IT Subcontractor (Company) Agreement
When dealing with specialist services such as IT services, 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
This document is compliant with the GDPR (General Data Protection
This IT Sub-Contractor (Company) Agreement is designed for use by IT
specialists working on a sub-contractor basis through a personal service
company (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
This document is designed for use alongside the IT Service Agreement, also
available from Simply-Docs. The clauses in each document are designed to
mirror and/or complement each other. In particular, this IT Sub-Contractor
(Company) 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 form of agreement cover elements such as fees
and payment, insurance, confidentiality and liability.
This template is designed for use where an individual IT specialist,
working through a personal service company or other intermediary company,
provides his services to a main contractor. That intermediary company
enters into the sub-contract agreement as the Sub-Contractor rather than
the main contractor contracting with, or employing, the individual IT
specialist direct. The template, the Self-employed IT Consultant Agreement
in the General Consultancy Agreements subfolder, 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
This agreement emphasises the independent status of the intermediary
sub-contractor company. Subject to the requirements dictated by the nature
of the IT services, the sub-contractor company retains a degree of
independence in decision-making, and it may at any time engage another IT
specialist and substitute him for the individual IT consultant.
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 IT consultant 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 personal service 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 individual.
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 legal and tax
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 Guidance Note relating to Self-employment and IR35 in this
Group 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 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.
This IT Sub-Contractor (Company) 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
9. Fees and Payment
14. Force Majeure
15. Term and Termination
16. Effects of Termination
17. Data Protection
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
5. Sub-Contractor’s Fees
7. [Privacy Notice]
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