If you run an agency, freelancers and contractors are your secret weapon for project flexibility. But are you fully protected? Discover why a solid freelancer contract is non-negotiable for agency owners.
Freelancers can bring a specific set of skills to your agency, such as web and software development, UX design, video production, photography, front end design etc. the list goes on.
The good news is a freelancer does not carry the same costs that an employee at your agency will bring, such as employers national insurance contributions, holiday pay and sick pay.
The bad news is a freelancer can carry other costs and legal risks that can sometimes eclipse those of an employee.
To help you manage your legal risk when you work with freelancers, here’s 8 top tips when it comes to your freelancer contract.
- Have a freelancer agreement!
The number of agencies that we’ve spoken to (some above 100 in headcount) that do not have contracts in place with their freelancers is worrying! If you’re taking your business seriously, take your approach to contracts seriously – they are there to protect you, your freelancer and also your client (more on that later). - Check your client contract
We often find that a lot of agencies that are familiar with signing contracts are working with bigger brands that have in-house legal teams. A key clause that can be found in a lot of contracts issued by the client’s legal team is a clause that doesn’t permit third party contractors to be used…or if it does, there’s usually an approval process to go through before the agency can engage with the freelancer.
Some agencies gloss over the finer details of the contract, crack on with the project that uses various freelancers and then discover they’re in breach of contract when something goes wrong. - Loose lips sink ships
Make sure your freelancer contract covers off any confidential obligations you’ve signed up to with your client. Most importantly, make sure you’ve had a conversation with your freelancer about the do’s and don’ts of discussing the project outside of the agency. The easy faux pas here is the work portfolio…we have seen many an agency slip up because of a freelancer boasting on social media about a project which is otherwise confidential or requires prior approval from the client before it can be showcased as an example of work. - Be careful with IP
This is often one of the most hotly negotiated clauses in a client contract as it’s often where all the value sits. If you’re using a freelancer that will be creating Intellectual Property (IP) as part of the project or using licensed IP, make sure you have this covered off in both the client contract and the freelancer contract so it all flows together nicely. - Scope and quality control
If your freelancer produces work that isn’t fit for purpose, make sure your contract sets out the process to resolve this.
You should also ensure there is a nice and clear process for signing off work rather than having an open-ended sign off process. If your freelancer is invoicing you based on time spent instead of an overall project fee, make sure you have an approval process before additional time and expenses are incurred.
All of this might feel like common sense, but you might be surprised at how many of agencies forget to cover this. - Make sure they are a genuine freelancer
Making sure you have the correct employment status for your freelancer is critical from a tax liability perspective. You might already be familiar with IR35, but this is a key piece of legislation that is there to prevent businesses dressing up employees as freelancers in order to pay less tax. The penalties and consequences for non-compliance can be brutal, so make sure you’ve checked this area carefully. - Beware of the poachers
In a tricky employment market where talent for niche roles is short and the economy is struggling, bad behaviour is becoming more prevalent.
Make sure you have a nice and clear clause in your freelancer contract to deter them from poaching your clients and your team after a set period of time from when your contract with them ends.
It’s good practise to have the same type of clause in your client contract too so you’re covered from both angles. These clauses are known as restrictive covenants and are unfortunately quite slippery to use so it’s always worth getting professional advice in this area. - Remember where you saved the freelancer agreement!
Something so simple but often overlooked is the crucial step of saving a copy of the contract you’ve signed. Don’t leave it hiding in your email folder, save it somewhere central and easy to find (and archive!).
E-signature platforms are great as they’ll often have a central space where all your issued contracts are stored, but it’s the one’s you’ve received and signed that are often forgotten about.
The eight tips we have shared in this article are designed to protect you and your agency. Ensuring your freelancer contracts are well-written from a legal perspective will help prevent issues like confidential information leaks and client poaching. Cutting corners or using template documents means if issues arise, you might not be covered and the consequences could be significant. Just like investing in your business insurance, having solid legal contracts can protect you if things go wrong.
If you’d like to discuss the contracts in your creative, marketing or tech agency, you can book a free of charge initial chat
Ryan has helped a vast number of businesses protect and control their intellectual property as well as drafting and advising on consumer and commercial contracts.
