What is a Consultancy Agreement?
A Consultancy Agreement is an agreement or a contract between two parties out of which, one is being a consultant and other being a business or an individual that is taking certain services from the consultant. The document lays down the consultant’s rights, duties and responsibilities along with other relevant details.
This agreement comes handy when you or your organisation is planning to appoint an external consultant to work on a specific task or assignment. A consultant is generally an expert in his own field who will assist in providing specialized solutions for a temporary period.
When do you require a Consultancy Agreement?
- When your company is engaging the services of a specialist for a specific project or task.
- While appointing a person as a consultant on a self employed basis but not as your employee.
- If you’re an individual and are taking up a temporary assignment with a company/firm.
- When drafting an elaborate yet simplified agreement for appointing a consultant.
Advantages of a Consultancy Agreement
- Improves Clarity
- The consultancy agreement involves a detailed description of the nature of work which negates the scope of doubts between the parties.
- Exercise Legal rights
- The parties express their will, rights, and duties in an agreement which reduces the scope of disputes.
- Scope and Confidentiality
- Agreement involves clauses that state the compliance with any confidentiality that the parties may prescribe in their contract.
Elements of a Consultant Agreement
- Scope of work
- The consultant agreement for service must specify all the duties, obligations, responsibilities, and functions that the consultant needs to perform.
- Term
- The Term sub-clause mentions a period within which the company will require services from the consultant.
- Payment terms
- The payment terms usually include all the details regarding compensation that the consultant will receive from the company along with other benefits if applicable.
- Confidentiality
- Additionally, the employer may include a provision to prevent the consultant from using any confidential information, trade secrets or sensitive information of clients for his own benefit.
- Termination
- The agreement must also state the manner in which the employer or consultant can terminate the contract.
- Non competition
- It specifies that during a stipulated term, the consultant will not engage with competing companies in any way.
- Non solicitation
- Consultant should not recruit other co-workers to join them when they leave the company. Furthermore, the consultant cannot ask the company’s clients or customers to follow them to their new company.
- Indemnification
- Such a clause protects the consultant from lawsuits of any kind due to the Client’s business.
FAQs
Agreement of Consultancy is a service agreement made to get a particular work or project done within a prescribed time of period.
An employment contract is a signed agreement between an employer and the employee, in which it establishes both the rights and responsibilities of the company.
The consultant is an independent contractor and cannot be considered as an employee of the company thus making him ineligible to receive the same benefits as an employee on the rolls.
In most cases you’ll not qualify as you’re not an employee of the company. This will be detailed in the agreement made by you with the employer. Even benefits like provident fund and E.S.I may not be in your reach.
Specific consulting jobs require no formal training as such, as they deal more with strategizing and planning. For instance, social media consulting isn’t something that you can have a license in, but various factors help make you qualified to pick up such a role.
Hey @HarshitShah
The things to include in an employee’s personnel file are: