If your company is looking to hire remote contractors and freelancers, it’s important that you use an Independent Contractor Agreement to define the scope of work that’s expected, the deadline by which the work is due, and the payment amount that has been agreed between the contractor and and the hiring organization.
In this article, we’re looking at what you need to include in your Independent Contractor Agreement, and why –
together with a simple independent contractor agreement that you can cut and paste for your own use.
What is an independent contractor?
An independent contractor is defined as anybody that’s a self-employed worker. While variations differ from country to country, this classification of worker typically covers all contractors, freelancers, and sole business owners.
When you hire an independent contractor, they will be performing specific services or completing set assignments for your organization. In addition, they have flexibility to work for many different clients or organizations at once – not just your business. So they fall outside the scope of a typical employee.
With the rise of remote work, many organizations are hiring skilled professionals such as designers, photographers, writers, and consultants from around the globe to assist their internal teams and avoid the overheads and costs of full-time or part-time employees.
Unlike employees, independent contractors are flexible with their hours and workload. You don’t need to factor in expenses like sick pay, insurances, or vacations – and you don’t need to deal with tax payments. Independent contractors are responsible for calculating and paying their own taxes.
What Is An Independent Contractor Agreement?
An Independent Contractor Agreement is a contract between a company and an independent contractor to hire the contractor without them becoming an employee. The contractor or freelancer agrees to work for the hiring organization for a specified period of time, on a specific assignment or project.
Why Do You Need An Independent Contractor Agreement?
Independent freelancers are usually skilled professionals or subject matter experts who set their own rates and may propose a scope of work and a timeframe that will help the hiring organization best reach its goals.
Having a signed agreement between the contractor and organization ensures there is no scope creep in terms of timeframes, amount of deliverables, or the type of work that the contractor has been hired to do.
The terms of the contract can be negotiated between the contractor and the hiring company to ensure both parties are in agreement before signing.
In the event there are any delays, disputes, or problems between the start and end of a freelance project, the company or the contractor can refer to this legally binding contract to settle matters.
Let’s take a look at a simple Independent Contractor Agreement that you can use as the basis for creating your own contract.
Simple Independent Contractor Agreement
A proper contract should be prepared for any new project or assignment that is being undertaken between a hiring company and an independent freelancer.
What you need to include:
- The names of both parties – contractor and hiring company
- Project scope – establish the exact services that will be provided by the contractor
- Changes, additions, and extra expenses incurred – set out how any changes to the original contract will be dealt with
- Timeframe – set out the start date, any milestones, and the deadline for completion
- Payment terms – set out the payment amount and payment terms
- General terms and conditions
- Contract termination – this protects both the contractor and hiring company if the agreement needs to be terminated for any reason
- Signature of both parties – this makes the agreement legally binding between both parties
Draft Independent Contractor Agreement
Disclaimer: Before signing any independent contractor agreement for your organization, please consult with your legal team.
This contract (the “Agreement”) is entered into by and between the below named parties (the “Parties”). This offer will expire at the close of business on [date which the proposed contract needs to be accepted by] if not accepted in writing by counter-signing this Agreement by the aforementioned date.
[Hiring organization name] (the “Client”)
Client contact name
Email address for contact name
[Contractor name/business name] (the “Contractor”)
Contractor full name
Email address for contractor
Services to be provided by the Contractor
The Contractor agrees to perform the services described in Attachment A (the “Services”) and the Client agrees to pay the Contractor as set out in Attachment A.
In witness whereof, the Parties have executed this Agreement (inclusive of Attachment A and Attachment B), as of the later of the two dates below (the “Effective Date”).
Client name and signature
Contractor name and signature
Attachment A: Services
Start date: (the date that the Contractor will begin the work)
Services summary: (enter a detailed description of the services the Contractor is being hired to provide)
Project total: (enter the total agreed amount for the deliverables that will be provided as part of this agreement)
(Set out the terms of payment here. Will the contractor bill once at the end of the project, or on agreed milestones during the project? Is a deposit required, and if so – how much?)
Examples of what to include:
- 50% deposit will be paid by the Client before any work begins
- Any deposit will be subtracted from subsequent invoices
- The Contractor will bill once upon completion of the work
- The Contractor will bill at monthly milestones on [dates]
Attachment B: Terms and Conditions
The undersigned representative of the Client has the authority to enter into this Agreement on behalf of the Client. The Client agrees to provide the Contractor with everything needed to complete the Services as, when, and in the formats requested by the Contractor.
The Contractor has the experience and ability to do everything the Contractor has agreed to for the Client, and they will carry out this work in a professional and timely manner.
The Contractor will endeavor to meet every deadline that is set, and to meet the expectation for Services to the best of their ability.
The Contractor warrants that:
(i) the Services will be performed in a professional manner and that none of the Services or any part of this Agreement is or will be inconsistent with any obligation the Contractor may have to others;
(ii) none of the Services or Inventions or any development, use, production, distribution or exploitation thereof will infringe, misappropriate or violate any intellectual property or other right of any person or entity (including, without limitation, the Contractor);
(iii) the Contractor has the full right to provide the Client with the assignments and rights provided for herein;
(iv) the Contractor will comply with all applicable laws in the course of performing the Services and
(v) if the Contractor’s work requires a license, the Contractor has obtained that license and the license is in full force and effect.
EXCEPT AS SET FORTH IN THIS ATTACHMENT B, THE CONTRACTOR DISCLAIMS ANY AND ALL WARRANTIES, WHETHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY, COMPLETENESS OR RESULTS TO BE DERIVED FROM THE WORK.
EXCEPT AS SET FORTH HEREIN, ALL DELIVERABLES ARE DELIVERED ON AN “AS-IS” BASIS.
[The warranty clause ensures that the Contractor understands and will legally comply with everything set out in the services section of the contract]
Confidentiality & Non-Disclosure
Each party shall maintain, in the strictest confidence, all Confidential Information (as defined in the next sentence) of the other party. “Confidential Information” means all
(i) nonpublic information (at the time of disclosure) disclosed by one party to the other party under this Agreement, provided such information is marked or indicated by the disclosing party to be confidential;
(ii) and any information which ought reasonably be considered confidential with regard to the circumstances surrounding disclosure, whether or not such information is marked “Confidential”.
In the event a party is required to disclose Confidential Information pursuant to a judicial or other governmental order, such party shall, to the maximum extent permitted by law or opinion of counsel, provide the other party with prompt notice prior to any disclosure so that the party or its client may seek other legal remedies to maintain the confidentiality of such Confidential Information.
Each party receiving Confidential Information shall be responsible for any breach of this provision that is caused by any of its employees, affiliates, representatives or agents and such party agrees to indemnify and hold harmless the other party from and against any liabilities, claims, damages, losses, costs and expenses resulting, directly or indirectly, from any breach by a party, or any of its employees or independent contractors, of any provision of this Agreement.
The obligations of this Section shall survive termination of this Agreement for a period of [number of months or years].
[The confidentiality clause protects the interests and privacy of both parties and prevents any sensitive information being disclosed during the course of the contract, and for a specified period of time after the contract ends.]
Ownership and Licenses
The Contractor agrees that the deliverables and materials developed pursuant to this Agreement (including, without limitation, all presentations, writings, ideas, concepts, designs, text, plans, and other materials that the Contractor conceives and develops pursuant to this Agreement, including all materials incorporated therein whether such materials were conceived or created by the Contractor individually or jointly, on or off the premises of the Client, or during or after working time) shall be treated as if the development of such deliverable constitutes a “work for hire” and shall be owned by the Client upon payment of all fees due to the Contractor pursuant to this Agreement.
In the event that any such material is considered not to be a “work made for hire,” the Contractor hereby assigns all ownership (whether represented or not by a registered patent, copyright, trade secret) and other proprietary or rights, title and interest in such deliverables and materials to the Client, and agrees to execute such documents as the Client may reasonably request, in order to assist the Client in obtaining and protecting such rights.
The Contractor agrees that they have no interest in any materials that the Contractor submits to the Client, including, without limitation, any security interest therein, and hereby releases to the Client any interest therein (if any) which may be created by operation of law.
Except as otherwise agreed to in writing and as necessary in the performance of this Agreement, the Contractor shall have no rights to license, sell or use the deliverables or materials developed under this Agreement, or any part thereof.
[Under this clause, all the work carried out by the Contractor for the Client under this agreement becomes property of the Client. This prevents the Contractor reselling the same work to anyone else]
The Contractor agrees that during the period in which it is providing Services and for [number of months or years] thereafter, the Contractor will not encourage or solicit any employee, vendor, client or contractor of the Client to leave the Client for any reason.
[This section protects the business interests of the hiring organization by preventing the independent contractor from “poaching” any clients or vendors of the Client for a specified period of time]
Relationship of Parties
Nothing contained in this Agreement shall be construed to create a partnership, joint or co-venture, agency, or employment relationship between the Contractor and the Client. Both Parties agree that the Contractor is, and at all times during this Agreement shall remain, an independent contractor.
[This clause is important to include, as it clearly defines the relationship between the two parties as being one of a client and contractor, and not a company and employee relationship]
Either Party may terminate this Agreement at any time, with or without cause, upon [number of days] written notice.
Either Party also may at any time terminate the Agreement immediately if: (i) the other party commits a breach of this Agreement and such party does not cure a breach within [number of days] of written notice from the non-breaching party of such breach.
If this Agreement is terminated earlier by the Client without cause, the Client agrees to pay the Contractor any and all sums which are due and payable for: (i) services provided as of the date of termination; and (ii) expenses already incurred, including those from documented non-cancelable commitments. The Contractor agrees to use the best efforts to minimize such costs and expenses.
Termination for any reason shall not affect the rights granted to the Client by the Contractor hereunder. Upon termination, the Client shall pay to the Contractor all undisputed amounts due and payable. If upon termination the Client has not paid undisputed fees owed for the material, deliverables or Services provided by the Contractor as of the date of termination, the Client agrees not to use any such material or the product of such Service, until the Client has paid the Contractor in full.
Any provisions or clause in this Contract that, by its language or context, implies its survival shall survive any termination or expiration of this Agreement. Notwithstanding anything to the contrary in this Agreement, the Contractor shall retain a perfected security interest in the deliverable or material until the Client has made payment in full for all undisputed amounts as of the termination date. The Contractor hereby agrees to release and waive its security interest in the deliverable and material upon receipt of full payment for all undisputed amounts.
[If for any reason either party can not or does not wish to continue on with the contract, this clause gives either party the right to terminate the agreement with a specified notice period, and it also ensures the Contractor is paid for any work done up to the date the agreement terminates]
The Client understands the importance of paying independent contractors in a timely manner and wants to maintain a positive working relationship with the Contractor to keep the project moving forward.
Payments for each invoice delivered by the Contractor to the Client are due within [number of days] of receipt. In case of overdue payments, the Contractor reserves the right to stop work until payment is received.
[Ensuring your contractors get paid on time is a crucial part of building good, long-term freelancer relationships. This clause sets out the agreed payment terms between both parties]
In the event an invoice is not paid on time, to the maximum extent allowable by law, the Contractor will charge a late payment fee of [percent of total amount] per [month/week] on any overdue and unpaid balance not in dispute.
The Contractor’s acceptance of such service charges does not waive its rights to any remedies for the Client’s breach of this Agreement. All payment obligations are non-cancelable and fees paid are non-refundable.
[Many contractors build in a late fee if their payments are not received by a specified date after they submit their invoice. This is typically a percentage of the project total, which accrues over every month or week that payment is not made)
A deposit of [amount of deposit required by the Contractor] is due upon the acceptance of this Agreement before work will begin.
[It’s common for professional contractors to require a payment up front before work begins. This ensures that both parties have “skin in the game” to begin and complete the work]
The Client shall reimburse the Contractor for all expenses that are reasonable and that have been authorized in writing by the Client in advance; payable within [number of days] of the itemized invoice.
[Depending on the type of project, a contractor may incur expenses that fall outside of the project total. This clause ensures they discuss any extra expenses with the client, and that the expenses are approved before they are invoiced]
Changes To Services
Any material changes to the Services, including the work to be performed and related fees must be approved by the prior written consent of both parties.
[This clause allows for changes in scope and deliverables to the original agreement, and set out the terms by which those changes need to be requested and approved]
Indemnification and Limitation of Liability
The Contractor agrees to indemnify, defend and hold harmless the Client from any and all claims, actions, damages, and liabilities (excluding, without limitation, attorneys’ fees, costs and expenses) arising (i) through the Contractor’s gross negligence ; (ii) out of any claim that the materials or deliverables, or any portion thereof, in fact infringes upon or violate any proprietary rights of any third party, including but not limited to patent, copyright and trade secret rights; or (iii) from a breach or alleged breach of any of the Contractor’s representations, warranties or agreements herein.
The Client agrees to indemnify, defend and hold harmless the Contractor from any and all claims, actions, damages, liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees) arising in any manner caused by the Client’s (i) gross negligence; (ii) out of any claim that the Client provided content, or any portion thereof in fact infringes upon or violate any proprietary rights of any third party, including but not limited to patent, copyright and trade secret rights; or (iii) from a breach or alleged breach of any of the Client’s representations, warranties or agreements herein.
TO THE MAXIMUM EXTENT ALLOWABLE BY LAW, THE CONTRACTOR SHALL NOT BE LIABLE TO THE CLIENT FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING DAMAGES FOR LOST PROFIT, LOSS OF BUSINESS OR THE LIKE) ARISING OUT OF OR RELATING TO THIS ATTACHMENT B OR THIS AGREEMENT, THE CONTRACTOR’S PERFORMANCE HEREUNDER OR DISRUPTION OF ANY OF THE FOREGOING, EVEN IF THE CLIENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE CAUSE OF ACTION, WHETHER SOUNDING IN CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE. TO THE MAXIMUM EXTENT ALLOWABLE BY LAW, THE CONTRACTOR’S AGGREGATE LIABILITY UNDER THIS ATTACHMENT B AND THIS AGREEMENT SHALL IN NO EVENT EXCEED THE AGGREGATE COMPENSATION PAID BY THE CLIENT TO THE CONTRACTOR UNDER THIS AGREEMENT.
[This clause is important for both the contractor and client, protecting them from any liabilities or legal claims that may arise for any reason while they are working together.
Right to Authorship Credit
Both Parties agree that when asked, the Client must properly identify the Contractor as the creator of the deliverables. The Client does not have a proactive duty to display the Contractor’s name together with the deliverables, but the Client may not seek to mislead others that the deliverables were created by anyone other than the Contractor.
The Client hereby agrees the Contractor may use the work product as part of the Contractor’s portfolio and websites, galleries and other media solely for the purpose of showcasing the Contractor’s work but not for any other purpose.
The Contractor will not publish any confidential or non-public work without the Client’s prior written consent.
[Many contractors rely on proof of their previous work to get new clients. This clause enables contractors to use the work they have done to showcase their talent, but ensures this work cannot be used for any other reason, without consent of the client]
Governing Law and Dispute Resolution
This Agreement and any dispute arising hereunder shall be governed by the laws of the jurisdiction of the Contractor’s primary business location (the “Contractor’s Jurisdiction”), without regard to the conflicts of law provisions thereof. For all purposes of this Agreement, the Parties consent to exclusive jurisdiction and venue in the courts located in the Contractor’s jurisdiction.
The failure of either party to enforce its rights under this Agreement at any time for any period shall not be construed as a waiver of such rights.
[This clause sets out the jurisdiction where any legal conflicts will be settled in relation to this contract, if they arise. It can either be the country/state where the client is located, or where the contractor is located]
No failure or omission by a party in the performance of any obligation under this Agreement shall be deemed a breach of this Agreement or create any liability if such failure or omission shall arise from any cause or causes beyond the reasonable control of such party which cannot be overcome through that party’s reasonable diligence, e.g., strikes, riots, war, acts of terrorism, acts of God, severe illness, invasion, fire, explosion, floods and acts of government or governmental agencies or instrumentalities.
[This clause protects the contractor from any situation out of their control that prevents them from delivering what they agreed upon under the services term of the contract]
Any notices to either Party made pursuant to this Agreement shall be made and sent (i) via US mail or a nationally recognized carrier to the other Party’s address on file; (ii) or via e-mail to the other Party’s designated representative. Each Party shall have an independent obligation to provide and update, as necessary, the mail and e-mail address on file for such notices. Notices sent by email shall be deemed effective once sent if no error or “bounce back” has been received within twenty-four (24) hours of submission.
The Client and the Contractor will seek to maintain a professional relationship that is free from harassment of any kind and from any other offensive or disrespectful conduct. If at any time during the term of this Agreement the Contractor believes that he/she has been subjected to harassing behavior on the part of the Client or the Client’s staff, the Contractor will notify the Client immediately and demand that appropriate actions will be taken to correct the matter. In the event that the reported behavior continues following the Contractor’s second notice, such behavior will constitute a breach of this Agreement and entitle the Contractor to terminate this Agreement in accordance with the Agreement’s Term and Termination Clause, and be paid in full for the ordered project or for the planned monthly service hours, as applicable, without limiting any other right or remedy available to the Contractor by law.
[It’s important that the client-contractor relationship is carried out in a businesslike manner. This clause protects both parties from all issues around discrimination and harrassment, and sets out remedies in the form of payment, contract termination, and appropriate actions to correct any issues between the parties]
The section and subsection headings used in this Agreement are for convenience only and will not be used in interpreting this Agreement. Both parties have had the opportunity to review this Agreement and neither party will be deemed the drafter of this Agreement for the purposes of interpreting any ambiguity in this Agreement. The parties agree that this Agreement may be signed by manual or facsimile signatures and in counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. In the event that any provision of this Agreement will be determined to be illegal or unenforceable, that provision will be first revised to give the maximum permissible effect to its original intent or, if such revision is not permitted, that specific provision will be eliminated so that this Agreement will otherwise remain in full force and effect and enforceable.
This Agreement, along with this Attachment B, and any exhibits, schedules or attachments, between the Parties supersedes any previous arrangements, oral or written, and may not be modified in any respect except by a future written agreement signed by both Parties.
If you’re a freelancer or an organization that’s looking to hire freelancers for projects or to bridge skill set gaps in your internal team – it’s essential that you have a signed Independent Contractor Agreement.
This agreement protects both parties when it comes to scope of work, deadlines, payments, confidentiality, business interests, and liabilities during the course of a project with an independent contractor.
While independent contractor agreements aren’t required by law, they ensure that project assignments run smoothly for everyone involved.