Agreement for supplying contractors to clients

A business that supplies contractors to work under its clients' control is an employment business, regulated under rules that most consultancies do not realise apply to them, and its client agreement has to be drafted for that: what the regulations require, how the contractual chain is built, who determines status under the off-payroll rules and who deducts, what the client must do, and what the business is paid when a client takes a contractor on directly. I draft that agreement for a fixed fee of £595, delivered in five working days, with the contractor-side agreement available as a template set.

Who this is for

Recruitment businesses, IT contracting firms, staffing companies and consultancies in England and Wales that supply contractors to clients to work under the client's direction, and businesses that have drifted into doing so and need the paperwork to catch up.

What matters in a contractor supply agreement

Employment business status and the conduct regulations

Supplying a person to work for and under the control of a client is the business of an employment business under the Employment Agencies Act 1973, and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 require terms with the client to be agreed in writing before services are provided, including the fees, the notice to end a supply, and the transfer fee provisions, and impose obligations on the information the business obtains about the work-seeker and the client's requirements; a contractor operating through a limited company may opt out under regulation 32 with the business, and the agreement should record the position for each supply.

The contractual chain and who the contractor contracts with

The agreement should set out the chain: the business contracts with the client to supply the contractor's services, and with the contractor (or the contractor's company) to provide them, with no contract between client and contractor; the client terms should say that the business is not responsible for the quality of the contractor's work beyond reasonable care in selection unless the agreement says otherwise, that the client directs and supervises the contractor's work and is responsible for the contractor's safety on site under section 3 of the Health and Safety at Work etc. Act 1974, and that the client may not engage the contractor outside the chain during the supply.

The off-payroll rules and who is the fee-payer

Where the contractor works through a limited company and the client is a medium or large business, the client determines whether the engagement is within the off-payroll working rules in Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 and must issue a status determination statement, and the business, as the party paying the contractor's company, is the fee-payer that must deduct tax and national insurance where the engagement is inside; the agreement should require the client to provide the determination before the supply starts, allow the business to adjust the rate or decline the supply, and allocate liability where the client's determination is wrong or late. For a small client, the contractor's company assesses under Chapter 8.

Fees, timesheets and the client's obligations

The agreement should state the charge rate per hour or day, that it includes the contractor's rate and the business's margin, the treatment of VAT, expenses and overtime, timesheets approved by the client as the basis for invoicing with deemed approval after a stated period, payment terms with interest under the Late Payment of Commercial Debts (Interest) Act 1998, and the client's obligations: to provide the information the regulations require about the role and its risks, to tell the business of any change, to allow the contractor to work the agreed hours, and to pay for the contractor's time regardless of the client's satisfaction with the work where the client supervised it.

Agency workers' rights where they apply

A contractor who is supplied to work under the client's supervision and direction and is not in business on their own account is an agency worker under the Agency Workers Regulations 2010, entitled after twelve weeks in the role to the same basic working and employment conditions as the client's direct recruits and from day one to access to facilities and vacancies, and the agreement should allocate the client's obligations to provide the comparator information and the business's to pay accordingly; where the contractor is in business on their own account the Regulations do not apply, and the agreement should say how the business and client decide which, because the answer is not the contract's label.

Transfer fees, terminations and liability

Where the client engages a contractor directly, through another business or on a permanent basis during or after the supply, the agreement may charge a transfer fee, but the Conduct Regulations require the client to be offered an extended period of hire as an alternative and limit the period after the supply during which a fee can be charged, and the agreement should be drafted within those limits; it should also provide notice to end a supply, immediate termination where the contractor is unsuitable, the business's liability capped at the fees for the supply with consequential loss excluded under section 11 of the Unfair Contract Terms Act 1977, the client's indemnity for the contractor's work on its site and under its direction, and data protection terms under the UK GDPR for the contractor's personal data shared between them.

What it costs

Consultancy or contractor agreement, £595. Drafted for your business. Five working days.

Template set for repeat use, £895. One master agreement plus a short-form schedule you can reuse for every engagement. Five working days.

Buying online forms the engagement on payment. The scope is what the consultancy and contractor agreements page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A clear, express assignment of intellectual property to your business
• Confidentiality provisions that protect your business information
• Restrictive covenants drafted at a scope a court will uphold
• Clear treatment of status, so the arrangement is not accidentally something else
• Payment, deliverables and termination provisions that match how you work
• A reusable structure, so the next engagement costs you nothing

What is not included

• Employment status determinations and off-payroll working assessments, which need your accountant
• Tax advice
• Disputes with a contractor you have already engaged
• Immigration and right to work compliance

Questions I am often asked

We are a consultancy that places developers with clients who manage them. Are we an employment business?

If the client controls the developers' work, yes, and the Conduct Regulations apply to your client terms and your contractor terms. The agreement is drafted to comply and to say which model you run.

Who deducts tax if a contractor is inside the off-payroll rules?

The fee-payer, which is the business paying the contractor's company, after the client has issued its determination. The agreement requires the determination before the supply starts and lets the business adjust the rate.

A client hired our contractor permanently after the supply ended. Can we charge?

Within the period and on the terms the Conduct Regulations permit, with an extended hire offered as the alternative, yes. The agreement contains the transfer fee clause drafted within those rules.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Agreement for placing associates with clients
• Reviewing an umbrella company or agency contract as a contractor

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.