Contractor (Service Company) Agreement

This Contractor (Service Company) Agreement is a general-purpose contractor agreement for use across a range of roles where your business is engaging an individual who works through a personal service company or other intermediary company. In that arrangement, the intermediary company (rather than the individual) contracts with your business as the “Contractor”.

It can be useful where it is not necessary or appropriate to employ staff on a permanent basis and where a short-term, renewable arrangement would give greater flexibility to match workforce needs to market demand.

When to use a different agreement

If the contractor contracting with your business is an individual (rather than a personal service company or other company), use the accompanying template Self-Employed Contractor Agreement instead.

Employment status and IR35 risk

This template aims to reduce the risk (to both 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 rather than a self-employed contractor.

However, the individual may still be treated by HMRC, an employment tribunal, or any other body as an employee. Legislation (such as IR35 or other rules) may still apply in a way that impacts the individual’s or the personal service company’s legal, tax or NIC position. That will depend not only on what the contract says, but also on all the surrounding circumstances, including how the contract is implemented and the arrangements between your business, the intermediary company and the individual.

HMRC guidance and case law are not sufficiently precise to enable anyone to predict how any particular “balancing exercise” will be carried out or what conclusion will be reached in a specific case. For that reason, before you decide to use or adapt this template, you and your proposed contractor should take professional advice on the circumstances and any impact of employment law, IR35, tax and NIC rules on the personal service company and the individual contractor.

How the agreement supports contractor independence

A carefully worded agreement that supports 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 individual you initially deal with), free to determine when, where and how work is completed (subject to your business’s requirements), and free to take on other clients.

This template is more basic than the Sales Contractor (Service Company) Agreement, as it does not deal with commission.

The data protection provisions in this document have been updated in line with the UK GDPR.

What the agreement covers

• Term and contractor obligations, including engagement of workers.
• Fees, expenses, late payment and tax liability.
• No employment or other relationship, exclusivity and competition.
• Confidentiality, intellectual property and company property.
• Termination, liability, force majeure, notices and entire agreement.
• Schedules covering services, workers and data protection/data processing (including an annex).
• Law and jurisdiction.

Contractor (Service Company) Agreement is part of Employment. Just £38.50 + VAT provides unlimited downloads from Employment for 1 year.