Contract for services: self employed contractor, client 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 client.

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 version of our contract for services is tailored to favour the client rather than the contractor. The client could be an individual hiring a contractor for a one off piece of work such a computer network installation, or the client could be a business that frequently uses freelance workers for a wide range of repeat tasks such as marketing.

Whatever the nature of the work, using this agreement, the client should remain in control of the project and be confident that no employment tax obligations should arise.

It 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.

Note that we do have a range of agreements tailored for specific construction industry trade as well as a large number for consultancy and many other business sectors.

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 contractor, you may want an agreement that favours you to a greater extent. Use the contractor version of this agreement.

Contents

  • contractor’s status
  • client warranties
  • the assignments
  • fees and expenses
  • taxation
  • confidentiality
  • intellectual property
  • use of sub-contractors
  • warranties
  • disclaimers and limitation of liability
  • insurance
  • duration and termination
  • assignment of the contract
  • uncontrollable events (force majeure)
  • other miscellaneous matters
  • schedule 1: compliance with the Data Protection Act



You might find your contractor from an advert in the local paper, or from an online marketplace for remote freelancers. The contractor could be operating through a company or on a self-employed basis. He or she could subcontract some of the work to a third party.

This contract for services can be edited and reused for each new assignment that you offer. You should present it to new contractors before work starts. If the contractor subsequently performs further work for you at a later date, that later work will also by default be covered by this contract (unless you want to specify otherwise).

This document is suitable for a client contracting:

  • professional tradesmen outside the construction industry (we have a version specifically drawn for tradesmen in that industry - see below).
  • freelance workers undertaking specific pre-defined project work, e.g. translation of a website into another language.

If you are the contractor rather than the client, you should use a version of this agreement that gives you far greater protection. See Self employed contract for services.

We have a version of this contract for tradesmen is in the construction industry. See Contract for services: construction industry: client version for more information.

The law relating to contracts for services

It is important that we make clear that this contract has been drawn to provide a sound basis for a service related agreement between a provider and his client. Only as a secondary provision have we considered the tax effects of the agreement. We have done this simply because the result of “getting it wrong” could be disastrous to the client.

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.

H M Revenue and Customs have established a number of conditions which tend to indicate whether a contract is for employment or is a contract for self employed services. The name you place on the document is not relevant. However, if you use an agreement such as this one, and follow the terms, it well be extremely helpful in making clear that the relationship is not one of employment.

If, in truth, the relationship is what most people would rate as “employment” then nothing you put in any agreement will change that character.

It is important to the client that the relationship is not one of employment. If it is, the other party has full employment rights and the employer pays tax under PAYE and must deduct national insurance contributions too.

This document will provide a suitable framework for your agreement to use the services of a self employed person.

Other versions of this agreement

If there is no personal data being processed then you won’t need the terms relating to data protection. Use the simple version of this agreement instead.

If you are the contractor, you may want an agreement that favours you to a greater extent. Use the contractor version of this agreement.

Contents

  • contractor’s status
  • client warranties
  • the assignments
  • fees and expenses
  • taxation
  • confidentiality
  • intellectual property
  • use of sub-contractors
  • warranties
  • disclaimers and limitation of liability
  • insurance
  • duration and termination
  • assignment of the contract
  • uncontrollable events (force majeure)
  • other miscellaneous matters
Draftsman

This document was written by a solicitor for Net Lawman. It complies with current English law.

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