Staffing Agency Independent Contractor Agreement Template for England and Wales

A staffing agency independent contractor agreement sets out the terms on which an agency engages a self-employed contractor or their personal service company (PSC) to carry out assignments for client hirers. Unlike an employment contract, it doesn't create employer-employee obligations: the contractor provides services rather than personal service, can substitute, and bears their own financial risk.

Since April 2021, medium and large private-sector hirers must assess whether the contractor's role falls inside or outside IR35 using a Status Determination Statement (SDS). If inside IR35, the fee-payer in the contractual chain (usually the agency) deducts income tax and National Insurance from the contractor's fee. The agreement should address the SDS process, who is the fee-payer, and how IR35 assessments are communicated and challenged.

A worker is someone who personally performs services under a contract and is not operating as a genuinely independent business. Workers have rights that self-employed contractors don't: National Minimum Wage entitlement, working time protections, and annual leave. If a contractor is found to have worker status, the agency (as engaging party) may face back-payments and penalties. The agreement should include genuine substitution rights and mutual obligations consistent with self-employment.

A genuine right of substitution is a strong indicator of self-employment. The agreement should allow the contractor to send a suitably qualified substitute to complete work in their place, subject to the hirer's reasonable approval of the substitute's credentials. The clause should make clear the contractor remains responsible for the substitute's work and will pay the substitute from their own fee, without recourse to the agency.

The contractor should maintain professional indemnity insurance (commonly a minimum of £1 million per claim) and public liability insurance. Where the contractor has their own employees, employer's liability insurance is compulsory under the Employers' Liability (Compulsory Insurance) Act 1969. The agreement should specify minimum coverage levels and require the contractor to provide proof of insurance on request before starting an assignment.

Agencies supplying contractors who work through personal service companies must report details of each engagement to HMRC under the off-payroll working rules if the engagement is assessed as outside IR35. The agency must make quarterly returns to HMRC using the specified format. Failure to report accurately exposes the agency to penalties from HMRC.

Yes, but the two arrangements must be kept entirely separate and based on genuine assessments of each engagement's status. Mixing employed and self-employed placements for the same individual carries significant tax risk: HMRC may treat all income from the agency as employed income if the reality of the arrangements is consistent with employment. The agreement should apply only to genuinely independent work.

The contractor will often access the hirer's confidential business information. The agreement should require the contractor to maintain strict confidentiality during and after each assignment, and assign all intellectual property created during the assignment to the hirer (or the agency on the hirer's behalf). Without an express IP assignment, the contractor may retain rights in deliverables created as a service provider.