Posted by Minna Boyle on 26 October 2018
When you’re working in a small business or startup and decide to hire a contractor to outsource some of your work, it’s tempting to download a free Contractor Agreement template from the internet to cut costs. But is it safe to use a free template in this situation?
Most of the time, even if you download a free template it still comes with a disclaimer to seek professional advice. This is because there are certain risks with hiring a contractor that are specific to your particular business, and won’t be covered in a template.
Learn more about contractors and the key considerations for a Contractor Agreement below.
What Is A Contractor?
A contractor is a freelance worker you can engage to do work for your business. A contractor differs from an employee because a contractor normally has a much higher level of control over how the work is done. A contractor often has their own ABN, may submit an invoice for work completed and sorts out their own insurance, superannuation and tax.
Contractors can be ideal if you just require them for a specific task or time frame. However, there is a clear legal distinction between hiring someone as a contractor and hiring someone as an employee, so it’s important that you are complying with the law when hiring contractors.
When Do I Need A Contractor Agreement?
If your business engages contractors, it’s a good idea to have a Contractor Agreement in place with each contractor you engage. This helps set clear expectations about the scope and standard of services to be provided, fees & payment, confidentiality, IP ownership and termination processes.
How Do I Use It?
You should get your contractors to sign the Contractor Agreement before they start working for you. You can then refer back to the Contractor Agreement if any issues comes up.
Contractor Agreement Example
Daley needs a digital marketing consultant to help grow his ecommerce business. He can’t afford to employ a permanent marketing team just yet, but he’s looking for someone to help him set up a marketing system he can continue to operate himself. He engages Reece, a freelance marketing consultant, as a contractor. The Contractor Agreement clearly sets out that Reece will be hired for 3 months to set up a marketing system for Daley’s ecommerce business, along with other important terms of the arrangement. This not only gives Daley certainty in terms of the costs his business will incur, but also the flexibility of not having to lock in permanent staff.
What’s In It?
These are some of the sorts of issues that are typically covered in a Contractor Agreement, but may not be detailed in a free template. A lawyer can help guide you through the best options for your business.
- FEES/ PAYMENT – How will you pay the contractor for their services?
- TERM – How long does the contract go for? Is it for a specified time frame or ongoing?
- INTELLECTUAL PROPERTY – Who owns the IP created by the contractor for your business?
- TERMINATION – What happens if either party wants to end the contract before it is over?
Having a properly drafted Contractor Agreement is really important – it can protect your company from exposing IP and confidential information, and provides certainty about your agreement with the contractor so both sides know what is expected.
Having a lawyer help you draft a legally sound Contractor Agreement will give you clarity around your engagement, and also relieve you from the stresses associated with the legal technicalities of hiring contractors.
At Sprintlaw, we have a team of experienced lawyers can assist you with drafting or reviewing a Contractor Agreement. Get in contact with one of our consultants for a no-obligation chat on how we can help you put together a Contractor Agreement and help with any other legal issues your business may have.