What is a fractional contract?
A fractional contract is a consultancy agreement under which a senior executive, usually through their own limited company, holds a defined seat for a set number of days a month in return for a day rate or a monthly fee. It is a contract for services rather than employment, and its wording is written to keep it that way.
The six clauses that matter
- Days and pattern. How many days a month, whether they are fixed or flexible, and what happens to unused days. Ambiguity here is the single most common source of disagreement in month three.
- Notice. Thirty days either way is the usual shape at one or two days a week. Anything longer starts to look like employment, which is a risk for both sides.
- Intellectual property. Everything created during the engagement should assign to the company. Most consultancy templates say this. Check that yours does, because a fractional CTO writing code under a template that does not is a problem you find at diligence.
- Confidentiality, with a stated period. Two or three years after the engagement ends is normal.
- Conflicts. Not a blanket ban on other clients, which is the whole model, but a named list of direct competitors they will not take on during the engagement, and a duty to disclose new clients in the same space.
- Conversion. What happens if you later want them full-time. Agree it now, in a sentence, while nobody wants anything.
What changes by seat
The six clauses are the same for every seat. What each seat can do to the company is not, so each one needs one or two extra lines.
| Seat | What the contract must add | Why |
|---|---|---|
| CFO | Written authority limits, and the bank mandate: who may approve payments, up to what, and with whom | A fractional CFO on the bank mandate with no stated limit can commit the company alone |
| CMO | Agency contracts, ad accounts, domains and data held in the company's name, with spend authority in a stated monthly figure | Accounts opened in a consultant's name leave with the consultant |
| CTO | Assignment of all code and IP to the company on creation, and repository and credential handover on exit | Unassigned code is the finding that stops a round in technical diligence |
| General Counsel | Their own professional indemnity cover, and how legal privilege is protected when advice is given by a non-employee | Privilege and regulated advice turn on who gives it and in what capacity |
| COO | Authority to direct staff and suppliers without that making them an employee: scope, decisions reserved to the board, no line management on paper | The more a contract reads like a job, the more it is treated as one |
A plain-English template you can hand to a solicitor
Heads of terms, not a finished agreement. Fill in the brackets, agree them with the operator, and give the result to a solicitor to turn into the contract. This is not legal advice.
Parties: [Company Ltd], company number [ ], and [Consultant Ltd], company number [ ], providing the services of [name]. Seat: [Fractional CFO / CMO / CTO / COO / General Counsel], accountable to [the CEO / the board] for [three outcomes in plain words]. Days: [n] days a [week / month], pattern [fixed days / flexible]. Unused days [lapse / carry over one month]. Either side may propose a change to the days on [14] days' written notice. Fee: [£ ] a day, invoiced [monthly in arrears], payable within [ ] days. Day rate set against the published bands at getoperators.co/day-rates. Expenses only if agreed in writing in advance. Term and notice: starts [date], continues until ended by either side on [30] days' written notice. Confidentiality: everything learned about the company stays confidential during the engagement and for [two / three] years after. IP: everything created for the company assigns to the company on creation. The consultant's pre-existing know-how and tools stay theirs, with a licence to the company for anything built into its work. Conflicts: the consultant will not act for [named direct competitors] during the engagement, and will tell the company before taking on a new client in the same market. Non-solicitation: neither side will solicit the other's staff for [six] months after the engagement ends. Substitution and status: the consultant decides how the services are delivered and may provide a suitably qualified substitute with the company's reasonable approval. Nothing here creates employment. The company will make and share its off-payroll (IR35) status determination where the rules require it. Data protection: each side complies with UK GDPR; where the consultant processes personal data for the company, a data processing clause applies. Liability: each side's liability is capped at [the fees paid in the previous twelve months], except for fraud and anything that cannot be limited by law. Conversion: either side may raise a permanent role; this agreement ends on the day employment starts. Law: England and Wales, and the courts of England and Wales.
The clause everybody forgets
Conversion. A fractional engagement that works often ends with the company wanting the person permanently, and that conversation goes badly when nobody thought about it at the start.
One sentence is enough: that either side may raise it, that the fractional agreement ends on the day employment starts, and that no fee is owed to anyone on the change unless a third party introduced them and has terms that say otherwise. If you found the person through a platform or a search, read that platform's terms before you sign anything, because this is exactly where an introduction fee lives.
Who holds the contract
You should contract directly with the operator or their limited company. If a platform sits in the middle of the contract, the relationship is with the platform, and the terms that govern it are the platform's rather than yours.
On this site the contract is always between the company and the operator. We are not a party to it.
Status, and why the wording matters in the UK
A fractional executive working through their own limited company sits inside the off-payroll working rules, and the determination is the client's responsibility for medium and large companies. The contract wording is part of that assessment but it is not the whole of it: what actually happens week to week matters more.
The practical version is that substitution, control and mutuality of obligation are what get examined. A contract that describes a fixed-hours employee with a different job title will be read as one.
Common questions
Do you need a contract for a fractional executive?
Yes, and a short one is enough. A two-page consultancy agreement covering days, notice, intellectual property, confidentiality, conflicts and conversion will cover almost every fractional engagement.
What notice period is normal for a fractional executive?
Thirty days either way at one or two days a week. Longer notice starts to resemble employment, which creates status risk for both sides and removes the flexibility that made the arrangement attractive.
Can a fractional executive work for a competitor?
The model depends on them having several clients, so a blanket ban is not realistic. The workable version is a named list of direct competitors they will not take on while engaged with you, plus a duty to tell you before accepting anyone new in the same space.
How do I structure a fractional executive agreement to protect both parties?
Contract with the executive's own company on a consultancy agreement, and get six things into it: days and pattern, a short notice period, IP assigned to the company, confidentiality with a stated period, a named list of competitors rather than exclusivity, and what happens on a move to permanent. Add the seat's own risk, such as a CFO's authority limits.
What does a typical fractional engagement contract look like?
Two to four pages: parties, the seat and what it is accountable for, days a month, the day rate, thirty days' notice either way, confidentiality, IP assignment, conflicts, non-solicitation, substitution and status wording, UK GDPR, a liability cap and governing law. A long document is not a safer one.
Is there a free fractional executive contract template?
The heads of terms on this page are free to copy. They cover every clause a fractional engagement needs, in plain English, ready for a solicitor to turn into the agreement against your facts. It is a starting point, not legal advice, and a solicitor's review is worth its cost here.
What should a fractional CMO contract include that a CFO contract does not?
Three things. Who owns the creative and the data the work produces, since a fractional CMO builds assets, briefs and audiences that must stay with the company. Authority over agency and freelancer spend, in a stated monthly figure, so the budget can be moved without a founder's sign-off each time. And the pipeline or revenue contribution number the engagement is judged on, written down with the sales lead's agreement, so marketing is not measured on impressions.
More of them, on hiring, contracts and what a fractional engagement costs, on the fractional executive FAQ.