A detailed and well-drafted contract is essential when your business relies on contractors to get work done and meet deadlines. Contracts ensure that your business and your contractor are on the safe side of the law and your agreement to work together to deliver your project on time. But, how will signing a contract help? Let’s explore in detail.
What is a freelancer contract?
A freelancer contract is a legal agreement between your company and the freelancer you work with. A typical contract outlines the key responsibilities, specifications and nature of work agreed upon by the freelancer and the company.
A signed contract is important to protect your business and to ensure that you get desired work done by the freelancer without delays or payment issues. A contract benefits the freelancer also as he will get the assurance that he will be paid for the work he delivered.
What should a freelancer contract include?
An effective freelancer contract should contain the following details:
- Contact details of the freelancer
The contract should have the personal information about the contractor. This includes his name, registered address, contact details including mobile number and email id.
- Scope of the project
Outline the scope of work including the exact tasks and deliverables, the tools you will provide to ensure that the work is completed. This will help define the expectations of both the parties and eliminate misunderstandings throughout the course of the project.
- Compensation for the project
Include details such as the ways in which the freelancer will be paid for his service: will he be paid a flat fee or at an hourly rate? If additional service is required, how much money will be offered for it. How will you be paying him? Will there be an invoice? Whether there will be a kill fee that you will pay the freelancer for a canceled project or work that is beyond the independent contractor’s control.
- The number of deliverables
What components must be included in the project? When do you expect the output? How will it be submitted?
- Project timeline and deadlines
Provide a detailed breakdown of timelines starting from the initial briefing date till the date of submission. State extraa time for providing feedback and revisions. You should also include the deadline for the project and ensure that the freelancer has complied to finish the project by the defined time
- Mode of payment
State the compensation and additional expenses. Define the terms of the payment, how invoices will be handled, and the duration required to process the invoice. If you are working on a big or long-term project, define when the freelancer can expect his payment and in how many parts the payment will be made to him.
- Non disclosure agreement
Oftentimes you will need to divulge sensitive, confidential information to the freelancer, which could be leaked. A non-disclosure agreement protects you from that. This applies to freelancers working with many companies within the same industry.
- Legal and tax terms
Freelancers should understand that there are legal consequences of not honoring an agreement. Include details of W9 form and the details the freelancer must disclose on the form, such as their SSN. Companies are expected to furnish Copy B of form 1099-NEC and send a copy to the freelancer. These details must be included in the contract.
- Kill fee and cancellation terms
In some situations, you might have to cancel the project or terminate the freelancer in between the project. In such cases, will you be offering the freelancer a fee for their effort? If so, how much will it amount to and When can they expect the fee? These details are to be included in the contract.
It doesn’t matter if your contract covers every aspect of your project if it isn’t signed by you and the freelancer. A signature illegally binds the employer and the contractor. Both the parties must sign the contract, specify the date, and list their titles to fully execute the legal contract.
Is it necessary to provide a freelance contract?
It’s always better to get things in writing, even if you are working with an acquaintance. Issues such as copyrights, compensations, bonuses & expenses, and termination has to be specified in the contract so that idf unforeseen events occur, you can seek legal actions.
Although verbal agreements are recognised by the law. However, you will have a tough time proving details when terms are verbally exchanged. If you are working on a large-scale project, you should even consider deploying a legal counsel on both the terms to stay safe.
Why do companies insist that freelancers sign a contract?
A contract ensures that you have a clear set of obligations, terms and details that needs to be fulfilled by a freelancer when he is working with you. It helps draw a clear line between yourself and the freelancer and summarizes the professional values and rules both parties need to abide by while working together. A contract ensures many things:
- Clarity on the professional relationship you share with the freelancer
- What are the expectations and goals that need to be accomplished
- An overview of standard and acceptable terms while working with you
- Explanation on what you’re willing to do if things don’t work out the way you planned
What to do if someone breaks the contract?
Just because you have a contract in place, doesn’t mean your freelancer may abide by it. In such situations, ensure that you keep the below points in mind:
- Keep a record of all the written conversation that you’ve had with the freelancer. Avoid talking over phone or whatsapp. Instead use email to communicate with each other. This will help you stay professional and keep evidence if things go wrong.
- If you do have a contract in place ensure that you stick to it. Even if it means, you have to seek legal actions, it is better to protect your business than compromise on the terms of work. Ensure you you enforce the terms and have your work delivered by the freelancer
- Although your contract will keep you protected from any legal hassles, you must seek legal advice if you’re not sure how to deal with unreasonable freelancers.
Although working with freelancers has its own benefits, things could always go wrong. A freelancer contractor is a safety shield that will keep you protected when such things happen. Besides, a legally binding contract ensures that you foster a mutually respectful working relationship with your freelancer. So don’t skip out on it.