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 IT Sub-Contractor (Company) Agreement is designed for use where an
individual IT specialist (“Principal Consultant”) works on a sub-contractor
basis through a personal service (or other intermediary) company. That
intermediary company enters into this form of Agreement as the
Sub-Contractor rather than the main contractor contracting with, or
employing, the individual direct.
Under this template, unlike an employee, the intermediary company is free
as an independent contractor to provide any suitably qualified person (a
“Consultant”) rather than only the original individual (“Principal
Consultant”) named in the sub-contract having to do some or all of the work
if the Principal Consultant had been engaged direct as an employee. The
Subcontractor intermediary company is free under this template to determine
when, where and how work is completed (subject of course to the main
contractor’s and its client’s requirements). The IT Subcontractor is free
to work for other clients or main contractors.
This IT Sub-Contractor (Company) Agreement 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 form of agreement may be used alongside the
IT Service Agreement
. 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
Other key provisions in this form of agreement cover elements such as fees
and payment, insurance, confidentiality, data protection, and liability.
Self-Employed IT Consultant Agreement
template 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 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
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.
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. Data Processing
19 No Waiver
20. Further Assurance
22. Assignment and Sub-Contracting
24. Relationship of the Parties
25. Third Party Rights
27. Entire Agreement
30. Dispute Resolution
31. Law and Jurisdiction
and the following schedules:
1. The Main Contract
2. The Sub-Contracted Services
5. Sub-Contractor’s Fees
7. [Data Processing]
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