Employment contract for sales representative

What is a Sales Representative Contract?

A sales representative contract agreement is a legally binding document that outlines the terms and conditions of the employment relationship between the employer and a sales representative. This contract defines important elements of future employment, including

• details of both parties;
• detailed list of job duties and responsibilities;
• salary, bonuses, and commissions;
• non-solicitation and confidentiality clause;
• duration;
• termination.

The sales representative contract is typically entered into by two parties—the employer and the sales representative. The employer is a business that needs to hire a person to promote their goods or services. The sales representative is an individual who wishes to perform sales activities under the supervision and in accordance with the guidelines of the employer.

An employment agreement with a sales representative could be of different types:

• retail sales representative (i.e., sale and promotion of goods in a specific shop);
• outside sales representative (i.e., an employee travels to meet customers and clients in person);
• inside sales representative (i.e., an employee who makes cold calls or sends emails to clients and customers);
• business-to-business sales representative (i.e., an employee targets companies and other businesses for selling and promotion of goods).

How to draft a sales representative contract template?

When drafting a sales representative contract template, it is essential to include certain key components to ensure a document’s validity, measure parties’ expectations, and ensure clarity.

Job Duties

A list of job duties and responsibilities differs widely depending on the type of sales (i.e., retail sales, outside sales). The typical list of employee duties under a sales representative contract agreement template includes

• Identifying and contacting new leads
• Following up on prospects and closing deals
• Maintaining relationships with existing clients and more.

Except for outside sales, an employment agreement should also define the exact place of work for a sales representative. This place could be a company’s office, call center, or any other place agreed upon between the parties.

Non-Solicitation

A non-solicitation clause is typical for sales representative contract samples. This clause prevents the sales representative from attempting to take the employer’s clients, prospects, or employees after the contract ends.

This clause is aimed at protecting the employer’s business relationships. The inclusion of such a clause into the contract’s template should be subject to the following limitations:

• A non-solicitation obligation should not last more than three years;
• The list of exact prohibited actions should be defined directly in the contract, and
• A non-solicitation obligation should be effective within a specific territory (optional).

Metrics and Performance Review

A sales representative is a performance-based role. Thus, a sales representative contract sample should outline the key performance indicators that an employee should be able to meet.

The parties may also agree upon the frequency with which an employee’s performance review should be made. A performance review could be weekly, monthly, quarterly, or annual. Usually, if a sales representative cannot meet required performance indicators, parties may agree upon the termination of the employment agreement.

Duration and Termination

An employment contract for a sales representative template shall clearly define:

• an employee’s first working date;
• duration of employment relations (i.e., permanent or fixed);
• probation period (if any); and
• notice period for termination by either party.

It is common for a sales representative contract agreement to include a probation period. During a probation period a sales representative’s skills and professionalism are evaluated closely by the employer. The duration of a probation period may last from a few days up to 6 months. The federal law does not define the maximum or minimum duration of a probation period.

Either party shall have a right to terminate employment relations by providing prior written notice to the other party. A notice period could be 10, 15, or 30 days. Immediate termination of the employment agreement is possible during the probation period only.

The information above helps both parties understand how the relationship can end and what obligations continue after the contract is terminated.

Payment Provisions

Every sales representative contract agreement should define compensation for a sales rep. Usually, a compensation consists of two parts—base salary and commission or bonuses for sales made.

A base salary cannot be lower than the federal minimum (i.e., not lower than USD 7.25 per hour). A commission structure may have various forms, including percentage of sales, bonuses, etc.

It is also common to include in a document’s template the frequency with which salary payments should be made. For an employment contract, a frequency of payments is key. Therefore, the parties may agree that a salary should be paid once a month or in several installments every other week.

For a retail sales representative contract, parties may also consider inclusion of deductions in the cancellation clause. Under this clause a representative’s bonuses should be revised and recalculated once the products are being subsequently returned by the customers or clients.

How to customize a contract template at Faster Draft?

In order to customize a sales representative contract sample, follow a few easy steps below:

1. Click the button “Create Document.”
2. Answer simple questions in the questionnaire.
3. Select a document format—Sales Representative contract PDF or Word.
4. Make a payment.
5. Get a customized contract template in seconds.