As a business owner or an independent consultant, it’s essential to understand how to draft consultancy agreements to protect your interests. By understanding the different types of clauses and what each one entails, you can create an agreement that meets your needs and also complies with the new laws and rules for businesses in the UK.
This article will outline the key points you must remember when creating consultancy contracts.
What is a consultancy agreement in the UK?
Consultancy agreements offer businesses an option of partnering with individuals without forming a work relationship that falls under Employment Law.
The agreement should outline the terms and conditions under which the consultant will provide services and any payments due to the consultant. It is essential to document all agreements carefully to avert any conflict or disagreement between parties.
The Right Way to Draft a Consultancy Agreement
A consultancy agreement template UK should include detailed information about various things: Let us discuss them individually.
The Services
The terms and conditions for the agreement should be set out in general terms or be specific with lots of detail, such as setting out a schedule in the final section of this agreement.
The duration
The contract may be for a specific project, deliverables, or fixed term length. It can also be terminated on notice by either party at any time.
Duties of the Consultant
A consultant must fulfil the following responsibilities:
- Skill level: It’s essential to include a set of guidelines for the consultant to have adequate training and experience. One can also state specific standards, to help guide them.
- Working time: Except for a project or contract that involves deliverables and time requirements, the agreement should specify the minimum number of days or hours per month the consultant must provide his services.
- Abide by social media policies
- Reporting
Employment Status
Confirming the contractor is an independent contractor can be useful when it comes to clarifying the intentions of both parties.
Equipment
Obligate consultants to provide their equipment and materials to fulfil the agreement’s obligations.
Payment Terms and Fee
It could be a target-based commission or more on a dedicated amount of time. All of this is a matter of commercial negotiation between the employer and the consultant. The higher risk the consultant is seen as taking, the better it is for the employment tests.
Substitution
A substitution clause gives a consultant the right to send someone else to provide the services in his place. This is useful when establishing self-employed status. However, the company i.e. the client may or may not accept it.
Insurance
As a part of any consulting arrangement, the agreement should include provisions that ensure that the consultant has appropriate insurance coverage.
It may include Public liability insurance, Cyber insurance, Commercial general liability insurance (CGLI), Employers’ liability insurance, and Professional indemnity insurance.
Tax
The agreement should state clearly that the consultant will be responsible for their tax and NICs (and VAT, if applicable) on the final consultancy fee.
Confidential information
When a business engages a consultant, they must protect their business. A confidential clause should be included to avoid any inconvenience or legal issues later on.
Intellectual Property
IP should be clearly defined and include provisions about who owns it, what happens to it, and how it can be managed.
- The consultant must disclose all intellectual property assets they create during the consultancy.
- Assign ownership of IP to the client
- The consultant is granted a license to use that IP to perform his duties if required.
When Should You Use a Consultancy Agreement?
One may require a consultancy agreement when:
- You’re a business entity that requires an individual (consultant) for specific services on a self-employment basis.
- You’re a consultant wanting to provide services on a self-employment basis
- You’re looking to appoint an individual via a third-party company
Summing up
We discussed the basics of drafting consultancy agreements in the UK. By understanding and following these simple steps, you can protect your interests and ensure that your business dealings are conducted legally.
However, if you ever meet with any dispute or want legal advice on forming a consultancy agreement, contact Mishoura. They will connect you with the best business consultancy lawyers in the country.
Author’s Bio:
Omar Shams
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