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Many individuals now prefer to offer their services on a consultancy rather than employment basis. There are many reasons why it is advisable for both parties to have a formal consulting or consultancy agreement or contract, as detailed below.
We understand that there are cost/benefit considerations when using lawyers for consulting contracts, and we have many consultancy contract templates, (including many for IT consultants) which are already drafted and can be adapted for the specifics of your matter on a cost effective basis. Whether you are a self-employed consultant or an organisation thinking of using consultants, the following are important considerations for any consultant agreement :-
• Flexibility and specific expertise
• Possible tax saving for company using consultant
• Possible avoidance of contractual notice payments, redundancy and employment law risks and liabilities
• Independent and impartial advice
• Employment law status may not always be clear cut, even if consultancy agreement signed and consultant agrees initially they are self employed (see below)
• Risk of overreliance on the consultant so that they have you “over a barrel” – an obvious example is using an outsourced IT consultant. What happens if your system crashes ? What if the Consultant is ill or on another urgent job ? What happens if you are in dispute with the Consultant and he or she refuses to help except if you agree to drop any dispute or pre-existing complaint?
Contracts with consultants can be complex and require careful thought and drafting in relation to issues such as defining the services to be provided, performance clauses and dealing with disputes. It’s not generally a good idea to simply agree to a Consultants standard terms and conditions.
• Specifying the aims of the consultancy
• Specifying the services to be provided
• Stating whether a specific individual only to provide services or a class of individuals or sub-contractors
• Roles and responsibilities
• Start and finish provisions for services
• Cancellation of service provisions
• Confidentiality/non-competition provisions
• Consultant liability
• Payment terms
One of the biggest perceived advantages of bringing in consultants is that they are not employees. However, employment law is not clear cut when it comes to the status of an individual who works closely with an organisation.
The key thing to be aware of is that the label put on any relationship in the workplace is not necessarily conclusive and there are many instances where. workers who are on the face of it self-employed, seek at a later stage to assert that they are in fact employees. The general way to approach this issue is to consider the extent to which you control the contractor.
If you control the consultants hours of work, where he or she works from and he or she is not able to sub-contract or delegate the work, these are factors indicative of employment rather than self-employment. The loner the consultant had provided services for may also be somewhat indicative of an employment type relationship.
It is almost inevitable that a consultant will need access to information and data about your business., It is imperative that your contract with a consultant contains appropriate confidentiality and restrictive covenant provisions.
An external consultant may also be and agent of your business. If the consultant deals with 3rd parties on behalf of your business, what level of authority does the consultant have to bind your business ? If the limits of authority are not made clear, top the Consultant and possibly to 3rd parties where appropriate, you may find that your business has been bound by actions of the consultant which were not authorised.
Careful consideration should be given to your particular requirements. Key areas may include :-
For legal advice on consultant agreements or if you need an agreement drafted, amended or updated or advice on an existing agreement, please get on contact.