Self Employed Subcontractor Agreements
Contractors, whether by default or by necessity, will sometimes need to employ the services of sub-contractors.
The Self Employed Sub-contractor Agreements in this subfolder will give main contractors (through their use of sub-contractors) considerable flexibility in rendering their services, allowing for an increase in working capacity and, in many cases, in specialist knowledge or skills.
Each of the five template sub-contracts are designed for use by a main contractor engaging a sub-contractor who is an individual (not a company).
The content of these forms of sub-contract aim to reduce the risk that the individual who is sub-contractor might be deemed a de-facto employee of the contractor rather than a self-employed sub-contractor, but whether, in law, he is self-employed rather than an employee will depend on all circumstances (not just on the terms of the sub-contracts). For example, it may be necessary to examine the practical implementation of the sub-contract, and all of the arrangements between, and conduct of, the main contractor and its client, the sub-contractor, and any person engaged by the sub-contractor to do any of the sub-contract work.
We have a range of information pages regarding Employment and Self-Employment (in relation to engaging individuals) and IR35 rules (where personal service companies are engaged) here and further guidance can also be found on HMRC’s website; but its decisions as to whether someone is self-employed are often based on a “balancing exercise” in which it gives weightings to various factors. However, neither the HMRC guidance nor relevant case law are sufficiently precise to provide a simple answer on the point in any situation. For that reason we recommend that you take professional employment law, tax, and NIC advice in relation to your particular circumstances before deciding to use or adapt any of these Self employed Sub-contractor Agreements.
Nevertheless, a carefully worded sub-contract ensuring the independence of the sub-contractor is a key starting point. As a self-employed sub-contractor rather than as an employee of the main contractor, the sub-contractor is, for example, free to provide a suitably qualified person in his place rather than do the some or all of the work personally, and is free to determine when, where and how work is completed (subject of course to the main contractor’s and its client’s requirements).