Sales Representative Contract (Pakistan)
SALES REPRESENTATIVE CONTRACT
Under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 | Contract Act 1872
Income Tax Ordinance 2001 (Withholding — Sections 149 / 233)
This Sales Representative Contract ("Contract") is entered into at [Contract City] on [Contract Date] between:
PRINCIPAL (Company):
Name: [Company Name]
SECP Registration No: [Company Registration No]
NTN: [Company NTN]
Registered Address: [Company Address]
Represented by: [Company Rep Name]
SALES REPRESENTATIVE:
Name: [Rep Name], son/daughter of [Rep Father Name]
CNIC No: [Rep CNIC]
Address: [Rep Address]
Contact: [Rep Phone]
The Principal and the Sales Representative are hereinafter collectively referred to as the "Parties."
1. NATURE OF ENGAGEMENT AND TERM
1.1 The Principal hereby engages the Sales Representative as: [Engagement Type]
1.2 This Contract shall commence on [Contract Start Date] and shall continue for [Contract Duration], subject to earlier termination in accordance with Clause 8 of this Contract.
1.3 Where the Sales Representative is engaged as a permanent employee, the provisions of the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (the "Ordinance") shall apply, including the Standing Orders of the Principal's establishment certified by the Labour Department. Where the Sales Representative is engaged as an independent contractor, the provisions of the Contract Act 1872 governing agency (Sections 182–238) shall apply.
2. TERRITORY AND PRODUCT SCOPE
2.1 The Sales Representative is authorised to operate within the following territory: [Territory]
2.2 Territory Status: [Territory Exclusivity]
2.3 Products / Services Authorised: [Product Scope]
2.4 The Sales Representative shall not promote, sell, or represent any competing products or brands within the assigned territory without the Principal's prior written consent.
3. COMPENSATION
3.1 Basic Salary: PKR [Basic Salary] per month (if applicable).
3.2 Commission: [Commission Rate]
3.3 Sales Targets: [Sales Targets]
3.4 Performance Bonus: [Performance Bonus]
3.5 Expense Reimbursement: [Expense Policy]
3.6 Vehicle / Conveyance: [Vehicle Arrangement]
3.7 Tax Treatment: Salary income shall be subject to withholding tax under Section 149 of the Income Tax Ordinance 2001. Commission paid to independent contractors shall be subject to withholding tax under Section 233 of the Income Tax Ordinance 2001 at the applicable rate. The Principal shall issue tax certificates as required under the Ordinance.
3.8 EOBI: Where the Sales Representative is engaged as an employee, the Principal shall register the representative with the Employees' Old-Age Benefits Institution (EOBI) under the Employees' Old-Age Benefits Act 1976 and make the prescribed contributions.
4. REPORTING AND PERFORMANCE
4.1 The Sales Representative shall comply with the following reporting obligations: [Reporting Obligations]
4.2 Persistent under-performance against the targets specified in Clause 3.3 shall result in a formal Performance Improvement Plan (PIP). Failure to achieve PIP targets may be a ground for termination in accordance with the Standing Orders Ordinance 1968 (for employees) and this Contract.
5. CONFIDENTIALITY
5.1 The Sales Representative shall keep strictly confidential all information relating to the Principal's business, including: [Confidentiality Scope]
5.2 This confidentiality obligation shall survive the termination of this Contract for a period of three (3) years and is enforceable under the Contract Act 1872 and the principles of equity applied by Pakistani courts.
6. NON-COMPETE AND NON-SOLICITATION
6.1 Post-Termination Restriction: [Non-Compete Period]
6.2 The Parties acknowledge that Section 27 of the Contract Act 1872 renders agreements in unreasonable restraint of trade void. The restrictions above are intended to be the minimum necessary to protect the Principal's legitimate business interests — including customer relationships developed using the Principal's resources and trade secrets acquired during the engagement — and shall be construed narrowly.
7. TERMINATION
7.1 Either Party may terminate this Contract by giving the other Party [Notice Period] written notice.
7.2 The Principal may terminate this Contract immediately (without notice) for cause — including fraud, dishonesty, wilful damage to company property, habitual absence, or conviction of a criminal offence under the Pakistan Penal Code 1860. For employees under the Standing Orders Ordinance 1968, the Principal must issue a show-cause notice and conduct a hearing before dismissal for misconduct.
7.3 Upon termination, the Sales Representative shall: (a) return all company property including samples, CRM access, company vehicle, and marketing materials; (b) deliver a final sales report and customer contact list; (c) transfer ongoing customer relationships and pending orders to the Principal's designated replacement; and (d) certify that all confidential information has been returned or destroyed.
7.4 Commission accrued on confirmed sales as of the termination date is a vested right of the Sales Representative and shall be paid in the final settlement, subject only to deduction for proven fraud. Under the Payment of Wages Act 1936, all wages including commission due to employed representatives must be paid within two working days of termination.
7.5 End-of-Service Benefits (for employees): Gratuity, leave encashment, and provident fund employer contributions shall be paid in accordance with the Standing Orders Ordinance 1968, the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968, and the Principal's HR policy.
8. GOVERNING LAW AND DISPUTE RESOLUTION
8.1 This Contract is governed by the laws of Pakistan — including the Contract Act 1872, the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the Industrial Relations Act 2012, and the Income Tax Ordinance 2001.
8.2 Disputes between employed workers and the employer shall be referred to the Labour Court under the Industrial Relations Act 2012. Disputes between independent contractors and the Principal shall be resolved by arbitration or before the competent civil court in [Contract City].
IN WITNESS WHEREOF, the Parties have executed this Contract at [Contract City] on [Contract Date].
Principal (Company Representative)
________________
Signature
Sales Representative
________________
Signature
Witness
________________
Signature
What Is a Sales Representative Contract (Pakistan)?
A Sales Representative Contract in Pakistan defines what each party must do under the deal and the consequences of failing to perform.
The Industrial and Commercial Employment (Standing Orders) Ordinance 1968 (the Ordinance) is the primary labour statute governing employment terms for workers in Pakistan's industrial and commercial sector. The Ordinance requires every covered establishment to maintain certified Standing Orders — approved by the Labour Department — that govern the classification of workers, conditions for engagement and discharge, and disciplinary procedures. A sales representative employed as a 'worker' within the meaning of Section 2(i) of the Ordinance enjoys the statutory protections of the Standing Orders — including the right to a termination notice of one month (for permanent employees), gratuity under Section 12-E of the Ordinance, and the right to challenge unfair dismissal before the Labour Court under the Industrial Relations Act 2012.
The Contract Act 1872 governs the commission agency relationship when the sales representative is engaged as an independent contractor rather than as an employee — a distinction that has significant implications for tax, EOBI contributions, and labour law applicability. Under the Agency provisions of the Contract Act 1872 (Sections 182 to 238), an agent owes the principal duties of honesty, avoiding conflicts of interest, maintaining accounts, and not making secret profits. The principal owes the agent the duty to indemnify against lawful acts and pay the agreed commission without deduction.
In Pakistan's commercial environment, Sales Representative Contracts are widely used in sectors including pharmaceutical companies (the pharmaceutical industry in Pakistan exceeds PKR 600 billion annually), fast-moving consumer goods (FMCG) companies, technology products and software, insurance companies licensed by the Securities and Exchange Commission of Pakistan (SECP) under the Insurance Ordinance 2000, telecom products and services for companies like Telenor, Jazz, Zong, and Ufone regulated by the Pakistan Telecommunication Authority (PTA), and banking and financial products for banks regulated by the State Bank of Pakistan (SBP).
The Federal Board of Revenue (FBR) classifies commission income received by sales representatives as business income taxable under Section 18 of the Income Tax Ordinance 2001, with withholding tax deducted by the principal under Section 233 of the Ordinance at the prescribed rate. Sales representatives registered with the FBR as taxpayers file annual income tax returns through the IRIS portal. Sales commission received by non-resident individuals is subject to withholding tax under Section 152 of the Income Tax Ordinance 2001.
The legal framework governing the Sales Representative Contract (Pakistan) in Pakistan draws on several key statutes and regulatory bodies. Under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, employers in Pakistan must issue appointment letters with terms of service. The Industrial Relations Act 2012 governs collective bargaining and the National Industrial Relations Commission (NIRC). The Employees Old-Age Benefits Institution (EOBI) administers pensions under the EOBI Act 1976. The Federal Board of Revenue (FBR) administers PAYE under the Income Tax Ordinance 2001. Labour Courts adjudicate employment disputes. Parties executing a Sales Representative Contract (Pakistan) in Pakistan should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Industrial and Commercial Employment (Standing Orders) Ordinance 1968 sets the foundational requirements.
When Do You Need a Sales Representative Contract (Pakistan)?
A Sales Representative Contract in Pakistan is needed whenever a company wants to engage an individual or firm to sell its products or services within a defined territory or to a defined customer base, whether on a salary-plus-commission or pure commission basis, and wants a written agreement governing performance expectations, payment terms, and termination rights.
A Sales Representative Contract is required when a pharmaceutical company operating in Pakistan — such as a multinational with a Pakistan subsidiary or a domestic manufacturer like Getz Pharma or Ferozsons Laboratories — hires medical representatives (MRs) to call on doctors and pharmacies in assigned districts. The contract specifies the territory (e.g. Faisalabad District), the product portfolio, the monthly salary and quarterly commission structure, the call reporting requirements through a CRM system, and the consequences of under-performance.
A Sales Representative Contract is needed when an FMCG company — such as Unilever Pakistan, Nestle Pakistan, P&G Pakistan, or a domestic consumer goods brand — engages field sales officers or territory sales managers in rural and urban markets across Punjab, Sindh, KPK, and Balochistan to execute distribution and trade marketing plans. The contract governs performance against sales targets, monthly incentive structures, company vehicle use, and compliance with the Code of Business Conduct.
A Sales Representative Contract is required when an insurance company licensed by the SECP under the Insurance Ordinance 2000 appoints an individual insurance agent to sell life insurance, health insurance, or general insurance policies. The SECP and the Insurance Association of Pakistan require licensed insurance companies to maintain signed agency agreements with all registered agents, specifying commission rates, training requirements, and compliance obligations.
A Sales Representative Contract is needed when a software company or technology firm in Pakistan's IT sector — one of over 10,000 IT companies registered with the Pakistan Software Export Board (PSEB) — engages freelance sales agents in foreign markets to generate leads for export services. The contract governs the commission rate on converted sales, the reporting process, and the non-solicitation restriction post-termination.
A Sales Representative Contract is required when a bank regulated by the State Bank of Pakistan appoints direct sales agents (DSAs) or bancassurance sales agents to sell retail banking products — personal loans, credit cards, home finance — or insurance products under a bancassurance arrangement. SBP's Consumer Protection Framework requires that DSAs operate under written agreements with the bank, specifying their authority, the products they may offer, and the complaint escalation procedures they must follow.
What to Include in Your Sales Representative Contract (Pakistan)
A valid Sales Representative Contract in Pakistan under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 and the Contract Act 1872 must contain the following essential elements.
Party Identification: Full legal name and registered address of the principal (company), its Companies Act 2017 registration number and National Tax Number (NTN), and the name, CNIC number (NADRA 13-digit format), and residential address of the sales representative. Where the representative is a company or partnership, its registration details should be recorded.
Nature of Engagement: Whether the sales representative is engaged as (a) a permanent employee subject to the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 and entitled to all statutory benefits, or (b) an independent contractor/commission agent under the Contract Act 1872 not entitled to employment benefits. This classification affects EOBI registration obligations, withholding tax treatment under Section 149 (salary) versus Section 233 (commission) of the Income Tax Ordinance 2001, and the applicability of the Industrial Relations Act 2012.
Territory Assignment: A precise description of the geographic territory (specific districts, cities, or zones in Punjab, Sindh, KPK, Balochistan) or customer segment (specific named accounts, government sector, or retail trade) within which the representative is authorised to operate. Territory exclusivity — whether the representative has exclusive rights within the territory — must be expressly stated, as exclusivity carries commercial value and affects the compensation model.
Product and Service Scope: A description of the products or services the representative is authorised to sell, including any restrictions on competitive products. A non-compete clause prohibiting the representative from selling competing products — whether during employment or for a specified post-termination period — must be drafted carefully to comply with Section 27 of the Contract Act 1872, which renders agreements in restraint of trade void unless the restraint is reasonable in scope, duration, and geographic area.
Sales Targets: Monthly, quarterly, and annual sales targets in PKR value or volume units, the performance review period, and the consequences of consistent under-performance — including performance improvement plan (PIP) procedures before termination for cause under the Standing Orders Ordinance 1968.
Compensation Structure: (a) Base salary (if any) in PKR per month; (b) commission rate — stated as a percentage of net sales value (invoice value minus returns and discounts) or as a fixed PKR amount per unit sold — and whether commission is payable on orders placed, invoices raised, or collections received (commission on collection is common in Pakistan to incentivise debt recovery); (c) travel and entertainment expense reimbursement policy; (d) company vehicle provision or conveyance allowance; and (e) any performance bonus scheme linked to annual target achievement.
Reporting Obligations: The frequency and format of sales call reports (daily, weekly, monthly), CRM system usage requirements, expense claim submission procedures, and the representatives' obligation to attend sales training and team meetings.
Confidentiality and Non-Solicitation: An obligation to maintain the confidentiality of customer lists, pricing, commercial terms, and trade secrets under the Contract Act 1872 and the principles of equity, both during and after engagement. A post-termination non-solicitation clause — prohibiting the representative from soliciting the principal's customers for a defined period (typically six to twelve months) — is enforceable if reasonable under Section 27 of the Contract Act 1872.
Termination Provisions: Notice periods required for termination by either party — for employees, the minimum notice under the Standing Orders Ordinance 1968 (one month for permanent workers); for independent contractors, a commercially agreed notice period. Grounds for summary termination without notice — fraud, dishonesty, wilful misconduct — must be stated. End-of-service benefits applicable to employees (gratuity, leave encashment, provident fund) should be addressed.
Forms-legal.com provides this Sales Representative Contract (Pakistan) template for use by companies across industries — pharmaceutical, FMCG, technology, insurance, and financial services — to establish a formal, documented engagement with sales personnel that complies with the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the Contract Act 1872, and the Income Tax Ordinance 2001 withholding requirements.
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Sales Representative Contract (Pakistan) (Pakistan) [Legal document template]. Forms Legal. https://forms-legal.com/pakistan/employment/contracts/sales-representative-contract-pakistan
"Sales Representative Contract (Pakistan) (Pakistan)." Forms Legal, 2026, https://forms-legal.com/pakistan/employment/contracts/sales-representative-contract-pakistan.
@misc{formslegal-sales-representative-contract-pakistan,
author = {{Forms Legal}},
title = {Sales Representative Contract (Pakistan) (Pakistan)},
year = {2026},
howpublished = {\url{https://forms-legal.com/pakistan/employment/contracts/sales-representative-contract-pakistan}},
note = {Free legal document template}
}Frequently Asked Questions
The classification of a sales representative in Pakistan as an employee or independent contractor depends on the actual nature of the engagement — not merely on how the contract labels it. Pakistani labour courts and the Labour Appellate Tribunal apply a multi-factor test drawing on the Industrial and Commercial Employment (Standing Orders) Ordinance 1968 and common law principles: control over work methods and hours; integration into the business; exclusivity of services; provision of equipment and office by the employer; and the regularity and structure of payment. If the principal controls the representative's working hours, assigns a fixed territory exclusively, provides a vehicle or office, and pays a fixed monthly salary — these factors point to employment, regardless of whether the contract says 'independent contractor.' Misclassification as an independent contractor when the relationship is substantively an employment relationship exposes the principal to liability for unpaid EOBI contributions, gratuity under the Standing Orders Ordinance, and back-payments of salary-related benefits before the Labour Court under the Industrial Relations Act 2012.
Sales commission income in Pakistan is taxed differently depending on whether the representative is an employee or an independent contractor. For employed sales representatives receiving salary plus commission, both elements are taxed as employment income under Section 12 of the Income Tax Ordinance 2001 — the employer deducts withholding tax monthly under Section 149 of the Ordinance and issues an annual salary certificate for income tax return filing. For independent commission agents, commission income is business income under Section 18 of the Income Tax Ordinance 2001. The principal is required to deduct withholding tax from commission payments under Section 233 of the Ordinance at the rate of 12% for companies and 12.5% for individuals (rates as of the Finance Act 2024 — subject to annual update by the Federal Board of Revenue). The commission agent must file an annual income tax return through the FBR's IRIS portal, declaring all commission income and claiming the Section 233 withholding tax as a tax credit. Commission agents who are not on the FBR Active Taxpayers List (ATL) face higher withholding rates.
Non-compete clauses in Sales Representative Contracts in Pakistan are governed by Section 27 of the Contract Act 1872, which declares that every agreement by which a person is restrained from exercising a lawful profession, trade, or business of any kind is void to that extent. However, Pakistani courts — including the Supreme Court of Pakistan and the Lahore High Court — have recognised that reasonable post-employment restraints limited in scope, duration, and geographic area may be enforced in equity under certain circumstances, particularly where the employee has been exposed to trade secrets, confidential customer lists, or proprietary information. A non-compete clause that restricts a pharmaceutical representative from working for a direct competitor within the same therapeutic product line in the same territory for six months post-termination is more likely to be upheld than a broad prohibition on working in any sales role nationwide for three years. Drafting a defensible non-compete clause in Pakistan requires balancing business protection against the absolute statutory prohibition in Section 27 — a qualified Advocate's input is strongly recommended for senior sales executives with access to sensitive commercial information.
The notice period for terminating a Sales Representative Contract in Pakistan depends on the representative's classification. For employed sales representatives classified as permanent workers under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968, the Ordinance requires one month's written notice (or one month's wages in lieu of notice) before termination without cause. For contractual workers employed for a fixed term, the contract term itself governs — early termination without cause may require payment of the remaining contract wages. For independent commission agents engaged under the Contract Act 1872, the contractually agreed notice period applies — typically 30 to 60 days for senior agents. In all cases, summary termination (without notice) is permissible only for specified misconduct — fraud, dishonesty, wilful damage, habitual absence, or conviction of a criminal offence under Pakistan Penal Code 1860. The Standing Orders Ordinance 1968 requires a show-cause notice and a hearing before any termination for misconduct by a workman. Failure to follow proper termination procedures exposes the principal to reinstatement orders and back-pay awards by the Labour Court.
Accrued commission that a sales representative has earned — by generating confirmed orders or collected sales — before termination of the contract constitutes a vested right under the Contract Act 1872 and cannot be forfeited by the principal unilaterally. A term in the Sales Representative Contract that purports to forfeit earned commission on termination (other than for proven fraud or dishonesty) would likely be unenforceable as an unconscionable penalty clause under the Contract Act 1872. The Sales Representative Contract should clearly define when commission is 'earned' — at the point of order, invoice, or collection — and specify the payment timeline for commission accrued as of the termination date. Under the Payment of Wages Act 1936 (for employed representatives), all wages including commission must be paid within two working days of termination. For independent commission agents, the agreed commission on all completed transactions as of the notice date must be paid in the final settlement. Disputes over unpaid commission between employed workers and employers fall under the jurisdiction of the Labour Court under the Industrial Relations Act 2012; disputes between independent agents and principals are resolved in civil courts or through the arbitration mechanism agreed in the contract.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
Found an error? Let us knowRelated Documents
You may also find these documents useful:
Commission Agent Agreement (Pakistan)
A Commission Agent Agreement for Pakistan — a contract between a principal and a commission agent (arhtia) governing the agent's authority to sell goods or services on behalf of the principal in exchange for a commission, regulated under the Contract Act 1872 and the agricultural commission agent framework of the Agricultural Produce Markets Act.
Distribution Agreement (Pakistan)
A Distribution Agreement for Pakistan — a contract between a supplier or manufacturer and a distributor appointing the distributor to sell and market products in a defined territory, governed by the Contract Act 1872 and applicable trade regulations.
Employee Non-Disclosure Agreement (Pakistan)
An Employee Non-Disclosure Agreement for Pakistan — a binding confidentiality contract between employer and employee protecting trade secrets, client data, and proprietary information under the Contract Act 1872 and the Prevention of Electronic Crimes Act 2016.
Appointment Letter (Pakistan)
An Appointment Letter for Pakistan — a formal offer of employment issued by an employer to a selected candidate, setting out designation, salary, probation period, and terms of service under the Industrial and Commercial Employment (Standing Orders) Ordinance 1968.
Commission Sales Plan (Pakistan)
A Commission Sales Plan for Pakistan — an employment or contractor document defining sales targets, commission rates, tiers, and payment terms for sales employees or independent sales contractors, governed by the Contract Act 1872 and the Industrial and Commercial Employment (Standing Orders) Ordinance 1968.