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Introduction to this document

Letter terminating consultancy agreement

You can use our letter to terminate your agreement with a self-employment consultant.

Genuinely self-employed?

Assuming your consultant is genuinely self-employed, i.e. is independent and in business of their own account, and so is neither an employee nor a worker, they have no statutory employment law rights on the termination of their engagement; any rights will arise from the terms of their consultancy agreement, e.g. their right to notice. However, just because you issue an individual with a consultancy agreement doesn’t mean they’ll automatically be deemed to be self-employed in employment law terms. Employment tribunals will look beyond the label you’ve attached and examine the realities of your relationship. In fact, the agreement won’t even be the starting point as assessing employment status is a matter of statutory interpretation, with the tribunal looking at the wording of the relevant legislation and taking a purposive approach; it’s not a matter of contractual interpretation.

Notice

Consultancy agreements normally have provisions setting out the circumstances in which the client can terminate the arrangement without notice, for example where the consultant has been in material or persistent breach of the terms of the agreement or where they’ve been negligent in the performance of their consultancy services. Most agreements also include general notice provisions, allowing the client to terminate the arrangement on notice at any time. Assuming you’re confident that the consultant is genuinely self-employed, you can use our Letter Terminating Consultancy Agreement to terminate their engagement. It sets out that you’re terminating the agreement and then outlines whether this is under the general notice provisions or under the no notice provisions (and, in the latter case, which specific provision you’re relying on and why). We’ve followed the wording here that’s in our Consultancy Agreement, so do amend it if your agreement wording contains different provisions. Our letter also confirms the consultant’s termination date and makes clear that, after this date, you’ll have no further obligations to them under the agreement, other than making any payments in respect of fees and expenses properly accrued or incurred under the terms of the agreement before this date.

Confidentiality and return of property

Once your consultant has left (or during their notice period), your main concern will be to ensure that they don’t disclose any of your confidential information and that they return any of your documents and other property. Assuming you have relevant clauses in your consultancy agreement relating to these matters, you can simply refer the consultant to them and point out that these provisions continue to have effect notwithstanding termination of the agreement. Our letter does this, as our Consultancy Agreement contains appropriate clauses. If your consultancy agreement has no such clauses, it’s probably worth adding relevant provisions into your termination letter and then, to aid enforceability, asking the consultant to sign a copy of it to signify that they accept these new obligations. Where the consultant has been a data processor and has been processing personal data on your behalf, do also consider any data protection implications of them retaining or deleting information. Hopefully, this will already be covered in your consultancy agreement, so your letter can refer to that clause too.