The Importance of Setting Freelance Terms and Conditions
Contracts are legally binding agreements that protect both parties involved in the work relationship. As a hiring manager, you want to ensure that the freelancer delivers the work on time and according to the terms you agreed upon. The freelancer wants to be sure that they will be paid according to the terms they agreed upon, including the amount, method of payment, currency, and time frame.
Drafting and signing a Contract for every freelancer you hire is important for several reasons.
1. Avoid Misunderstandings
Contracts help you avoid any misunderstandings that could arise in the future about who should cover business expenses, provide training, or issue equipment. Writing a contract ensures that all of these questions are addressed from the beginning and that there is no ambiguity or misunderstanding.
2. Protection in court: Because contracts are legally binding, you can take them to court if one party breaks the contract. For instance, you have the right to sue if the freelancer disappears without delivering, and they have the right to take legal action if you don’t pay them. It’s best to avoid this, but if things go wrong, you’ll have your legal bases. You can also include a jurisdiction or arbitration clause that outlines what legal action you can take in the event of a breach of contract. Being dragged through a court case in another state or country can be very complicated and costly.
3. Working “By the Book”: Contracts demonstrate to outside stakeholders (e.g. investors) that your company is doing everything according to the rules and regulations. All vendor and freelance agreements will be reviewed during due diligence audits before you receive funding or go public.
4. Compliance with labor laws: In some states and countries (e.g., New York), it is illegal to work with freelancers without a contract.
New York passed the “Freelance isn’t Free” act in 2016, which requires freelancers and hiring companies to sign contracts, among other obligations.
What has to be included in a contract for a freelancer?
Every aspect of the working relationship should be covered by thorough freelancing terms and conditions. Typically, this comprises the following:
The client's and freelancer's contact information: This contains both parties' complete names, contact information (phone and email), and address. Usually included are other details like the company's mailing address and the freelancer's EIN or business number.
Project's extent: Give the freelancer a detailed description of the job you need done, including the project's goal, how long it will take, and how many hours the freelancer should work.
Deliverables: Make clear exactly what has to be produced or finished by the freelancer.
Price & rates: The amount you will pay the freelancer for their job is the main topic of discussion in this section. What is the person's rate? Do they operate on a fixed fee per delivery or do they charge by the hour?
Options and schedule for payments: Here, you will choose the currency, schedule, and mode of payment for the freelancer.
Timelines and commitments: Even if it's not always practical to include precise deadlines in the contract, you should at the very least specify the start of the working relationship and the completion date of the task. Mentioning any consequences that could arise from the freelancer missing a deadline is also a smart idea.
Copyright and ownership: This makes it clear who, when the work is finished, truly owns it. Until you pay the freelancer for the job, they typically keep the rights to it. The freelancer is not permitted to use or resell the work to anybody else after receiving payment.
Legal terminology: To make sure that the hiring manager and freelancer are both aware of their legal responsibilities, define key legal phrases and ideas.
Terms of cancellation and kill fee: In the case that you must terminate the project before it is completed, specify how the freelancer will be paid. For instance, you will pay the independent contractor a certain amount based on the total number of hours they have completed.
Gear and expenditures: When engaged for a certain kind of job, freelancers might need to invest in particular equipment, software, tools, or training. You should specify in this part who will pay such expenses: the freelancer or your business.
Signatures: Finally, but just as importantly, a freelancer's terms and agreements become legally enforceable only when both parties sign them. Put otherwise, a contract is only enforceable if both parties sign it.
Additional legal paperwork that the freelancer has to sign:
You could also want the independent contractors you engage to sign other legal
agreements in addition to the normal labour contract, like:
Non-disclosure agreement: Often referred to as a confidentiality agreement, this legally enforceable contract creates a private connection between your business and the independent contractor. It guarantees that the independent contractor won't divulge any private information they could come into contact with.
Agreement on intellectual property (IP): Under this agreement, rights to intellectual property may be transferred from one party to another. When a corporation works with freelancers, this typically entails the freelancer giving the company the intellectual property rights to their work.
Non-compete: A non-compete agreement is a legal contract that requires an employee to refrain from working for a certain amount of time after the employment relationship ends with any businesses that are regarded as rivals of the hiring firm. Additionally, these agreements forbid the employee from disclosing confidential or proprietary information to those parties not affiliated with the recruiting organization.
Data protection agreement: You should have a freelancer sign an agreement requiring them to abide by your organization's data security and confidentiality standards if they need access to sensitive corporate data to do their task.
Legal advice ought to go over the agreement.
Don't worry if this sounds like too much legalese. Your legal counsel will be pleased to offer their opinions. Indeed, they will undoubtedly desire to participate in the process of hiring independent contractors in order to guarantee adherence to business regulations and legal specifications.
Once you've found the ideal freelancer for the work, be sure to let your legal team know and ask for their advice on which legal agreements you should sign. Depending on the goal and nature of the task, they may frequently already have authorized templates for you to use or may wish to design a fresh contract themselves. Allow a member of your legal team to at least read and
