Consultancy agreement for a fractional COO

A fractional COO is engaged to make a business run, which puts them closer to its daily operation than any other fractional role and closest to the lines the agreement has to hold: between consultant and director, between directing staff and employing them, and between an independent professional and a part-time employee. The agreement has to define the operational remit, delegate authority with limits, and reflect a self-employed engagement in substance. I draft it, for the business or for the COO, for a fixed fee of £595, delivered in five working days. Whether an individual is self-employed is checked case by case with HMRC's Check Employment Status for Tax tool, which no agreement can pre-empt.

Who this is for

Businesses in England and Wales engaging a part-time operations lead to build processes, manage delivery or run the company while the founder sells, and operators offering fractional COO services to several clients through their own company.

What matters in a fractional COO agreement

The services and the operational remit

The agreement should describe the remit (operations, delivery, systems, process, supplier management, team management, reporting) and the commitment in days a month, with a rate for more, and should say that the COO performs the services with reasonable care and skill, decides how within the client's reasonable requirements, and reports to the board or the founder; an undefined operational role expands until it is a full-time job, and the commitment is the control on that.

Authority without becoming a director

A COO who runs the company is at risk of being a de facto director with a director's duties, and a board that does what the COO says risks making them a shadow director under section 251 of the Companies Act 2006; the agreement should state that the COO is not a director or officer, has delegated authority within a schedule (spend limits, supplier approvals, staff decisions subject to the client's HR processes), and recommends to the board on matters outside it. If the client wants the COO on the board, that is a director's appointment with its own terms.

Managing staff and suppliers as a consultant

The COO will direct the client's employees and instruct its suppliers, and the agreement should say that the COO does so as the client's consultant under the client's policies, that employment decisions (hiring, discipline, dismissal) are taken by the client with the COO advising, and that supplier contracts are the client's; a consultant who hires and fires in their own name has taken on exposure the agreement should keep with the client. Confidentiality should cover everything the COO sees, with the client's information handled as the client directs.

Status and the off-payroll rules

Daily involvement in operations is the pattern most likely to look like employment, so the agreement should state the features that make this engagement different: the COO's other clients, their own equipment and premises for work not done at the client's site, a right to substitute, no obligation to accept more work and no employee benefits. Where the COO works through a company for a medium or large client, the client determines status under Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 and must issue a statement; the determination uses HMRC's tool and depends on how the engagement works in practice, which the agreement describes but cannot dictate.

Fees, expenses, notice and handover

The agreement should state the monthly fee and day rate, expenses at cost with approval, invoicing and interest under the Late Payment of Commercial Debts (Interest) Act 1998, a notice period on both sides, and a handover obligation on termination covering processes, documentation, supplier relationships and access; a fractional COO who leaves on a month's notice with the operations in their head has left the client where it started.

Liability, insurance and intellectual property

Processes, playbooks, documentation and systems configurations the COO creates should be assigned to the client on payment under section 90 of the Copyright, Designs and Patents Act 1988 with the COO's own frameworks retained and licensed; liability should be capped at a multiple of the annual fee with consequential loss excluded, tested under section 11 of the Unfair Contract Terms Act 1977; and the COO should carry professional indemnity insurance at a stated level, with the client's own insurances covering its operations and staff.

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

Can the COO dismiss one of our staff?

The decision should be the client's on the COO's advice, taken through the client's HR process, and the agreement says so. A consultant dismissing staff in their own name is a consultant taking on the client's employment risk.

Our COO is in the office three days a week. Is that a problem for status?

It is a factor, not a verdict. Days at the client's site are weighed with control, substitution, other clients and the rest. The agreement records the features that support self-employment, and HMRC's tool is applied to how the engagement runs.

Should the COO be a director?

Only if you want them to have a director's duties and powers, in which case the appointment is made properly and the consultancy agreement is replaced or supplemented. Most fractional COOs are kept off the board deliberately, and the agreement is drafted for that.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Consultancy agreement for a fractional CFO
• Consultancy agreement for an interim manager

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.