Contracts for freelancers, associates or subcontractors

freelancer-contracts-stanford-gould

There’s much  to be thankful for as a freelancer, with all the freedoms and flexibility your status provides, but sometimes it’s easy to get carried away by this new found autonomy and forget to ensure that your contractual back is covered. Here’s our three top tips to ensure you stay protected and keep enjoying your work, and its benefits.

Are you legally a Freelancer, contractor or employee?

Check your status – this sounds simple, right? You’re a freelancer – what’s the issue? Unfortunately its not as simple as ‘I am as defined in the contract’ – if this position is challenged by HMRC checking that tax is being properly paid, or if your fellow freelancers want to challenge their status with the company that you work with. What you are called in your contract is no longer a definitive answer to this question. A recent case in the Supreme Court tested this, and the law has been clarified.

Your label is only part of the puzzle, what actually matters is what’s  happening ‘on the ground’ and how much control or instruction you are given by the party you work for. Typically these are the sorts of indicators that show true freelancer status:

  • You chose whether you come to work, and if you don’t, you are not paid.
  • You bring all the equipment and tools that you need to undertake your tasks.
  • You are not required to wear a uniform, or branded clothing.
  • Any vehicle you use is owned and insured by you,  and not provided by your work place
  • You could send someone to deputise for you in your absence , so long as they have the requisite skills or experience.
  • You are told what jobs to do, but not necessarily how to do them.
  • You are not paid for any absences, holidays, sick leave or parental leave.
  • You insure your own operations.
  • You work under a fixed term arrangement for a specified period of time less than 12 months in duration, or on a specified project or assignment, with breaks between any rolling repeat of these arrangements.

None of these indicators is definitive – anyone seeking to challenge your status would look at the position in the round, and take a view about whether you were sufficiently controlled and instructed to  qualify you as an employee – whatever your contract says.

Make sure your contract is clear about your status, who is responsible for paying tax and insurance to cover your work and that you have a right to substitute another worker if you are not available to provide the services. Take advice and be careful, not complacent.

You can check your tax status on the UK government website here

Copyright and Ownership of Materials

Who owns the rights to what you produce as a freelancer? Do you? Does the party to whom you provide services own everything or anything that you create? And can you use anything you create during the delivery of your services elsewhere? For another project? Another competitor?

These are all questions which arise around the ownership of intellectual property rights in any work that you undertake.

If you were an employee, the basic position would be that any Intellectual Property Rights (IPR) would accrue to your employer – in broad terms – but as a freelancer the position is less straightforward.

Get it clear in the contract, and ensure that if you are creating original materials, ideas, processes, or even goods that you have a potential IPR interest in, you know what you can use elsewhere or exploit outside the confines of the freelancer contract.

Making Payment Terms Clear

Getting paid – nobody likes to be taken for granted and if you have a late payer for your services it can feel like that,  and be a real challenge. Maybe your contract terms can help that?

Are you clear about what your payment terms  are? How many days after invoice are your fees due? Can you flex that timeline and shorten the period for persistent late payers? Is it in your contract, and is the right to vary it also there?

Can you down tools if you are not paid, until you are paid? Seems like a no-brainer – you’d be surprised! Unless your terms state so, this is not a given, and in fact could create liabilities for yourself if you stop work without that explicit right to do so, and the other party suffers a loss. Be careful!

Can you ask for money in advance under your terms? Particularly if you have had your hands burned, or the other party presents a bigger risk, or has a reputation?

Think about charges for late payment – some will impose an administration fee added if you are required to chase late payments, and you have the option of addition contractual or statutory interest on any late payment. Make sure your terms deal with this in line with your legitimate entitlements – and for further info you could look here…

https://www.gov.uk/late-commercial-payments-interest-debt-recovery

If you need further advice on any of these issues,  please contact us:

Heather Stanford, Managing Director of Stanford Gould Limited

heather@stanfordgould.co.uk

www.stanfordgould.co.uk