Consulting Agreement Template

Understanding Consulting Agreements in Australia

A Consulting Agreement is the foundation of every successful consulting relationship. It’s a legally binding contract that outlines the terms of engagement between a consultant and client, protecting both parties while setting clear expectations for the work ahead.

In Australia, having a written Consulting Agreement isn’t just good practice – it’s essential for establishing your status as an independent consultant rather than an employee, protecting your intellectual property, and ensuring you get paid for your expertise.

Consultant vs Employee: Critical Legal Distinctions

The Australian Taxation Office (ATO) scrutinises consulting arrangements closely. Without a properly structured Consulting Agreement template, you risk being classified as an employee, triggering obligations for superannuation, PAYG withholding, and workers’ compensation.

Your agreement must clearly establish that neither you nor any subcontractors are employees of the client. However, simply stating this isn’t enough. The ATO considers multiple factors when determining your status:

Key indicators of genuine consulting arrangements:

• Freedom to delegate or subcontract work to others
• Payment based on deliverables rather than hourly wages
• Provision of your own equipment and tools
• Control over how work is performed
• Ability to work for multiple clients simultaneously
• Commercial risk and professional liability for your work
• Operating your own Pty Ltd company

Essential Clauses for Australian Consulting Agreement Templates

Scope of Services and Deliverables

Your Consulting Agreement must precisely define what services you’ll provide. Vague descriptions lead to scope creep and payment disputes. Include specific deliverables, milestones, and timelines. Be explicit about what’s included and what requires additional fees.

This clarity protects both parties – clients know exactly what they’re paying for, and you’re protected from endless revision requests or expanding project requirements without additional compensation.

Payment Terms and GST Provisions

Australian consulting agreements must address GST requirements if your annual turnover exceeds $75,000. Your payment clauses should specify:

• Whether quoted fees include or exclude GST
• Payment schedules tied to milestones or deliverables
• Invoice terms (typically 14-30 days)
• Late payment interest rates (must be reasonable)
• Expense reimbursement procedures

Consider including provisions for various payment structures, such as hourly rates, fixed project fees, retainer arrangements, or success-based compensation.

Intellectual Property Ownership

IP ownership is often the most contentious aspect of consulting relationships. Australian law defaults to different rules depending on the type of IP created, making clear contractual terms essential.

Background IP: Your pre-existing methodologies, frameworks, and tools should remain your property. The agreement should grant clients a license to use these materials solely for their internal purposes.

Project IP: Work created specifically for the client typically transfers to them upon payment. However, you should retain rights to general methodologies, know-how, and skills developed during the engagement.

Third-party IP: Clearly address any third-party materials incorporated into deliverables, ensuring proper licenses are in place.

Confidentiality and Non-Disclosure

Consultants often access sensitive business information. Your agreement requires robust confidentiality provisions that protect both parties. These should survive the termination of the contract and clearly define what constitutes confidential information.

Consider mutual confidentiality obligations – you’ll protect their business secrets, and they’ll protect your methodologies and approaches.

Limitation of Liability

Australian Consumer Law prevents complete liability exclusions, but you can limit exposure for certain types of losses. Well-drafted limitation clauses can cap liability at the total fees paid under the agreement while excluding liability for consequential losses.

Never attempt to exclude liability for personal injury, death, or breaches of consumer guarantees – such exclusions are void and may invalidate your entire limitation clause.

Termination and Dispute Resolution

Termination Rights

Both parties need clear exit strategies. Your agreement should specify:

• Notice periods for termination without cause
• Immediate termination rights for material breaches
• Payment obligations upon termination
• Return or destruction of confidential information
• Survival of key clauses post-termination

Dispute Resolution Procedures

Court proceedings are expensive and time-consuming. Include escalation procedures that start with good-faith negotiations, progress to mediation, and only then resort to litigation. Specify which State’s courts have jurisdiction – typically where YOUR business is registered.

Insurance and Professional Standards

While Professional Indemnity Insurance isn’t legally required for all consultants, many clients demand it. Your agreement should specify required insurance levels and confirm you’ll maintain coverage throughout the engagement.

Operating through a Pty Ltd company structure provides additional protection, limiting personal liability to company assets. This can be more cost-effective than maintaining high insurance limits.

Subcontracting and Assignment

If you plan to use subcontractors, your agreement must clearly address this. Some clients prohibit subcontracting entirely; others permit it with notification or approval. When subcontracting is allowed, you remain fully liable for deliverable quality and timely completion.

Include provisions that prevent clients from directly engaging your subcontractors for 12-24 months, thereby protecting your business relationships and preventing client poaching.

Practical Considerations

Multiple Engagement Models

Modern consulting often involves various engagement types, including one-off projects, ongoing retainers, success-based arrangements, and equity participation. Our standard agreement is flexible enough to accommodate different models while maintaining essential protections.

Electronic Execution

Australian law now recognises electronic signatures. When you send your agreement to your client, specify the acceptable signing methods, such as DocuSign, Adobe Sign, or email confirmation. This speeds up engagement commencement while maintaining legal validity.

Regular Reviews and Updates

Australian business law evolves constantly. We review our Consulting Agreement template annually, as well as after significant legislative changes, such as updates to privacy laws or changes to consumer protection requirements.

Conclusion

A comprehensive Consulting Agreement is your first line of defence against disputes, non-payment, and legal complications. The investment in a properly drafted agreement pays dividends through clearer client relationships, better payment terms, and robust legal protection.