Consultancy and sub-contractor agreements

Do you hire consultants and sub-contractors?

Should your consultants be classed as an employee or worker?

Employing a consultant can be is a useful resource for your business. It allows you access to a particular skill or expertise on a temporary or long term basis, without having to spend the time or money recruiting and training employees.

A properly drafted consultancy agreement should cover:

• details of the duration of the agreement (or term)
• details of the services or scope of duties
• details of availability (the consultant should be available at all times on reasonable notice, if not then you will need to agree otherwise)
• fees and expenses (what expenses can they charge for e.g. travel and hotel accommodation)
• whether VAT is chargeable
• exclusivity arrangements
• requirements for professional indemnity insurance

It should also include a covenant against competing with your business post-termination, together with an indemnity in respect of tax.

Consultants who are genuinely self-employed should not be classed as employees or workers. This means your business is free from the legal obligations governing the employment relationship. However, the downside of this arrangement is that you cannot control the consultant as closely as you would an employee. If you try to control how the consultant carries out the consultancy you run the risk of the consultant being deemed to be an employee. The usual way around this is to ensure that the consultant is not working under the direction or supervision of the company.

Many consultants now choose to be employed through a personal services company.

It is important to ensure when drafting a consultancy agreement that you are not trying to hide an employment relationship. If you are hiring consultants or sub-contractors, let the employment law team at Myers & Co review your arrangements.

Based in Stoke-on-Trent, Staffordshire, our commercial lawyers have a reputation for providing accurate advice, and dealing with complex problems in an efficient manner.   To find out more, contact us on 01782 577000.