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 document includes a data protection clause, but if the Sub-Contractor
will be carrying out any data processing for the service provider, you
might wish to add the standard data processing clause which you can find
This General Sub-Contractor (Company) Agreement is designed for use by
those working on a sub-contractor basis through a personal service or other
intermediary company 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
. The clauses in each document are designed to mirror and/or complement
each other. In particular, this template 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 form of agreement cover elements such as fees
and payment, insurance, confidentiality and liability.
This template is designed for use where an individual working through a
personal service or other intermediary company provides his services to a
main contractor. That intermediary company enters into the Agreement as the
Sub-Contractor rather than the main contractor contracting with, or
employing, the individual direct. The accompanying template, the
General Sub-Contractor Agreement (Self-Employed)
, is to be used instead when the sub-contractor entering into the Agreement
with the main contractor is a sole trader (working as a self-employed
individual) rather than an intermediary company.
This agreement emphasises the independent status of the intermediary
sub-contractor company. Subject to the requirements dictated by the nature
of the services, the sub-contractor company retains a degree of
independence in decision-making, and it may at any time engage a substitute
for the person named in the sub-contract as the individual who provides the
services on behalf of the sub-contractor.
This template provides that the main contractor does not have to pay taxes,
national insurance contributions, pensions, benefits or similar, and that,
instead, the main contractor pays fees to the sub-contractor who then pays
any sums due in respect of tax, national insurance etc.
This document aims to reduce the risk (both to the individual and the
personal service or other intermediary company) that, under employment law
and any other applicable law, the individual is regarded as an employee.
Nevertheless, he might still be treated by HMRC, an employment tribunal, or
any other body, as an employee, and legislation (such as IR35 or other
rules) might still apply in a way which adversely impacts the individual’s
or his company’s legal, tax or NIC position. Whether that is so will depend
not just on what is contained in the sub-contract but also on all other
circumstances. Those circumstances may include the way in which the
sub-contract is implemented, and all arrangements between the main
contractor, the personal service or other intermediary company, and the
HMRC provides some guidance on its website about employment,
self-employment, and IR35. Its decisions on these points 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
enable anyone to predict how in any particular case the “balancing
exercise” would be carried out or what HMRC’s conclusion would be about
that particular case. For that reason we recommend that before you decide
to use or adapt this form of agreement, you take professional advice in
relation to your particular circumstances as to any impact on the company
and the individual of employment law, IR35, tax, and NIC rules.
Further guidance on tax and employment status of an individual who works
(as a subcontractor or contractor) through an intermediary company can be
found in the
relating to Self-employment and IR35, but we still recommend that you take
professional legal and tax advice before using this form of document.
Nevertheless, a carefully worded sub-contract ensuring the independence of
the personal service company sub-contractor is still a key starting point.
Unlike an employee, the company is an independent contractor which is free
to provide any suitably qualified person rather than only the original
individual named in the sub-contract having to do some or all of the work,
it is free to determine when, where and how work is completed (subject of
course to the main contractor’s and its client’s requirements), and it is
free to work for other clients or main contractors.
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 General Sub-Contractor (Company) Agreement contains the following
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]
9. Fees and Payment
13. Data Protection
15. Force Majeure
16. Term and Termination
17. Effects of Termination
18. No Waiver
19. Further Assurance
21. Assignment and Sub-Contracting
23. Relationship of the Parties
24. Third Party Rights
26. Entire Agreement
29. Dispute Resolution
30. Law and Jurisdiction
and the following schedules:
1. The Main Contract
2. The Sub-Contracted Services
3. Sub-Contractor’s Fees
[5. Privacy Notice]
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