Consultancy (Company) Software Developer Agreement

Consultancy (Company) Software Developer Agreement

BS.FL.06B

This Consultancy (Company) Software Developer Agreement has been designed for use by a freelance software developer contracting through a personal service company (or other intermediary company) to provide his services to business clients rather than contracting directly as an individual. (The accompanying template, the Freelance Software Developer Agreement, is to be used instead when the software developer is an individual.)

This agreement aims to reduce the risk that, under employment law and any other applicable law, despite use of a personal service company, the software developer is regarded as an employee as opposed to a self-employed contractor.

Nevertheless, he might still be treated as an employee by HMRC, an employment tribunal or any other body, and legislation (such as IR35, agency worker, or other rules) might still apply in a way which adversely impacts the software developer’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 this contract but also on all other circumstances. Those circumstances may include the way in which the contract is implemented, and all arrangements between the company, the client, and the software developer.

HMRC provides some guidance on its website about employment, self-employment, IR35, and agency workers. 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 template,you take professional advice in relation to your particular circumstances as to any impact on the company and the software developer of employment law, tax, and NIC rules.

A carefully worded contract ensuring the independence of the personal service company is still a key starting point. Unlike an employee, the company is an independent contractor which is free to provide any suitably qualified person rather than only the software developer or any other particular individual having to do the work, it is free to determine when, where and how work is completed (subject of course to the client’s requirements), it is free to take on other clients, and, most importantly, it may be subject to penalties if the work is not completed on time.

Payment under this agreement may take the form of a single flat fee or initial fee followed by a series of milestone payments. Moreover, the fee also serves as consideration for the assignment of the copyright (and any other IP rights) in the work produced by the software developer.

Each party provides warranties and indemnities to the other with regard to the non-infringement of third party intellectual property rights.

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 Consultancy (Company) Software Developer Agreement contains the following sections:

1. Definitions and Interpretation

2. Engagement of the Developer

3. Nature of Engagement

4. Status of the Developer

5. Fee

6. Intellectual Property

7. Developer’s Warranties and Developer’s and Client’s Indemnities

8. Client’s Warranties

9. Liability

10. Confidentiality

11. Termination

12. Nature of the Agreement

13. Severance

14. Notices

15. Alternative Dispute Resolution

16. Law and Jurisdiction

and the following schedules:

1. The Software

2. Client’s Materials

3. Name of any named Consultant engaged by Developer

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