What is a consultancy agreement?
For businesses in need of some support: Fluctuations are inevitable in a company's business lifecycle, and there may come a time when the expertise of a consultant is needed. This need may arise due to a short-term requirement that is not expected to continue in the long run, or it could be that the consultant is supporting the business on an ambitious project. In either case, a consultancy agreement would be essential.
Not an employee: This consultancy agreement template is to be used where a company will be engaging a consultant to carry out work for the business, but will not be employing them. The term 'Consultant' is a general term to describe such a person, but you may call them a ‘Sub-contractor’, ‘Contractor’, 'Freelancer' or 'Adviser' depending on what they're doing for the business. This template contains customisable party names to ensure your contract reflects the language that suits your situation best.
To ensure you're equipped with the knowledge to create your own consultancy agreement template, read this ultimate guide.
When would you use this consultancy agreement template?
You would use this agreement when a company need someone to carry out work for the business, but the company does not want to employ someone. That individual would be an independent consultant and free to work with whoever they want, whenever they want and would generally be able to decide where and how they provide their services to you.
What are the key benefits of Docue's consultancy services agreement template?
Effectively assign IP rights: Works that are created by employees in the course of their employment will generally automatically belong to the company. However, intellectual property rights in deliverables created by consultants do not automatically belong to the company commissioning the work. The IP rights must be assigned from the consultant to the company. This consultancy agreement template transfers the ownership of the intellectual property rights in the work or deliverables created by the consultant to the company.
Reduces the risk of disputes: A well-drafted consultancy contract can help reduce the risk of disputes between a company and consultant by clearly outlining the scope of the services to be created, deliverables, timelines, standards and expectations of both parties. This can help to prevent misunderstandings and conflicts later down the line.
Fully customisable clauses: This consultancy agreement template includes optional clauses so the consultancy agreement can be tailored to your specific needs and preferences. You can easily add or remove sections, adjust the language to fit your style, and include any additional terms or clauses that you feel are necessary. Every consulting services engagement is unique, and Docue’s dynamic consultancy services agreement template gives you the ability to create a contract that reflects yours.
In addition to our lawyer-drafted guidance notes throughout the document, you can also follow our 5-step checklist to create your own consultancy contract template.
What are the key terms that a consultancy agreement should include?
Key terms: Docue’s consultancy agreement template contains the following key provisions:
- Scope of the services and deliverables (if applicable);
- Appointment of a substitute;
- Exclusivity and conflicts;
- Payment;
- Expenses;
- Tax and national insurance;
- Intellectual property;
- Confidentiality;
- Data protection;
- Liability and insurance;
- Termination; and
- Governing law and jurisdiction.
To explore more ways to protect yourself with a consultancy agreement, check out our legal experts' 7 top tips.
What is IR35 and how does it affect consultants?
IR35 is a tax law in the UK that aims to stop workers (i.e. consultants or contractors) from using a limited company (known as a personal service company or PSC) or other intermediary who are effectively employees, to disguise their employment status and reduce the amount of tax they pay on their income. If a consultant is genuinely a self-employed business, they are considered to be “outside of IR35” which means that the usual income tax and national insurance contributions will not apply in the same way they would in an employer/employee relationship. For this reason, the parties to a consultancy agreement are often keen to ensure the consultant's status falls outside of IR35.
For more information about IR35, check out these FAQs. answered by our legal experts.
What factors can indicate if a worker is outside of IR35?
There are several factors that determine whether a worker falls outside of the off-payroll working rules or not. However, there are three key employment tests that are considered to be strong indicators of a worker’s genuine “outside IR35” status:
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Control: A customer shouldn’t have direct control over the way that the consultant provides its services. If the contractor has autonomy over how they carry out the work according to their own schedule, they are more likely to be outside IR35.
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The right of substitution: If the consultant has the right to substitute themself with another consultant to provide the services, and they can be substituted in practice, this can be helpful in determining that a consultant is an independent PSC rather than an employee.
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Lack of mutuality of obligation: “Mutuality of obligation” exists in a conventional employment relationship where there’s an obligation on both the employer and the employee to provide and accept work. This isn’t the case with a consultant that’s genuinely self-employed. As the consultant is just paid to deliver a specific piece of work - there's no obligation for the customer to give the consultant any more work and therefore, no mutuality of obligation.
This consultancy agreement template includes optional clauses that can be selected to suit the circumstances of the consultant/customer relationship (i.e. if the consultant will have the ability to appoint a substitute and take on other clients, etc.). However, please note these factors are not the only factors considered when assessing a consultant's IR35 status, and the determination must be made on a case-by-case basis, taking into account all relevant factors. For more information about IR35, check out the Government's guidance.
When should this consultancy agreement template not be used?
As this consultancy services agreement template is designed specifically for engagements between consultants and customers for consultancy services, if the service supplier will be providing a broader range of services, then a services agreement may be more suitable.
What other agreements may come in handy for consultancy services?
If you will be sharing confidential information when discussing a potential consultancy engagement, either as the consultant or as a company seeking expertise, then a non disclosure agreement should be signed to ensure each party's confidential information is kept a secret. Once the consultancy agreement has been entered into, the NDA will come to an end and the consultancy agreement will contain confidentiality provisions to keep your confidential information strictly confidential!
Why use Docue?
Dynamic: This consultancy agreement template was designed and is continuously updated by qualified lawyers. Docue’s cutting-edge technology combined with our lawyer-made content allows you to create, customise, e-sign, store and manage your contracts all in one place in Docue Drive.
Easy to use with favourable terms: The consultancy agreement template includes clause-by-clause guidance to help you through the drafting process. You’ll have a comprehensive, tailored, and ready-to-use consultancy agreement in no time. Once you have selected which party you are, the terms are automatically drafted in favour of the party that you are acting as (i.e. the customer or the consultant).
Transparent pricing: Our pricing is clear and cost-effective, with pricing tiers to suit your business needs. We don’t believe in hidden costs buried in the fine print!
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