Consultancy (Company) Agreements
In certain situations, it may not be practical or even desirable to take on a full-time employee, particularly if specialist knowledge or experience is only required for a limited period. Engaging a consultant is often the answer.
A consultancy agreement will clearly define the services that are to be provided by the consultant. Such an agreement protects the interests of both parties, ensuring that the consultant is paid and that valuable business information and intellectual property belonging to the client is safeguarded. Additional protection may come from the inclusion of non-competition and non-solicitation measures, limiting the consultant’s freedom to provide services for competitors or to “poach” staff.
Whilst reasonable limits should be observed, a balanced form of agreement will ensure the maximum benefit for all concerned, providing a clear structure for an efficient and effective business relationship.
These templates provide for the client to contract with a company running a consultancy business which engages one or more individual professionals to provide the services on its behalf. The company may be operating as a personal service (or other intermediary) company of an individual consultant.
In addition, there are Consultancy (Sole Trader) Agreements ; these provide for an individual consultant, working on their own as a self-employed sole trader, to contract personally with the client, without any consultancy company.
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Frequently Asked Questions
I need specialist help for a limited period but don't want to hire an employee. What agreement should I use? +
A consultancy agreement is often the answer. Use these Consultancy (Company) Agreements where you engage a company that runs a consultancy business and supplies one or more individual professionals to do the work, which may be a personal service company. The agreement defines the services, protects your confidential information and intellectual property and can limit competition and staff poaching. If you are engaging an individual consultant personally as a sole trader, use the Consultancy (Sole Trader) Agreements instead.
Can I stop a consultant from working for my competitors or poaching my staff? +
You can include non competition and non solicitation terms, and these agreements do. They are enforceable only so far as they are reasonable and go no wider than necessary to protect a legitimate business interest, such as confidential information, client connections or a stable workforce. A restriction that is too broad or too long can be struck down as an unlawful restraint of trade, so keep the scope, area and duration tight and tailored to the actual risk.
Who owns the intellectual property a consultant creates for my business? +
Do not assume you do. By default the author, or their company, owns copyright in what they create, even though you paid for it, so you could be left with only a licence to use it. To own the rights you need a written assignment signed by the owner. These consultancy agreements deal with intellectual property ownership so that rights in the work created for you pass to your business rather than staying with the consultant.
Does a consultancy agreement protect me from IR35 or an employment claim? +
It helps but offers no guarantee. Where the consultancy is a personal service company, the off-payroll rules can still apply, and if you are a medium or large client you must assess status and issue a determination. A clear, arm's length agreement supports a genuine business relationship, but HMRC and tribunals look at the reality of the engagement. Keep the working arrangement consistent with independence, and take advice where the stakes are high.
What should a consultancy agreement include? +
A solid consultancy agreement should set out the services and deliverables, the fees and payment terms, the duration and how to end it, confidentiality, ownership of intellectual property and any reasonable non competition or non solicitation limits. It should also make clear that the consultancy is engaged as an independent business, not an employee. These templates cover those areas and can be tailored to the particular engagement.
