IT Services Sub-Contractor Agreement

When dealing with specialist services such as IT services, it may often be the case that a service provider (or “main contractor” in this context) wishes to sub-contract all or part of the services they are contracted to provide.

This IT Services Sub-Contractor Agreement is designed for use by an IT specialist working as a sub-contractor on a self-employed basis. It has been designed to be sufficiently broad to cover a range of different types of IT services. The specific details which will be unique to each transaction should be provided in a series of schedules, outside the main body of this sub-contract.

This sub-contract document is designed for use alongside the IT Service Agreement . The clauses in each document are designed to mirror and/or complement each other. In particular, this template includes a provision to the effect that it will not come into force until the main contract does and will terminate automatically in the event that the main contract is terminated (subject, of course, to the obligation to make reasonable payment for any work already completed by the sub-contractor).

Other key provisions in this form of agreement cover elements such as fees and payment, insurance, confidentiality, data protection and liability.

This template emphasises the status of the sub-contractor as an independent self-employed individual, and under its terms the sub-contractor retains a degree of independence in decision-making. This document states that the individual is not employed by the main contractor but is a self employed sole trader. It provides that the main contractor does not have to pay taxes, national insurance contributions, pensions, benefits or similar. Under this template, the main contractor pays fees to the sub-contractor, and it is up to the sub-contractor to pay any sums due in respect of tax, national insurance etc.

This template includes a number of provisions dealing with the Sub-Contractor’s right to engage one or more other individuals (“Workers”) to carry out any of the services that the Sub-Contractor is to provide to the main contractor. There are options for the Sub-Contractor to engage any Worker(s) as a substitute for the Sub-Contractor or to work with the Sub-Contractor.

This form of agreement aims to reduce the risk that the individual sub-contractor might be deemed in law to be a de-facto employee of the main contractor rather than (and as intended) a self-employed contractor. However, whether he is treated by HMRC, an employment tribunal, or any other body, as a self-employed contractor will depend not just on the content of this contract. It will also depend on all other circumstances, including the practical implementation of the sub-contract, and the arrangements between, and conduct of, the main contractor, the individual sub-contractor, and any Worker engaged by the Sub-contractor.

HMRC provides some guidance on its website about self-employment, but its decisions as to whether someone is self-employed 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 make it possible to predict how this “balancing exercise” would be carried out or what the position will be in any situation. (For that reason we recommend that you take professional employment law, tax, and NIC advice in relation to your particular circumstances before deciding to use or adapt this document.). Nevertheless, a carefully worded sub-contract, ensuring the independence of the individual sub-contractor is a key starting point.

As a self-employed individual rather than as an employee of, the main contractor, he is, for example, free to provide any Workers (see above) to carry out any of the IT services, and is free to determine when, where and how the services are completed (subject of course to the main contractor’s and its client’s requirements).

There is also a similar version of this template, the IT Subcontractor (Company) Agreement , to be used when the sub-contractor entering into the agreement with the main contractor is a personal service (or other intermediary) company rather than an individual IT specialist providing the IT services for the main contractor. Please see the information page accompanying that version for guidance about tax, employment status, and IR35, where the sub-contractor engaged is such an intermediary company, and the IT services are carried out for the intermediary by the individual IT specialist engaged by it.

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 template contains provisions compliant with the relevant data protection law.

This IT Services Sub-Contractor Agreement contains the following clauses:

1. Definitions and Interpretation
2. Commencement Date
3. Engagement of the Sub-Contractor
4. Status of the Sub-Contractor
5. Sub-Contractor’s Obligations
6. Service Provider’s Obligations
7. Provision of Equipment
8. Insurance
9. Fees and Payment
10. Indemnity
11. Liability
12. Confidentiality
13. Non-Solicitation
14. Force Majeure
15. Term and Termination
16. Effects of Termination
17. Data Protection
18. Data Processing
19. No Waiver
20. Further Assurance
21. Costs
22. Assignment and Sub-Contracting
23. Time
24. Relationship of the Parties
25. Third Party Rights
26. Notices
27. Entire Agreement
28. Counterparts
29. Severance
30. Dispute Resolution
31. Law and Jurisdiction

and the following schedules:

1. The Main Contract
2. The Sub-Contracted Services
3. Equipment
4. Software
5. Sub-Contractor’s Fees
6. [Insurance]
7. Data Processing

This document is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.

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