Key things to look out for before signing a contract

Due to the emphasis often placed on IR35, contractors may enter into contractual agreements without fully understanding the practicality and implications of the other provisions.

Contractors often focus on employment status wording while overlooking commercial terms that can affect payment, termination, and post-termination restrictions. Here are some typical things to look out for before you sign on the dotted line.

The Assignment Schedule

Consultancy agreements between the agency and the contractor, or directly between the client and the contractor, often include an assignment schedule detailing the specifics of the services to be performed under the contract.

However, being aware of the start and end date and the daily rate does not cover the entirety of your potential obligations under the contract.

It may be that some contracts not only cover the specific assignment to be entered into at the time, but also cover any ongoing assignments with the agency and/or client. This means that once the initial assignment is complete, you may remain bound by the contract.

This can restrict your ability to move on quickly to other work. It is important to be aware of the contractual terms of both the assignment and the contract, together with any termination provisions.

Termination rights

There are usually general termination rights in agency and client contracts. They allow the agency and/or the client to terminate the contract for breach of contract and insolvency, among other things.

Before entering into the contract, a contractor should be fully aware of their rights to terminate the contract and how this would work in practice, particularly where short notice periods could leave them without income.

Payment procedures

As well as being satisfied with the daily rate payable for the work you are carrying out, a contractor should also ensure they are content with the payment procedure to be put in place.

Most agencies and clients use their own payment systems, including timesheet and expense reporting processes. It is important to understand the exact requirements to avoid payment delays.

The majority of contracts of this nature contain express wording setting out when payments may be withheld or delayed.

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A contractor should ensure they are fully satisfied with their contractual obligations in this regard prior to signing and commencing services. Failure to comply can result in delayed or non-payment.

In addition to payment-related obligations, there will be other contractual obligations that contractors must comply with throughout the contractual term.

Failure to comply with any contractual obligation may place a contractor in breach of contract, potentially resulting in termination and loss of income.

Legal obligations

Further, clauses surrounding government legislation, such as data protection and intellectual property, may mean that if a contractor does not comply with them, they could also be breaking the law.

These obligations often sit alongside commercial terms and should not be overlooked when reviewing a contract.

Post-termination obligations

Similar to contractual obligations, which remain in force throughout the contractual term, there are often post-termination covenants which survive termination of the contract.

This means that contractors may remain bound by certain restrictions even after an engagement has ended.

In agency and client contracts, post-termination covenants commonly include non-competition and non-solicitation clauses.

If breached, these provisions may be enforced against you, potentially resulting in damages being sought or an injunction that limits your ability to work for other clients.