General Sub-Contract Template

General Sub-Contractor Agreement

BS.GEN.SCONT.01

When dealing with many kinds of services, particularly if specialist knowledge or skills are required, it may often be the case that a service provider (or “main contractor” in this context) wishes to sub-contract all or part of the services they are contracted to provide.

This General Sub-Contractor Agreement is designed for use by an individual sole trader working on a self-employed basis as a sub-contractor and has been designed to be sufficiently broad to cover a range of different types of work. The specific details which will be unique to each transaction should be provided in a series of schedules, outside the main body of the contract.

This document is designed for use alongside a general Service Agreement, also available from Simply-Docs. The clauses in each document are designed to mirror and/or complement each other. In particular, this General Sub-Contractor Agreement includes a provision to the effect that it will not come into force until the main contract does and will terminate automatically in the event that the main contract is terminated (subject, of course, to the obligation to make reasonable payment for any work already completed by the sub-contractor).

Other key provisions in this document cover elements such as fees and payment, insurance, confidentiality and liability.

This form of agreement emphasizes the individual’s status as an independent sub-contractor, and under its terms he/she retains a degree of independence in decision-making. It states that the individual is not employed by the main contractor but is self employed. It provides that the main contractor does not have to pay taxes, national insurance contributions, pensions, benefits or similar. It states that the main contractor is to pay fees to the sub-contractor, and it is up to the sub-contractor to pay any sums due in respect of tax, national insurance etc.

This form of agreement aims to reduce the risk that the sub-contractor might be deemed in law to be a de-facto employee of the main contractor rather than (and as intended) a sole trader working on a self-employed basis as a sub-contractor. However, whether he is treated by HMRC, an employment tribunal, or any other body, as a self-employed contractor will depend not just on the content of this contract. It will also depend on all other circumstances, including the practical implementation of the sub-contract, and the arrangements between, and conduct of, the main contractor, the individual sub-contractor, and any person engaged by the sub-contractor to carry out any of the services for the sub-contractor.

HMRC provides some guidance on its website about self-employment, but its decisions as to whether someone is self-employed are often based on a “balancing exercise” in which it gives weightings to various factors. However, neither the HMRC guidance nor case law are sufficiently precise to make it possible to predict how this “balancing exercise” would be carried out or what the position will be in any situation. For that reason we recommend that you take professional employment law, tax, and NIC advice in relation to your particular circumstances before deciding to use or adapt this form of agreement.

Nevertheless, a carefully worded sub-contract, ensuring the independence of the individual sub-contractor is a key starting point. As a self-employed individual rather than as an employee of, the main contractor, he/she is, for example, free to provide a suitably qualified person in his/her place rather than carry out some or all of the services personally, and is free to determine when, where and how the services are completed (subject of course to the main contractor’s and its client’s requirements).

We have also provided (in the Company Subcontractor Agreements subfolder) a version of this template, the General Sub-Contractor (Company) Agreement, to be used when the sub-contractor entering into the agreement with the main contractor is a personal service company (or other intermediary company) rather than the individual who provides the services for the main contractor. Please see the information page accompanying that version for guidance about tax, employment status, and IR35, where the sub-contractor engaged is such an intermediary company, and the services are carried out for the intermediary by the individual engaged by it.

Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document. (Please note in particular Clause 7. If this clause is removed, the main clause numbers in the document will update automatically. Cross-references within clauses, however, will not and must be changed manually.)

This Sub-Contractor Agreement contains the following clauses:

1. Definitions and Interpretation
2. Commencement Date
3. Engagement of the Sub-Contractor
4. Status of the Sub-Contractor
5. Sub-Contractor’s Obligations
6. Service Provider’s Obligations
[7. Provision of Equipment]
8. Insurance
9. Fees and Payment
10. Indemnity
11. Liability
12. Confidentiality
13. Non-Solicitation
14. Force Majeure
15. Term and Termination
16. Effects of Termination
17. No Waiver
18. Further Assurance
19. Costs
20. Assignment and Sub-Contracting
21. Time
22. Relationship of the Parties
23. Third Party Rights
24. Notices
25. Entire Agreement
26. Counterparts
27. Severance
28. Dispute Resolution
29. Law and Jurisdiction

and the following schedules:

1. The Main Contract
2. The Sub-Contracted Services
3. Sub-Contractor’s Fees
4. [Insurance]

 

This document is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.

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