Why you need a Consultancy Agreement
Sometimes a business wants to hire an individual contractor for the purpose of a project or to solve a particular problem. But you don’t want to bind them into a full employment contract, right? Instead, you use a Consultancy Agreement.
A consultancy agreement is useful when hiring a contractor or consultant, as it formalises the relationship between those involved and avoids any IR35 issues!
What is a Consultancy Agreement?
IR35 and Off-Payroll rules kicked in in April 2021, meaning that employers will be responsible for spotting “disguised employees” (a self-employed individual whose relationship acts as a normal employee).
Therefore, this must be reflected in the wording of a Consultancy Agreement that defines the rules of the contractor’s engagement with a company.
Frequently Asked Questions
Q: What to include in a Consultancy Agreement?
A: Lots of information needs to be included in a Consultancy Agreement. The top priority for both parties will be the terms of the engagement (the job), payment, termination, responsibilities and liabilities. View our table of contents or request our 'key facts' below to see the key sections to include.
Q: Do you need a Consultancy Agreement?
A: It is possible to make a verbal contract between parties. But the question is, what if something went wrong? In a court you would need to prove your case; if there is no proof, the case will fail. Verbal contracts are a risky game. Companies can mitigate risk by having a document in place, with agreed terms and signatures on a dotted line.
Q: Can a Consultancy Agreement be terminated?
A: A Consultancy Agreement will either end because a consultant has finished the “job” or delivered the deliverables they were contracted for, or it is terminated by a party. Usually, a party must a give notice period that will be defined in the agreement. The client will be able to terminate the agreement with immediate effect for cases where the consultant has materially breached the contract including fraud, misconduct, or causing the client to lose money.
Consultancy Agreement contents
2. Term of the engagement
3. The Consultant’s Responsibilities and Obligations
4. Terms of payment and fees
6. Other unrelated services
7. Confidential information and client property
8. Data protection
9. Intellectual property rights
10. Liability, indemnity and insurance
12. The consultants’ requirements on termination
15. Entire agreement
18. Third party rights
19. Governing law
Get the key facts of the Managed Services Contract
Contact the Law 365 team about this agreement
For these Microsoft Partners
- Managed Services Provider
- ISV, Software, Apps and IP
- System Integrators Professional Services Consultancy Partners
- Hosting Partners
- Licensing Partners
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