Contract for services: self employed contractor, contractor version
This is a contract for the provision of any type of service by a self-employed contractor, working as a sole trader or through a service company. It favours the contractor.
It should be used where the work involves collecting, using, storing or otherwise processing information relating to individuals. It allows both parties to comply with the requirements of the Data Protection Act (obligations that arise from the GDPR).
As well as setting out the terms under which the work will be carried out, it strengthens the proposition that the relationship is not one of employment for IR35 purposes.
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About this document
This contract can be used for any type of assignment where the contractor is a self-employed individual working as a sole trader or under a service company. He or she may subcontract some of the work.
The services carried out could be any. The agreement principally deals with the terms under which the work is done, and refers to a specification of work which you provide as a schedule or a separate document.
We have included the terms required under the Data Protection Act 2018 including GDPR, making this contract compliant with that law.
The document can be edited and reused for each new client. It should be presented before work starts. If you subsequently perform more work for the same client, your pre-agreed terms automatically cover that new work (unless you want to specify otherwise) allowing you to focus on winning and performing the work rather than dealing with administration.
The agreement has been designed, as far as possible, to distinguish the relationship as a business one, and not one of employment.
It is suitable for any type of service such as building trades, household service provision, business consultancy, and creative work contracts.
The law relating to this document
A contract for services is a common law term and not defined by legislation.
However, a contract of service is defined in employment and tax legislation, meaning an employment contract.
If you’re self-employed, you should make sure that your terms with your client, as far as possible, define your relationship as a business to business one. If HM Revenue & Customs could argue that in reality your agreement was in fact a contract of service then your client would be deemed to be your employer and be compelled to hold back your tax and National Insurance contributions under the usual PAYE rules.
It goes further than that for your client. If it could be argued that you are not self-employed but rather an employee, then the client would have further costly obligations to you under employment law such as statutory holiday leave. Savvy clients are likely to reject any contract that may make them an employer. On the other hand, a well written contract, like this one, is likely to impart professionalism and signal that you take your business seriously as it protects your client as well as you.
A well written contract therefore identifies the issues that HMRC or an employment tribunal might consider and clarifies the terms of the agreement so that it would be difficult to argue that the relationship was one of employment. In practice, HMRC will “look through” the legal agreement at the reality of the situation, but setting out the considerations in writing supports a claim of self-employment and ensures that both parties are clear as to how they should act to maintain the relationship as a one of service provision rather than employment.
Requirements under the Data Protection Act
The General Data Protection Regulation (GDPR) in enacted in the Data Protection Act 2018.
GDPR requires that where a service provider collects, accesses, uses, sees, stores, or otherwise processes personal information about individuals, then the contract between the service provider and the client must contain certain terms that bind the service provider to protect the data.
The obligations on both parties are extensive. We include these as a schedule to the original agreement.
Interestingly, it is unlikely either of the parties to the contract would want to sue the other for breach of contract if these are broken. They are terms put upon the parties by EU legislators, not because they benefit either side. However, their effect is to allow a third party (the individual whose data is being processed) to take action against either party in case of a loss under the Contracts (Rights of Third Parties) Act 1999.
Other versions of this agreement
If there is no personal data being processed by the service provider, then you won’t need the terms relating to data protection. Use the simple version of this agreement instead.
If you are the client, you may want an agreement that favours you to a greater extent. Use the client version of this agreement.
- contractor’s status
- client warranties
- the assignments
- fees and expenses
- intellectual property
- use of sub-contractors
- disclaimers and limitation of liability
- duration and termination
- assignment of the contract
- uncontrollable events (force majeure)
- other miscellaneous matters
- schedule 1: compliance with the Data Protection Act
This document was written by a solicitor for Net Lawman. It complies with current English law.
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