Businesses engage consultants for a range of reasons — from one-off projects to specialist support. Whatever the reason, a well drafted consultancy agreement will give both the company and the consultant clarity around the terms of engagement.
Consultancy agreements should set out details of the duties to be performed by the consultant and the amount of time they are expected to work for the company. The company may wish to give the consultant freedom to appoint a substitute in their place when needed, and this should be accounted for in the agreement.
The agreement should also set out the fees that will be paid to the consultant. Sometimes it will be appropriate to pay consultants on an hourly basis, whereas others may be engaged on a day rate. The agreement should also detail whether the company will reimburse the consultant for any expenses incurred in the exercise of their services.
Consultants will often create potentially valuable intellectual property (“IP”) in the course of their engagement, so it’s important to ensure that the IP vests with the company and not the consultant. As a result, an IP provision assigning all IP to the company will often be found in the consultancy agreement. If it is not, an alternative is to enter into a separate IP assignment agreement, an example of which can be found here.
Not only do consultancy agreements provide clarity around the terms of the engagement, but they can also prove important in the event of a dispute or if questions are raised over someone's status as a consultant. Statutory rights and entitlements differ between employees, workers and consultants — and while a consultancy agreement will not provide definitive evidence that an individual is a consultant rather than an employee or worker, it will be helpful if needed.
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