Independent contractor agreement

This template is for the arrangement most businesses actually have: a self-employed individual, a tradesperson, developer or interim specialist, working on an ongoing basis and paid a day rate or an hourly rate, with work agreed assignment by assignment as it comes up. Clause 2.4 provides for each later assignment to be agreed in writing, which is the mechanism that keeps an open-ended relationship from drifting into something neither side defined.

For a one-off project with fixed deliverables, use the freelance agreement. Where advisory services come through the consultant's own limited company with a named key individual, use the consultancy agreement.

Status is decided by what happens, not by what the paperwork says

This is the point on which these engagements are won and lost. Clauses 2.3, 4, 5 and 6 are drafted to reflect a genuinely self-employed arrangement: no obligation to offer or accept work, control over how the work is done, the contractor's own equipment and insurance, the right to work for others. Do not keep those clauses if day to day working does not match them. A tribunal or HMRC will look at the reality and treat the document as evidence of intention rather than as the answer.

Where the facts point the other way, the consequences are not abstract. A contractor found to be a worker gains holiday pay and the national minimum wage, backdated. Found to be an employee, they gain a good deal more, and the business acquires a payroll liability it never budgeted for.

What the agreement covers

The services and the rates at Schedule 1, how assignments are agreed, invoicing and expenses, intellectual property in what is produced, confidentiality, data protection, insurance, and termination. Optional clauses and schedule sections can be deleted where they do not apply.

Tax, briefly

Where the individual works directly rather than through their own company, the off-payroll working rules do not apply, but employment status for tax is still a live question and HMRC's view is not bound by the contract. The Construction Industry Scheme has its own rules where the work is construction operations, and those sit outside this document.

The practical test before you sign

Read clauses 2.3 to 6 and ask whether you would be comfortable describing the arrangement to a tribunal in those terms. If not, the honest answer is usually that the person should be employed, and a contract of employment is the cheaper document in the long run.

For a long-term, full-time or high value engagement, our employment law and HR solicitors review the working arrangements as well as the wording.