Notice and termination in a consultancy agreement

A consultancy agreement ends more easily than an employment contract, which is one of the reasons businesses engage consultants, and the termination clause is where that ease is written down: notice periods measured in weeks, termination for breach after a chance to put it right, an end on insolvency within the limits the law now sets, and a clear account of what is paid and handed over when the engagement stops. The clause also has to avoid the terms that make the engagement look like employment. This page explains the law and the drafting. I draft consultancy and contractor agreements for a fixed fee of £595, delivered in five working days.

Who this is for

Businesses in England and Wales engaging consultants and contractors who want to be able to end the engagement cleanly, and consultants who want their fees and their work protected when it ends.

What matters in notice and termination

Notice periods and why they differ from employment

An employee is entitled to statutory minimum notice under section 86 of the Employment Rights Act 1996 and to protection from unfair dismissal; a consultant is entitled to whatever notice the agreement gives and nothing else, and the agreement should give a period that reflects the engagement (a week or two for a short project, a month for a retainer, longer only where the consultant has committed resources), on both sides, with notice in writing and running from receipt. A long notice period with no termination for convenience looks like job security, and a short one on both sides looks like a business relationship.

Termination for breach and the cure period

The agreement should allow either party to terminate immediately for a material breach that is not remedied within a stated period after notice, and without a cure period for breaches that cannot be remedied (a serious breach of confidentiality, misconduct, a breach that destroys trust), with the grounds stated so that the question whether a breach was material is answered by the document; a client that wants to end an engagement for poor performance should give notice under the ordinary clause rather than argue breach, and the agreement should make that route available.

Termination for insolvency and the restriction on suppliers

The agreement should allow termination where the other party enters an insolvency procedure, but a consultant supplying services to a client cannot terminate solely because the client has entered administration, liquidation or a moratorium, because section 233B of the Insolvency Act 1986 makes such clauses ineffective for suppliers; the consultant may still terminate for non-payment of sums falling due during the procedure and for other breaches, and may stop work where the officeholder does not confirm payment, and the agreement should be drafted to those rights rather than to a clause that will not work. The client's right to terminate on the consultant's insolvency is not restricted.

What is paid on termination

The agreement should say that fees are payable for work done and deliverables delivered up to termination, pro rata for part periods, together with committed expenses, that no payment is due for work not done, and, for a fixed-price project ended early by the client, a stated proportion or payment for work done at a stated rate; it should also say that payment is not conditional on the client's satisfaction where the client ended the engagement for convenience, and that interest under the Late Payment of Commercial Debts (Interest) Act 1998 runs on sums unpaid. A notice period during which the consultant is paid but not given work is permissible and should be stated if the client wants it.

The consultant's obligations on leaving

On termination the consultant should deliver work in progress and the materials the client has paid for, return or destroy the client's confidential information and equipment, hand over access, credentials and documentation, cooperate with a handover for a stated period at the agreed rate, and confirm the assignment of IP in paid-for work under section 90 of the Copyright, Designs and Patents Act 1988; the clauses that survive termination (confidentiality, IP, restrictive covenants, liability, payment) should be listed, because a clause that is not stated to survive may be argued not to.

Fixed terms, early termination and the status question

A fixed-term engagement with no right to terminate on notice commits both sides for the term, which suits a defined project and does not suit an open-ended retainer, and a fixed term that is renewed repeatedly begins to look like continuous employment; the agreement should provide a notice right within the term where either party needs one, should state what is paid if the client ends a fixed term early, and should avoid the features of an employment termination clause (disciplinary procedures, warnings, appeals, garden leave, pay in lieu of notice as an employee would have it), because a consultancy agreement that terminates like an employment contract describes an employee.

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 we end a consultancy agreement without giving a reason?

On notice under the ordinary termination clause, yes, with fees paid to the end of the notice period. No reason is needed and no unfair dismissal claim follows, provided the person is in fact a consultant.

Our client has gone into administration. Can we stop work?

Not solely because of the administration, which the Insolvency Act now prevents for suppliers. You can stop for non-payment of sums falling due during the administration, and the agreement is drafted to that right.

What notice should a consultancy agreement have?

Enough to reflect what each side has committed, usually weeks rather than months, on both sides. A long one-sided period looks like job security; the agreement sets a period that fits the engagement.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Restrictive covenants in a consultancy agreement
• Insurance and indemnities in a consultancy agreement

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.