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A consultancy agreement is an agreement between a company (usually referred to as the “client”) and a service entity (usually referred to as the “consultant”).
The consultant agrees to provide a service to the client for a fee.
The consultant may agree to provide a one-off service for a set fee or continuing services to the client for a predetermined length of time for a fee.
This form of Self-Employed Consultant Agreement (Long) is the most comprehensive consultancy agreement in our template suite.
It provides an extensive contract for a contractor who is an individual sole trader to use where he/she intends to perform services as a self-employed consultant for a company.
(It is also suitable where the contractor is a partnership, but not a company.)
This version provides an option for vesting of Intellectual Property in respect of work in the consultant or the client.
It also allows for the consultant to engage professional advisers and experts to assist in providing the service, something which may be required in many consultancy contracts, for arbitration to resolve issues and for the consultant to attend at the client’s premises.
This template is appropriate where the work is of high value or the relationship between the parties is complex or is to be for a reasonable length of time.
With minor amendments, it can easily be adapted for use where the client is an individual rather than a company.
This form of agreement aims to reduce the risk that the individual consultant might be deemed to be a de-facto employee of the other party rather than a sole trader who is a self-employed contractor but whether in law he is self-employed will depend on all circumstances (not just on the terms of this agreement).
Nevertheless, a carefully worded contract ensuring the independence of the individual consultant is a key starting point.
Where the consultant is an incorporated company (rather than an individual sole trader) the alternative drafted for this purpose, the Consultancy Agreement (Long) – Company (engaging employees/subcontractors) should be used.
It’s important to distinguish contractors/consultants, who are self-employed, from employees, not least for tax reasons.
Self-employed persons operate either as sole traders (and would use a contract for services such as this template) or as a part of their own limited company (and they’d use our related template for a consultancy company in those circumstances).
Self-employed contractors/consultants can choose what work they do, and they can decide when and where they complete the work.
They are able to outsource work to others, they provide their own work equipment, and they often work for more than one client at a time.
They’re responsible for arranging their own tax and Social Insurance contributions.
They have fewer rights than employees.
It’s important to ensure that a consultant/contractor is not an employee in disguise – even if that outcome is inadvertent.
Getting it wrong can mean that both parties will face fines from the Revenue.
The wording of this template is carefully constructed to provide clarity about your respective intentions and to avoid ambiguity about the role that the consultant is to play.
Of course, drafting a document is one thing.
You’ll need to ensure that your relationship in practice is consistent with what’s described in this document and conforms to the legal rules.
Our guide contractor or employee also provides helpful background.
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