrictions

A commercial agent is self-employed by definition, with their own business, other principals, their own expenses and no obligation to work set hours, and the agreement should reflect that; an agent required to work exclusively for the business at set hours under a manager is at risk of being a worker or employee under section 230 of the Employment Rights Act 1996 with the rights that follow. Restrictions on the agent after termination are valid under the Regulations only if in writing, limited to the territory or customers and the goods covered, and no longer than two years, and the agreement should draft them within those limits; late payment of commission attracts interest under the Late Payment of Commercial Debts (Interest) Act 1998.

What it costs

Consultancy or contractor agreement, £595. Drafted for your business. Five working days.

Template set for repeat use, £895. One master agreement plus a short-form schedule you can reuse for every engagement. Five working days.

Buying online forms the engagement on payment. The scope is what the consultancy and contractor agreements page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A clear, express assignment of intellectual property to your business
• Confidentiality provisions that protect your business information
• Restrictive covenants drafted at a scope a court will uphold
• Clear treatment of status, so the arrangement is not accidentally something else
• Payment, deliverables and termination provisions that match how you work
• A reusable structure, so the next engagement costs you nothing

What is not included

• Employment status determinations and off-payroll working assessments, which need your accountant
• Tax advice
• Disputes with a contractor you have already engaged
• Immigration and right to work compliance

Questions I am often asked

We did not know we would owe compensation when we ended the agency. Can we exclude it?

It cannot be excluded. The right to an indemnity or compensation on termination applies for a commercial agent selling goods. The agreement chooses between them, which affects the amount, and states the notice periods the Regulations require.

Is an agent selling our services covered by the Regulations?

It is not. The Regulations apply to agents negotiating the sale or purchase of goods. An agent for services is governed by the contract alone, and the agreement for that is drafted differently.

Can we restrict an agent from working for a competitor after the agency ends?

Only by a written restriction limited to the territory or customers and the goods, for no more than two years, and reasonable in its scope. The agreement drafts one within those limits.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Consultancy agreement for a sales consultant on commission
• Getting an AI-drafted agency agreement checked

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.