Clerical & Administrative Contractor (Service Company) Agreement
Situations may often arise where it may not be necessary or appropriate for a business to employ staff on a permanent basis. This Clerical & Administrative Contractor (Service Company) Agreement can be used in a variety of such situations.
If you wish to use this document in a scenario that involves personal data, standard clauses for data protection and data processing are available in our UK GDPR & Data Protection Group.
A business may be particularly seasonal in nature and higher levels of staff may be required during certain periods; it may wish to take on book-keeping staff for only a few days each week; it may be starting a new department and may require an expert in a particular administrative field to train a permanent staff member in the running of that department; a PA may have just begun maternity leave; or perhaps the business is looking for the perfect candidate for a position but needs anyone sufficiently qualified to fill the position in the mean time.
This agreement is designed to allow an individual to provide their clerical or administrative services to businesses through a personal service company (or other intermediary company) used by the individual as opposed to the business employing or contracting with them direct. Under this document the personal service company or other intermediary company enters into the agreement as the contractor.
The accompanying template, the Self-Employed Clerical & Administrative Contractor Agreement, is to be used instead when the contractor entering into the Agreement with the business is an individual sole trader (working as a self-employed individual) rather than an intermediary company.
This agreement emphasises the independent status of the intermediary company contractor. Subject to the requirements dictated by the nature of the services, the contractor company retains a degree of independence in decision-making, and it may at any time engage a substitute for the person named in the contract as the individual who provides the services on behalf of the contractor.
This template provides that the business does not have to pay taxes, national insurance contributions, pensions, benefits or similar, and that, instead, the business pays fees to the contractor who then pays any sums due in respect of tax, national insurance etc.
This 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 impacts the individual’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 the contract but also on all other circumstances. Those circumstances may include the way in which the contract is implemented, and all arrangements between the business, 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 and the individual of employment law, IR35, tax, and NIC rules.
Further guidance on tax and employment status of an individual who works as a 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 contract ensuring the independence of the personal service company contractor 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 original individual named in the contract having to do some or all of the work, it is free to determine when, where and how work is completed (subject of course to the business’ requirements), and it is free to work for other clients.
Key provisions in this form of agreement cover elements such as fees and payment, confidentiality and liability.
Optional phrases and / or paragraphs are enclosed in square brackets.
This document is also available in the IR35 group of the Business document folder.
This Clerical & Administrative Contractor (Service Company) Agreement contains the following clauses:
2. Duration of the Agreement
3. Contractor’s Obligations
6. Late Payment
7. Status of Contractor and Tax Liability
8. No Employment
9. Exclusivity of Service and Competition
10. Confidential Information
11. Intellectual Property
14. Force Majeure
15. Company Property
16. No Waiver
17. Assignment and Subcontracting
18. Third Party Rights
20. Entire Agreement
21. Law and Jurisdiction
and an optional Schedule of Services.
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