Assignment vs. Subcontracting: Same … But Actually Different

Ever read a contract clause that says:

“The Contractor shall not assign or subcontract any part of this Contract without the prior written consent of the Employer.”

…and thought, aren’t assignment and subcontracting the same thing?

Spoiler alert: They’re not. Let’s break it down.

Assignment: Passing the Cheque (But Not the Job)

Assignment is basically saying:

“I’m handing over my right to get paid (or other benefits) to someone else.”

A classic example? A contractor assigns their right to receive payments under a contract to a bank as security for a loan.

But here’s the catch:

• The assignor usually stays responsible for performing obligations unless there’s a novation (a fancy word for a complete switch of parties).

• Many contracts say “No assignment without our consent,” so don’t try this sneakily.

• Assignment = handing over the right to benefits, not the job itself.

Can You Assign Without Consent?

Sometimes, yes.

Some contracts say you can assign rights without consent if you just give prior notice. For example:

“The Contractor may assign its rights under this Agreement by giving 30 days’ written notice to the Employer.”

But that’s usually limited to the right to get paid or other benefits.

Trying to assign your obligations—like doing the work or fulfilling contract duties—is an entirely different ballgame. That’s where novation comes in.

Assignment vs. Novation – The Golden Rule

Let’s keep it simple:

• Assignment = benefits. You’re transferring your right to get paid or receive other goodies under the contract. Sometimes the contract lets you do it without asking first—as long as you give notice.

• Novation = obligations. You’re trying to hand over your duties under the contract. That always needs the other party’s consent because it creates a brand-new legal relationship.

If you’re just passing on the money side, you might be able to assign it. But if you’re trying to pass on the work—or get out of your responsibilities—you’re looking at novation, and you’ll need everyone’s permission.

Subcontracting: Sharing the Workload

Subcontracting means:

“I’m still in charge, but I’ll get someone else to do part of the work.”

Think of a civil contractor hiring an electrical firm to handle the wiring. The main contractor stays liable to the employer for the entire job—even if the subcontractor messes up.

Here’s what makes subcontracting unique:

• It doesn’t change who the employer’s contract is with.

• It often needs the employer’s consent, especially for significant parts of the work.

• It keeps you on the hook for your subcontractor’s performance.

Why the Fuss?

Employers hate surprises. They don’t want:

• Payments diverted to some bank they’ve never heard of.

• Strangers turning up on site doing critical work.

That’s why contracts carefully restrict both assignment and subcontracting.

They’re cousins, not twins. Understand the difference—or risk finding yourself in breach of contract faster than you can say “consent required.”