Third Party Contractor Agreement for Malaysia

Third Party Contractor Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that establishes and regulates the relationship between a company and an independent contractor. This document outlines the terms and conditions for engaging third-party services while maintaining compliance with Malaysian employment, contract, and tax laws. It includes detailed provisions for service scope, payment terms, intellectual property rights, confidentiality obligations, and liability limitations, all structured to clearly differentiate the contractor relationship from employment and ensure adherence to Malaysian legal requirements including the Contracts Act 1950 and relevant employment legislation.

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What is a Third Party Contractor Agreement?

This Third Party Contractor Agreement is designed for use in Malaysia when engaging external service providers or individuals on a contractor basis rather than as employees. The document is essential for businesses operating in Malaysia that require specialized services, project-based work, or temporary expertise without creating an employment relationship. It incorporates key provisions required under Malaysian law, including compliance with the Contracts Act 1950, Employment Act 1955, and relevant tax regulations. The agreement is structured to clearly establish independent contractor status, specify service delivery requirements, protect intellectual property rights, and maintain confidentiality while providing flexible engagement terms. It's particularly valuable for companies seeking to manage risk, ensure regulatory compliance, and create clear operational frameworks for contractor relationships in the Malaysian business environment.

What sections should be included in a Third Party Contractor Agreement?

1. Parties: Identifies and provides full details of the contracting parties, including registration numbers for companies

2. Background: Sets out the context of the agreement and the parties' intention to enter into a contractor relationship

3. Definitions: Defines key terms used throughout the agreement

4. Appointment and Scope: Establishes the contractor's appointment and defines the scope of services

5. Term and Termination: Specifies the duration of the agreement and circumstances for termination

6. Contractor's Obligations: Details the contractor's duties, responsibilities, and performance standards

7. Company's Obligations: Outlines the company's responsibilities and commitments

8. Fees and Payment: Specifies payment terms, rates, and invoicing procedures

9. Independent Contractor Status: Explicitly establishes the independent nature of the relationship

10. Intellectual Property: Addresses ownership and rights to work created during the engagement

11. Confidentiality: Protects confidential information and trade secrets

12. Liability and Indemnity: Sets out liability limitations and indemnification obligations

13. General Provisions: Contains standard boilerplate clauses including governing law, notices, and entire agreement

What sections are optional to include in a Third Party Contractor Agreement?

1. Non-Compete: Restricts contractor's ability to compete - include when contractor will have access to sensitive business information

2. Insurance: Specifies required insurance coverage - include when services involve significant risks or regulatory requirements

3. Data Protection: Addresses personal data handling - include when contractor will process personal data

4. Equipment and Resources: Specifies who provides tools and resources - include when significant equipment or resources are needed

5. Compliance with Policies: Requires adherence to company policies - include when contractor works on-site or interfaces with company systems

6. Force Majeure: Addresses unforeseen circumstances - include when services are critical or long-term

7. Assignment and Subcontracting: Controls ability to delegate work - include when personal service is important

8. Change Control: Establishes process for scope changes - include for complex or long-term projects

What schedules should be included in a Third Party Contractor Agreement?

1. Schedule 1 - Services Description: Detailed specification of services to be provided

2. Schedule 2 - Fee Schedule: Detailed breakdown of fees, rates, and payment terms

3. Schedule 3 - Service Levels: Performance metrics and quality standards

4. Schedule 4 - Key Personnel: Details of main contractor personnel if applicable

5. Schedule 5 - Company Policies: Relevant company policies contractor must comply with

6. Schedule 6 - Required Insurance: Specific insurance requirements and coverage levels

7. Appendix A - Report Templates: Standard formats for required reports and documentation

8. Appendix B - Change Request Form: Template for requesting and documenting changes to services

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Genie AI

Cost

Free to use
Clauses
Relevant Industries

Information Technology

Construction

Professional Services

Manufacturing

Healthcare

Education

Financial Services

Telecommunications

Energy and Utilities

Consulting

Digital Media

Engineering

Real Estate

Logistics

Relevant Teams

Legal

Human Resources

Procurement

Finance

Operations

Compliance

Risk Management

Project Management Office

Administration

Business Development

Relevant Roles

Procurement Manager

Legal Counsel

HR Director

Project Manager

Operations Manager

Compliance Officer

Contract Administrator

Finance Manager

Risk Manager

Department Head

Business Unit Director

Chief Financial Officer

General Counsel

Chief Operating Officer

Industries
Contracts Act 1950: Primary legislation governing contract formation, validity, and enforcement in Malaysia. Essential for establishing the basic contractual relationship with the contractor.
Employment Act 1955: Important for understanding the distinction between employees and contractors, helping to avoid misclassification issues and ensuring the agreement properly establishes a contractor relationship.
Income Tax Act 1967: Governs taxation obligations for contractors and the contracting company, including withholding tax requirements for services rendered.
Employees Provident Fund Act 1991: Relevant for understanding contractor exemptions from EPF contributions and avoiding creating an implied employment relationship.
Personal Data Protection Act 2010: Regulates the collection, use, and handling of personal data if the contractor will be processing personal information as part of their services.
Copyright Act 1987: Important for intellectual property provisions in the agreement, especially regarding work created by the contractor during the engagement.
Industrial Relations Act 1967: Relevant for understanding the scope of industrial relations that do not apply to genuine contractors, helping to properly structure the relationship.
Competition Act 2010: May be relevant if the contractor agreement contains non-compete or exclusivity clauses that could impact market competition.
Digital Signature Act 1997: Relevant if the agreement will be executed electronically, establishing the validity of digital signatures.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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