Consultancy (Sole Trader) 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 an individual consultant, working on their own as a self-employed sole trader, to contract personally with the client, without any consultancy company. As applicable, the information pages accompanying the templates highlight any risk that HMRC or employment law might regard the individual consultant as an employee rather than as a self-employed sole trader.
In addition, there are Consultancy (Company) Agreements ; these provide for the client to contract with a consultancy business (a company) which engages one or more individual professionals to provide the services on its behalf.
Consultancy (Sole Trader) Agreements is part of Business . Just £38.50 + VAT provides unlimited downloads from Business for 1 year.
Frequently Asked Questions
I need specialist help for a while but do not want to hire an employee. What agreement do I use? +
Use a consultancy agreement. It lets you bring in an individual consultant to provide defined services for a set period or project, without the cost and commitment of employment. A good agreement fixes the services, fees, timescales and confidentiality, protects your intellectual property and makes clear the consultant is self-employed. These Simply-Docs templates are for a consultant who contracts with you personally as a sole trader, without a consultancy company.
Can I stop a consultant working for my competitors or poaching my staff and clients? +
You can, but only within reason. Restrictions such as non-competition and non-solicitation clauses are enforceable only so far as they go no wider than necessary to protect a legitimate business interest, judged on their scope, geographic reach and duration. A restriction that is too broad or too long is likely to be struck down as an unreasonable restraint of trade and become unenforceable. The consultancy templates include restraint clauses you can tailor to keep them reasonable.
Who owns the intellectual property a consultant creates, and how do I protect confidential information they see? +
Do not assume you own it automatically. A self-employed consultant, like any creator who is not your employee, keeps the copyright and other rights in what they produce unless the agreement assigns those rights to you. To own the work, you need a written assignment of intellectual property in the contract. You also protect sensitive information through confidentiality clauses. The consultancy templates provide for both, so the work and your business information stay with you.
Should I engage the consultant as a sole trader or through their company? +
It depends on how the consultant operates. If they work as an individual in their own name, use a consultancy (sole trader) agreement. If they provide their services through their own limited company, usually a personal service company, you should use a consultancy (company) agreement instead, which is drafted for that structure and takes account of the off-payroll working rules. Simply-Docs offers the company versions in the IR35 and Other Company Agreements group.
Does using a consultancy agreement mean the consultant is not my employee? +
Not on its own. A consultancy agreement helps show the consultant is self-employed, but status depends on how the engagement really works, not the label. If the consultant works under your close control, must do the work personally and there is an ongoing obligation on both sides, HMRC or a tribunal could still find employment or worker status. Keep the arrangement genuinely consultant-like. The guidance notes in this group explain the tests in more detail.
