Oversight and negligence are among the problems of freelancers and the self-employed. Surveys and forums show that many freelancers have not got paid for their work. Setting up a contract before starting freelancing work can protect you from non-paying clients and other risks associated with freelancing.
Establishing a contract as a self-employed worker will also help you achieve the following:
- Set clear expectations before starting work.
- Solve problems with customers about payments, delivery dates, reviews, etc.
- Charge for any additional work that was not stipulated within the framework of the project that is, for possible unforeseen events.
In this article, you’ll learn what to consider about presenting contracts as a freelancer. To do this, we will address the following points:
- Do all freelancers need a contract?
- What to include in your contract
- Freelance hire tips
- Contract templates
- How to handle a breach of contract
Note: This article offers general advice but does not constitute legal advice. Find out about local regulations and consult legal experts if necessary.
1. Do all freelancers need a contract?
It is not compulsory to draw up a contract before accepting a job as a freelance professional. However, if the project does not go as planned, the absence of a contract may mean that you or your client must spend additional money.
You may not need a freelance contract in the following situations:
- If your freelance work is a hobby.
- If you do not depend on your income as a freelancer to pay the bills.
- If you mainly accept small or short-term projects.
It is recommended that you establish a contract in the following situations:
- If you work as a freelancer full time.
- If you depend on your freelance work to pay the bills.
- If you take on high-value projects that may take you weeks or months to complete.
What to include in your contract?
What you include in your contract will depend on the type of work. For example, do you need a contractual agreement for an occasional project, a retention agreement, or certain terms and conditions that your clients must sign before starting work? The following are the most important clauses that you must consider in your contract as a freelance professional.
Essential points for a freelance professional contract:
Your rates and payment terms
Do you require a down payment or percentage before sealing the deal, ask for full payment upfront, or do you accept payment in instalments? For example, it is very common for freelance writers to require a payment of 50% of the total amount in advance when they accept a project and the remaining amount after the work is finished. Thus, you have a cash flow that can serve as financial support if the client backs out of an agreed project.
“Why should I pay in advance?”
This is a prevalent question from clients or accounting departments who are often unwilling to pay for your work until it is finished. When you answer, think about the following: if you work as a freelancer, your time is the product your clients pay for, and it is not infinite! Clients reserve a slot in your schedule through a partial or total payment in advance. If a client doesn’t reserve their space in advance, there’s no way you can guarantee they’ll be able to work on their project right when they need it since you’ve already allocated your availability for another project.
2. Late fees
What happens if customers don’t pay on time? Charging interest for late payments can help protect your liquidity and encourage customers to pay on time. For example, you can add 5% every 14 days that the invoice remains unpaid. Before you can start charging late fees, you need to notify your customers. Therefore, add it clearly in your contract and make sure it is reasonable. That is, do not apply a £50 fee on a £100 project because it would be excessive. A good idea would also be to apply a discount for those customers who pay on time.
3. Additional work or unforeseen events
If you’ve already set a flat rate for a project instead of an hourly rate, what happens if the job in question changes? Unforeseen events arise when a project demands work extra that you had not contemplated concerning the original plan. For freelancers, this leads to the client expecting more work for the same fee. Clearly defining the stages of the project in your initial agreement gives you something concrete to fall back on in case your client tries to pressure you with more work. Remember to include how you will manage the extra work; Will you charge an hourly rate or prepare a new budget for the project?
4. Copyright and intellectual property
Who owns the copyright to your work? If you work as an employee, your employer generally owns the copyright to all your work for that person or company, whether it’s photos you take or ideas you share in meetings. When you work as a freelancer, you own the copyright to your work until the moment you transfer that intellectual property to your client. You decide to clarify in your contract if and when this transfer will happen, when you deliver the final version, after the customer has made the full payment, or at another time. Also, remember to clarify exactly what rights your client will get: will they get the copyright to the final version of your work or to all the ideas you have proposed during the project? Research the copyright laws in your country and seek legal advice if in doubt.
5. Using the work in your portfolio
Showcasing your past work is the best way to gain new clients. However, if you want to include work you’ve done for your clients to promote your business, you’ll need to ask permission first. Some people include a clause in their contracts confirming that they reserve the right to use excerpts from the projects they’ve worked on to promote their business and advertising. However, many consult their clients individually out of good manners. This shouldn’t surprise your clients because most will have hired you after seeing your portfolio.
6. Cancellation policy and fee
What happens if a client unexpectedly cancels before the start of the project or during its course? In your contract, you should clearly state if you allow cancellations and, if so, within what period, and whether customers will lose payments made if they cancel. If you have a retainer agreement, include how much notice should be given if either party wants to cancel, e.g., at least six months’ notice for long-term benefits or thirty days’ notice for a monthly renewal contract.
It’s not as dramatic as it sounds: a cancellation fee applies when a client cancels a project you’re already working on, despite all your efforts. It is usually a percentage of the project’s total value and covers some (or all) of the time you have spent on the project to date. If a client cancels a project at short notice and can’t fill that gap in your income right away, at least you’ll get some of the money you were expecting to make.
7. Sickness or disability policy
What if you must take a few days off unexpectedly? It doesn’t matter if you are a healthy person; It is very likely that at some point in your career, you will have to take time off, for example, due to illness, the loss of a loved one, or if you ever need to take care of a family member. Work is the last thing you will want to think about at times like these, so you must have a way to proceed planned and spell it out in your contract. For example, you can reserve the right to subcontract, postpone the work for a set period, or offer a full or partial refund of money.
In addition to your contract, you can prepare for tough times by adopting good habits starting today. You can make a small contribution each month to your own “sick funds” or purchase income protection insurance that will pay you a set amount each month if you cannot work. Keep in mind that many policies will not cover all your income.
8. Changes and revisions
It’s happened to everyone when they turn in a job and the client comes back with a bunch of requests for changes or fixes. If you do not have a clause in your contract, it will be easy for you to fall into the “trap of a thousand corrections”. Specify the number of changes that the project rate contemplates and how much it will cost to make changes once this limit is passed. For example, writers may offer a post-delivery proofreading phase within the project price and then charge an hourly rate for any additional changes the client requests. Remember to include a time limit for submitting revisions. This will help you maintain momentum and prevent clients from coming back weeks later when you are already working another job.
9. Your rights as a contractor
When working as a freelancer, you do not enjoy the same benefits as an employee (such as sick pay or vacations), but some clients tend to treat you as if you were in a dependency relationship. Your contract should define what it means to be a contractor, e.g. For example, you have the freedom to work on your own schedule, set deadlines, accept work from other clients, and choose which projects to accept or reject. If you are not sure what it means to be independent, check the regulations in your country.
10. Your contact person
Finally, something that will make your life easier, even if it is not a contractual clause per se: who will be your contact person for this project? Having someone on the client side who is available to answer your questions, process your invoices, and review your work will help you meet your deadline. This is vital if you work for larger companies or with many shareholders.
Freelance Hire Tips
Write your contract in plain language. Nobody likes to read long and confusing contracts. It is much easier to convince clients when your contract is written in language that is easy to understand but covers all the legal bases.
Consult with professionals. There are tons of freelance contract templates on the internet, and articles like this will get you started. But none of this is a substitute for professional advice, though, so it’s best to find someone with expert knowledge to review your draft contract once you’ve drawn it up.
Running your own company is an adventure, but you will likely encounter many difficulties along the way. Update your contract regularly. When you have a problem, consider how you could better protect yourself and add a new clause to your next contract.