This Variable Fee Sub-Contractor (Company) Agreement is designed for use
where a subcontractor wishes to be taken on by a main contractor to work
for a variable fee.
This document is designed for use where an individual (“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), and it is free to work for
other clients or main contractors.
In this form of agreement, faulty work must be put right at the
Sub-Contractor’s own expense, equipment must be provided by it, and payment
is to be made to it on completion of work.
This template 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 our standard data processing clause in our GDPR Group which you
can find
here.
The accompanying template, the Variable Fee 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.
This Variable Fee Sub-Contractor (Company) Agreement 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,
the individual and the main contractor, 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.
This form of agreement is written from the perspective of a company as the
main contractor. The 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 Variable Fee Sub-Contractor (Company) Agreement contains the following
clauses:
1. Engagement of the Sub-Contractor
2. Indemnity and Liability
3. Provision of Equipment and Protective Clothing
4. Status of the Sub-Contractor
5. Consideration
6. Non-Competition and Non-Solicitation
7. Termination
8. Data Protection
9. Confidentiality
10. Force Majeure
11. Definitions
12. Miscellaneous
13. Governing Law and Jurisdiction
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