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As the world shifts towards a fluid global workforce, businesses are beginning to favour independent contractors over full-time employees. To make these untraditional work relationships a success, the key ingredient is a well-written and carefully thought-out contract. Or, in this case, an independent contractor agreement.
Here, we cut through the legal jargon and walk you through the process of writing an independent contractor agreement.
What's in this guide?
- What is an Independent Contractor Agreement?
- When should I use an Independent Contractor Agreement?
- Independent Contractor Agreement vs Employment Agreement
- What does an Independent Contractor Agreement include?
- How effective is an Independent Contractor Agreement?
- Do I need a lawyer for an Independent Contractor Agreement?
- Get access to online lawyers, legal documents and templates
- How do I write an Independent Contractor Agreement?
- Where to get free legal documents and templates like an Independent Contractor Agreement
What is an Independent Contractor Agreement?
An independent contractor agreement is a legally-binding document that sets out the terms and conditions between a client and an independent service provider. It includes clauses that outline billing methods, confidentiality agreements, intellectual property terms and other conditions that will be upheld throughout the duration of the relationship.
When should I use an Independent Contractor Agreement?
You should use an independent contractor agreement when you require the expertise of an individual service provider rather than an employee. Both parties need to sign the agreement before any work begins and before any money is exchanged.
Reasons, why you might choose to hire an independent contractor rather than an employee, include:
- If you need short term work to be carried out,
- When your team lacks certain expertise and you need to outsource,
- If it is more cost-effective than hiring a full-time employee.
Independent Contractor Agreement vs Employment Agreement
While a contractor and an employee may carry out similar duties, they usually engage with the company on different terms. The main difference is that those who enter an employment agreement are employed by a company, whereas those who enter a contractor agreement are normally self-employed and deal with their own taxes.
Because of this, an employment agreement will contain specific terms as to where the work is done and the hours in which it should be carried out. An independent contract agreement, on the other hand, will give the contractor the freedom to carry out the work when and how they wish.
What does an Independent Contractor Agreement include?
You should tailor your independent contractor agreement to the need of your specific working arrangement. There are, however, certain clauses that should be included to protect the interests of the client and the service provider:
Statement of relationship
Obvious, but essential, including a statement of relationship at the beginning of the document helps to define the nature of the working relationship from the outset. It should specify that the individual contractor works separately from the client's business, and is responsible for their own tax payments.
Non-disclosure clause (NDA)
Otherwise known as a confidentiality clause, an NDA specifies that the parties will not pass on any sensitive information shared throughout the duration of the relationship.
Intellectual property clause (IP)
An IP clause will protect the intellectual property of both parties. Intellectual property refers to creations of the mind such as inventions, designs and names.
It's best practice to include a clause that sets out how the agreement might come to an end. It should include the reasons why either party can terminate the contract and how much notice each party needs to give.
A few other key factors to address in your independent contractor agreement include:
- Responsibilities and deliverables of both parties
- Payment details including how the service will be paid for and when
- Start and end dates of the agreement
- Project milestones and deadlines
- The applicable governing law to be applied to the agreement
- How disputes will be handled and resolved
How effective is an Independent Contractor Agreement?
Creating a clear independent contractor agreement is key to a successful relationship between a business and an independent contractor. The contract can help to set clear expectations before the work begins as well as protect the interests of both parties involved.
Do I need a lawyer for an Independent Contractor Agreement?
You can prepare your own independent contractor agreement document if you don't want to pay for help from a legal professional. If you're not sure where to start, it's always best to use an independent contractor template to help you out. Once you've drafted your document, it's worth asking a legal professional to look over it. They will make sure that you haven't missed out any important clauses that could cause problems later down the road.
Get access to online lawyers, legal documents and templates
How do I write an Independent Contractor Agreement?
Depending on the relationship between the client and the contractor, an independent contractor agreement can be as short as one page or as long as 20. You will find that most independent contractors have a set agreement that they use with all of their clients. This will provide a great starting point for drawing up a personalised agreement for your working relationship.
Where to get free legal documents and templates like an Independent Contractor Agreement
Nowadays, free independent contractor agreement templates are easy to come by online. Templates provide a great starting point for drafting up your contract. Remember, its always worth asking a legal professional to look over your document too.
Here are a few places to start your search.
- Lawpath. When you sign up to Lawpath's subscription service, you'll be able to browse, download and customise your first template for free.
- Lawdepot. Browse through a large selection of online legal templates before finding the right one to download and edit.
- Legal Zebra. You'll be able to browse an independent contractor template on Legal Zebra, but you will need to pay to download and customise it for your needs.
- WonderLegal. Take your pick of more than 140 legal templates before customising and downloading an independent contractor agreement template for a one-time fee.
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