This Security Sub-Contractor (Company) Agreement is designed for use where
security services are provided to a main contractor by a sub-contractor
company which is an individual’s personal service or other intermediary
company.
This document has been designed to be sufficiently broad to cover a range
of types of security work and it provides a framework covering all of the
essential legal matters required for a sub-contract of this kind. The exact
nature of the services to be provided should be detailed in full in the
schedule at the end of the document.
Particular attention is paid in this document to the all-important SIA
licensing requirements. Individuals engaged by a security sub-contractor
company to either perform the services, or to manage or supervise the
services, must be appropriately licenced.
A key element addressed in this sub-contract is insurance. Two options are
contained within this provision and must be chosen with care. Under the
first, the main contractor’s insurance covers the provision of the services
by the sub-contractor. Under the second, the sub-contractor is required to
obtain his own insurance. An optional schedule is also provided for the
attachment of relevant insurance documents.
Further key provisions in this document address confidentiality,
non-competition and non-solicitation. The appointment of the Sub-Contractor
is non-exclusive. The order in which the services are provided by the
Sub-Contractor is at its discretion.
This document includes a data protection clause but if the Sub-Contractor
will be carrying out any data processing for the main contractor, you might
wish to add the standard data processing clause which you can find
here.
Under this template, the personal service (or other 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
Security Sub-Contractor Agreement
, 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.
Subject to the requirements dictated by the nature of the private security
services, the Sub-Contractor company retains a degree of independence in
decision-making. Under this template, unlike an employee, the
Sub-Contractor company is free as an independent contractor to provide any
suitably qualified person (a “Worker”) rather than only the original
individual (“Principal Worker”) named in the sub-contract having to provide
some or all of the services as would be the case if the Principal Worker
had been engaged direct as an employee. The Subcontractor company is free
under this template to determine when, where and how the services are
provided (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.
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
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 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, 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.
This form of agreement is written from the perspective of a company as the
main contractor. The main contractor does not have to be a company and any
references to this can be changed without altering the meaning or purpose
of the document.
This Security Sub-Contractor (Company) Agreement contains the following
clauses:
1. Definitions and Interpretation
2. Engagement of Sub-Contractor, and obligations of the parties
3. SIA Licensing
4. Indemnity and Insurance
5. Provision of Equipment
6. Status of the Sub-Contractor
7. Payment
8. Non-Competition and Non-Solicitation
9. Confidentiality
10. Data Protection
11. Term and Termination
12. Force Majeure
13. Entire Agreement
14. Assignment and Subcontracting
15. Relationship of the parties
16. Third party rights
17. Notices
18. Severance
19. No waiver
20. Law and Jurisdiction
and the following Schedules:
1. The Services and the Term
2. SIA Licensing
3. [Insurance]
4. [Privacy Notice]
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