Substitution clauses in a contractor agreement

Personal service is the mark of employment, and a contractor who may send someone else to do the work is, in that respect, not an employee. That is why substitution clauses appear in every contractor agreement and why tribunals and HMRC examine them so closely: a right that exists on paper and would never be exercised, or that the client could refuse at will, counts for nothing and may count against the contractor. This page explains what a substitution right has to look like, what it does, and where it cannot be real. I draft contractor and consultancy agreements for a fixed fee of £595, delivered in five working days.

Who this is for

Businesses in England and Wales engaging contractors and consultants who want the substitution clause to mean something, and contractors who want to know whether the clause they have signed helps them.

What matters in a substitution clause

Why substitution matters for status

An obligation to perform work personally is a condition of being an employee and of being a worker under section 230 of the Employment Rights Act 1996, so a contractor who has a genuine right to provide a substitute is neither, and for tax the same right is one of the strongest indicators that an engagement is outside the off-payroll rules in Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003; the courts have made clear that the question is whether the right is real, and that a clause inserted to achieve a status the parties did not intend to operate is disregarded.

What a substitution right has to look like to count

The right should be unconditional in its existence (the contractor may send a substitute at any time, not only when unable to work), subject only to the client's reasonable requirements as to the substitute's skills, qualifications, checks and confidentiality, exercisable without the client's prior consent beyond notice, and at the contractor's cost and risk; a right exercisable only with the client's consent, only in the contractor's absence, or only from a list the client approves is a limited right that counts for less, and a right the contractor must pay the client to exercise is not a right at all.

The client's right to object and its limits

The client may legitimately refuse a substitute who lacks the skills, qualifications or clearances the work needs, who is a competitor, or who has not signed the confidentiality and IP undertakings, and the agreement should say so; a right to refuse for any reason, or because the client prefers the named contractor, converts the clause into personal service with extra steps. The agreement should require the client to state its reason for refusing and should make the contractor responsible for the substitute's work and conduct.

Who pays the substitute and who is responsible

The contractor engages and pays the substitute, remains the client's contracting party, is responsible for the substitute's performance and for binding the substitute to the agreement's confidentiality and IP terms, and invoices the client at the agreed rate as if the contractor had done the work; a substitute paid by the client is the client's worker, and a substitute engaged on terms that do not pass the IP to the client leaves the client without the rights the agreement promised. The agreement should say that the substitute's work product is assigned through the contractor under section 90 of the Copyright, Designs and Patents Act 1988.

Substitution in practice and the evidence it leaves

A substitution right that has been exercised is the best evidence that it is real, and the agreement cannot create that evidence; the business and the contractor can, by allowing substitution when the occasion arises, by recording any substitution that happens, and by refusing substitutes only for stated reasons. HMRC's Check Employment Status for Tax tool asks whether the client would accept a substitute and whether one has been sent, and the honest answers are what the outcome rests on; a tribunal asks the same and looks at what happened.

Where substitution cannot be real and what to do instead

Some engagements cannot accommodate substitution: work with children or vulnerable adults where every person must be checked under the Safeguarding Vulnerable Groups Act 2006 regime, security-cleared work, work that depends on a named expert, and interim roles the client has chosen a person for. The agreement should not pretend otherwise; it should say that cover is arranged through the business or that substitution is subject to the checks the work requires, and should rely on the other factors (control, financial risk, the contractor's business) to describe the engagement, accepting that where those factors also point to employment, the engagement may be inside the rules or the person may be a worker, and drafting for that rather than for a fiction.

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

Our contractor has never sent a substitute. Does the clause still help?

It helps if the right is real: the contractor could send one, the client would accept a suitable person, and both sides know it. A right that has never been exercised is weaker evidence than one that has, which is why the agreement makes the right usable and the business should allow it when it arises.

Can we insist on approving any substitute?

You can require that a substitute meets the skills, qualifications and checks the work needs and signs the confidentiality terms. A general right to approve or refuse at will makes the clause worth little.

Our work requires DBS checks. Can we still have a substitution clause?

A limited one: substitution subject to the checks the work requires, arranged with enough notice to complete them. The agreement says so rather than pretending to an unconditional right, and relies on the other status factors.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Using CEST and drafting for self-employed status
• Consultancy agreement for an IT contractor working through a limited company

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.