Consultants can be a valuable resource for a business as they often bring specialist knowledge and skills that are needed in a business. Most employers are aware of what procedure they should follow to end an employee’s employment, but bringing a consultancy arrangement to an end, if dealt with incorrectly, could prove costly to your business.
In the same way that you should provide all employees with a contract of employment, if you decide to engage a consultant perhaps for a particular project, you should still issue the consultant, whether the consultant is a company or an individual, with a consultancy agreement.
The consultancy agreement will set out the duties and obligations on both parties and will cover how long the agreement will last for, what rate the work will be paid at, what provisions there are for terminating the arrangement and most importantly confirmation that they are not an employee.
If you decide to end a consultancy arrangement it is important to check what notice provisions have been agreed to make sure that you comply with them. The decision should ideally be communicated to the consultant in a meeting rather than over the telephone and should be used as an opportunity to remind them about any other obligations on termination.
This may include a handover of work, the return of any property that the consultant has used and that does not belong to them, including keys to the office, IT equipment and any documents relating to the business. If you fail to give the consultant the appropriate notice as set out in the agreement then this could result in an unnecessary and potentially costly breach of contract claim.
We are all aware that it is important to protect your business when an employee leaves, but it is just as important to consider this when a consultancy comes to an end. A consultant may have access to highly confidential and sensitive information about your business and therefore a clear procedure in relation to the return of this information should be agreed from the start to ensure that your business is protected.
If you decide to engage a consultant in your business you should ensure that they are not treated and given the same benefits as your employees. If you do, this could create confusion and a potential argument in relation to their status as a self-employed individual if a dispute arises at a later stage.