Subcontractor terms for an IT services company

An IT services company sells its clients outcomes that subcontracted engineers produce, under client contracts full of obligations about security, data and intellectual property that the subcontractor has never read. Subcontractor terms have to flow those obligations down, assign the intellectual property, protect client data and relationships, deal with employment status and the off-payroll rules, and give the company the remedies it needs when the subcontractor lets the client down. I draft those terms for a fixed fee of £995, delivered in five working days.

Who this is for

IT services, software development, managed service and consultancy companies in England and Wales engaging subcontracting companies and freelance developers, engineers and consultants on client projects and support contracts. These are business-to-business terms for the contracting company's side.

What matters in IT subcontractor terms

Flowing down the client contract

The subcontractor should deliver to the specification, service levels, security requirements and timetable the company has agreed with its client, and the terms should say that the relevant client requirements are attached or notified, that the subcontractor is liable to the company for losses the company suffers to its client from its performance, including service credits, and that the client may require the subcontractor's removal. Where the client contract needs the client's consent to subcontracting, the terms should say the engagement depends on it.

Intellectual property assigned

Under section 11 of the Copyright, Designs and Patents Act 1988 a subcontractor owns what it creates unless assigned in writing under section 90, and the company cannot give its client ownership it does not have. The terms should assign all rights in deliverables to the company on creation, with a licence back for the subcontractor's pre-existing tools disclosed in advance, a waiver of moral rights under section 87, delivery of source code and documentation, and a warranty that the work is original, does not infringe and does not include open source or third-party code outside what the client contract permits.

Confidentiality, client data and security

The subcontractor sees client systems and data, and the terms should impose confidentiality, require client data to be processed only on the company's instructions with the processor provisions under the UK GDPR and the Data Protection Act 2018 flowed down, require compliance with the client's security policies and the company's, including access controls, device security and incident reporting within a stated short period, and say that unauthorised access to systems is an offence under section 1 of the Computer Misuse Act 1990 as well as a breach.

Status, off-payroll rules and substitution

Freelancers engaged directly are independent businesses if the facts support it, with HMRC's Check Employment Status for Tax tool as the reference, and the terms should describe an arrangement of control, substitution and financial risk that is run as written. Where the subcontractor works through its own company, the off-payroll working rules in Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 may make the company or its client responsible for determining status, and the terms should say who does and provide for the consequences.

No poaching, payment, liability and exit

The subcontractor should not solicit or work directly for the company's clients it has worked on for a stated period, drafted no wider than needed to protect the relationship, and should not approach the company's staff. Payment is on the stated terms against milestones or timesheets, with interest under the Late Payment of Commercial Debts (Interest) Act 1998 applying as agreed and set-off for claims. The subcontractor's liability may be capped at a level the company accepts, with IP, confidentiality and data breaches outside the cap, and the company should be able to end the engagement on notice, immediately for breach, and on the client contract ending, with handover of work in progress.

What it costs

Customer or supplier terms and conditions, £995. One set of terms, customer-facing or supplier-facing, drafted for your business. Five working days.

Review of your existing terms, £495. You already have terms and want them checked and brought up to date. Returned marked up with my amendments and an explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the terms and conditions drafting 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 full set of bespoke terms drafted for your business, reflecting the legal requirements that apply to your business and sector
• A note in plain English explaining the terms I have drafted for you
• Liability, payment, termination and IP provisions that protect your position and are drafted to withstand scrutiny from the other side
• Guidance on how to incorporate the terms properly
• Your questions and comments answered by email or phone
• One round of amendments to finalise the terms ready for use

What is not included

• Negotiating your terms with individual customers (I am happy to quote for this as an additional service if required)
• Sector-specific regulatory compliance beyond the contract terms themselves
• Website privacy notice and cookie compliance, which I quote separately
• Terms governed by the law of another country
• Tax advice

Questions I am often asked

A freelance developer says the code is theirs until we pay a disputed invoice. Is it?

If the terms assign the rights on creation, the code is the company's and the invoice is a separate dispute. Without a signed assignment, the developer's position is stronger, which is why the assignment is signed before work starts.

Our client wants the subcontractor removed from the project. Can we do that?

If the terms say the client may require removal and the company may replace the subcontractor, yes, and the terms should say what is paid for work done to that point.

Who decides the subcontractor's status under the off-payroll rules?

It depends on the size of the client and the arrangement, and the terms should say who makes the determination and what happens to fees and deductions if the engagement is inside the rules. Take advice on the determination itself.

Related guidance and services

• Terms and conditions drafting, £995, the service this page describes
• Contract review, £495
• Purchase terms for a company buying software and IT services
• Subcontractor terms for a cleaning company

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