Security Sub-Contractor (Company) Agreement

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.

This document has been updated with a simplified data protection clause which refers to a separate privacy notice, removing references to specific legislation for ease of use. Full details of personal data use should be provided in that document.

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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