Article | 03 Sep 2018

Hiring a freelancer: legal considerations

Posted in Freelancer, Top tips, Tools & Advice, Learning,

Hiring a freelancer often seems simpler than hiring an employee. After all, you don’t have to worry about taxes, pensions, statutory rights and so on.

The flipside to this, however, is a lot of potential grey areas. As an employer, you have less control over freelancers than over permanent employees, which makes things like intellectual property (IP) and exclusivity less clear-cut than would otherwise be the case.

So if you’re hiring a freelancer, it’s best to forestall any legal issues by getting everything in writing at the outset. For many employers, that involves both parties signing a simple consultancy agreement and T&Cs outlining all the most important points. That way you both know where you stand from the get-go.

Here are some of the main freelance legal considerations you should be thinking about:

Intellectual property

IP law is befuddling at best. In general, you have ‘implied rights’ to use material created for you by a freelancer. However, if you want to use the material for a purpose other than that originally agreed, things can get complicated.

For example, if you hire a freelancer specifically to create graphics for a certain website and then use those graphics elsewhere, you could find yourself embroiled in an IP dispute.

Similarly, you probably don’t want material created for your company to be used by competitors. A freelancer who retains all IP rights would be within their legal boundaries to grant usage to the highest bidder, regardless of the original hire. So to avoid getting embroiled in any nasty legal disputes, hash out the nitty-gritty of what belongs to whom and how it can be used before the project starts.

Think about:

  • Crediting. Will you acknowledge the freelancer as the author of the material, or would you prefer to keep things anonymous?
  • Promotions. Will you be using the material created for promotional purposes? If so, how and by whom will it be distributed?
  • Exclusivity. Do you want exclusive or non-exclusive rights to the material?
  • Usage. How and where will the material be used?
  • Editing. Do you want to be able to edit or alter the material in the future?

Payment terms

If you and your freelancer do end up in a legal dispute, money is likely to be at the heart of it. So it’s really important to establish payment terms firmly and in full at the get-go.

Things to think about include:

  • The rate of pay. Are you offering a fixed sum for the project, or an hourly rate? If the latter, how will hours be measured?
  • Invoicing. Will you expect a freelancer to send invoices for the work? If so, when and how often?
  • Payment timescale. Because they don’t have a regular salary coming in, many freelancers need to know when invoices are likely to be paid so that they can budget accordingly.  It’s vital to agree and stick to a payment schedule which works for both parties.
  • Taxes. By and large, freelancers will sort out their own situation with HMRC. However, check whether or not they’re VAT registered, as this can make things like expenses a bit more complicated than usual.

Non-Disclosure and Exclusivity Agreements

If a freelancer is going to be handling confidential information, you may want them to sign a Non-Disclosure Agreement (NDA). This is a legally binding document which will clarify (and, if necessary, enforce) your confidentiality needs. Most NDAs are time limited (for example, a marketing promotion may need to be kept under wraps until the launch, after which secrecy is not so important any more).

Similarly, you probably won’t want a freelancer you’ve hired to simultaneously be working on competitor projects. Or to be using skills and concepts honed with or by you for rival firms. While the control a company has over a freelancer is more limited than over an employee, you can suggest an exclusivity agreement. This will ensure that your freelancer works exclusively for you (or avoids similar, rival projects) for a certain length of time.

Many freelancers will ask a higher rate of pay for exclusivity, but it’s usually worth it to keep them in your stable.

Contracts

You’re not legally required to sign a contract or consultancy agreement with a freelancer, but it’s a good idea to do it anyway. A contract helps both parties to know where they stand, and you can refer back to it if you’re ever unsure of your position.

When drawing up a contract, include everything relevant mentioned above. Also think about agreeing:

  • When they are going to do the work.
  • The timescale of the project.
  • How disputes will be handled.

Of course, the majority of freelancer projects go off without a hitch but thinking about all the possible eventualities ensures neither of you will face any nasty surprises down the line. And if you hire your freelancer through The Work Crowd, you benefit from having agreements built into the platform, and support on hand to mediate if need be. So both parties can feel confident that their rights will be protected.

And if you’re not sure of what you need to think about when hiring a freelancer or the best structure that will work for you, then give us a call on 0203 828 8440 or drop us a line at hello@theworkcrowd.com.  

 

Tagged in toptips, contracts, legal,