Consultancy Agreement (Independent Contractor)

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Questions about this document

Does this agreement make the consultant self-employed?

No document can do that on its own. Employment status depends on the reality of the relationship: whether the consultant can send a substitute, how much control the client has over how and when the work is done, and whether either side is obliged to offer or accept further work. The agreement is drafted to reflect genuine self-employment on each of those points, and Schedule 2 records the actual working practices so the paperwork and the reality match.

How does it deal with IR35 and the off-payroll working rules?

Where the consultant works through their own limited company, a medium or large client must decide whether the engagement is inside or outside IR35 and issue a status determination statement; a small company client is exempt and the consultant’s company decides. The agreement provides for the determination, the working-practices statement in Schedule 2 is the evidence, and the guidance notes explain the status tests and the small-company exemption.

Can I use it with a sole trader as well as a limited company?

Yes. The Particulars let you name either an individual consultant or a consultancy company with a named key person who will do the work, and the clauses are written to work for both.

Who owns the work the consultant produces?

Unlike an employee, a contractor keeps the intellectual property in what they create unless the contract says otherwise, so the agreement contains an express assignment of the deliverables to the client, with a licence back for the consultant’s pre-existing materials. If you want the consultant to retain ownership, the clause is clearly marked for editing.

What happens if the client pays late?

The agreement sets out the invoicing timetable and provides for statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998, which is 8 per cent above the Bank of England base rate, plus the fixed compensation the Act allows. Fees, expenses and any retainer go in Schedule 1.

Can I use this for an employee, a worker or an agency temp?

No. Someone you control day to day, who must do the work personally and whom you must keep supplying with work, is an employee or a worker regardless of what the contract calls them: use our Employment Contract. Agency and umbrella arrangements have their own terms. Using a consultancy agreement to disguise employment creates tax and employment-rights exposure for the client.

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