Subcontractor Agreement

A Subcontractor Agreement You Can Count On

It’s 4:19 pm, and you’ve just found the perfect subcontractor. You want them to start working with you tomorrow. But you’re stuck. You want everything clear and legal – and you don’t have a contract.

Grab our Subcontractor Agreement template. In less than fifteen minutes, you’ll have the contract in your hands. It’s written by lawyers, so there’s no stressing about the legalities. Simply fill in your details, present it to your colleague, and do the deal today!

What is a Subcontractor Agreement?

A Subcontractor Agreement is a legal agreement between a business (contractor) and a service provider (sub-contractor) to provide services.

This contract is often used when a business needs extra capacity or doesn’t have the necessary resources or skills to complete work for a client.

The subcontractor may provide a one-off service to the business, or they can be engaged to provide ongoing services for a predetermined length of time.

Who can use this Subcontractor Agreement template?

• Business engaging a subcontractor for specific services or a project
• Subcontractor
• Suitable for any industry
• All Australian states and territories

What does this Subcontractor Agreement template include?

Our comprehensive Subcontractor Agreement template covers:

• Schedule – key service details (start date, scope of works, fees, deposit, etc.)
• Engagement, Contractual Relationship and Term – makes it clear that the subcontractor is not an employee, how long they will be engaged
• Standard of Services – the requirement to complete the work to a certain standard
• Materials and Labour – subcontractors provide their own materials and labour
• Occupational Health & Safety – compliance with OHS regulations
• Insurance – insurance required (e.g. public liability)
• Payment – clear payment terms
• Tax Obligations – the requirement for ABN, tax invoices, and GST (if applicable)
• Warranties and Indemnity – an important legal clause
• Confidentiality – to protect confidential information
• Intellectual Property – who retains ownership of intellectual property created
• Limitation of Liability – an important legal clause
• Non Disparagement– to protect your reputation
• Termination – how either party can end the contract
• Restraint – restraint clause is included to protect the head contractor’s interests
• Dispute Resolution – the process to manage a dispute
• General – standard contract clauses such as Assignment, Severance, Entire Agreement, Waiver and Governing Law

Other names for a Subcontractor Agreement

• Subcontractor Contract
• Independent Contractor Agreement
• Services Agreement

Do I need a contract?

Yep. No doubt about it. What will you do if something goes wrong?

A contract protects both you and your contractors.

It’s not about big legal words and getting the upper hand on your subcontractor. It’s relationship insurance. A legally binding contract does the boring legal leg work, manages expectations, and provides certainty. That way, you can focus on what you want to achieve in your business.

Make sure your contract does the hard work for you.

Differences between an employee and a contractor

There’s a lot at play which is why it’s important to have an agreement in place.

Contractors generally:

• work for themselves and are their own boss
• are free to accept or refuse work
• control their own working times
• provide their own tools and equipment
• have no guarantee of future work

Employees generally:

• work in someone else’s business
• are subject to controls on how, where and when they do their work
• are paid a wage
• receive employee entitlements, such as sick and annual leave
• have the expectation of ongoing work

Want more information on employees vs contractors?

For more information visit the Fair Work Ombudsman. If you’re an employer, head to the ATO’s website to learn more about the tax and super obligations for employees and contractors and the differences between employees and contractors.

What is sham contracting?

Working on a nod and a handshake can end in disaster. Our Subcontractor Agreement protects you from this headache.

Some dodgy employers create sham contracting arrangements. They’re trying to disguise an employment relationship as a contracting arrangement. This is usually done to avoid paying employee entitlements. Even if you make an innocent mistake, you can still be fined.

If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600 as well as a back-payment of wages and entitlements.

Our Subcontractor Agreement template makes it clear you and your subcontractor are not employer and employee. You can confidently engage a subcontractor and move forward with peace of mind.

Fixed fee or an hourly/daily rate?

It’s up to you to negotiate fees with your subcontractor. You can negotiate a fixed price for a specific project. Other projects may be a day rate or hourly rate. This is part of your commercial negotiation.

Some factors that can influence the fees include the length of the project, the skills required to do the job, and the scope or size of the project.

Who is responsible for the work performed?

You need to ensure that you have the right to subcontract the work before you get started. This should be clearly outlined under your existing agreement with clients. If you are allowed to subcontract the job, you will generally be held responsible for any:

• defects in the subcontractors’ performance
• other violations of your contractor agreement.

You have engaged them to act on your behalf, so you will be held accountable for their actions.

How do I stop a subcontractor from taking my clients or competing with my business?

We have included a restraint clause in our Subcontractor Agreement template to prevent the subcontractor from poaching clients or employees or competing directly with your business.

Termination

Our Subcontractor Agreement template allows for the business to terminate for non-performance or if the subcontractor fails to meet the key responsibilities listed in the agreement.

It’s important to have a clear termination clause in your contract so that you aren’t stuck paying for a service that isn’t being delivered!