Becoming a Contractor The legal lowdown

Becoming a Contractor The legal lowdown Parents are increasingly looking outside traditional employment models in order to more effectively balance parenting with a fulfilling career. With the ability to work flexibly and control your workflow, Freelancing is one way to achieve that. The Australian Bureau of Statistics Reports that there were over 1 million full-time independent contractors in 2014, and the freelance platform Upwork reports over 3.7 million Australians undertake some kind of freelancing work. An overwhelming majority of freelancers report flexibility as the primary reason for becoming self-employed and interestingly, 36.3% of independent Contractors are professional women. In the Freelance world, a little self-belief and some persistence go a long way, but you will also need a clear and concise Services Agreement to set you on the trouble free path to self-employment. Here are a few legal tips on drafting your Freelance Services Agreement: 1.Defining the relationship. The Australian Tax Office (ATO) can deem that a contractor is an employee for tax and superannuation purposes. Your contract should clearly define the nature of your relationship. This is particularly important to make sure that your relationship does not give rise to the obligations normally associated with an employer/employee relationship. 2.  Obligations of each party and description of services to be provided. 3. Duration of the contract, including a termination clause setting out how to terminate the contract and the rights of each party. 4. The value of the contract, including service fees, costs incurred and GST. 5. A clause describing the rights, if any, of the contractor to delegate. It is important to note, that if your contractor is prohibited from delegating, this may be an indication of an employee relationship. 6. A clause setting out that the contractor is responsible for providing their own equipment and materials. 7.Insurance requirements of the parties and where the risk falls in relation to services performed under the contract. In the absence of special circumstances, 8. Consider carefully any warranty and indemnity you provide to your clients. Make sure any indemnity creates certainty as to your potential liability and, if necessary, take out the relevant insurance. 9. Contractors are not bound by the inherent confidentiality obligations of an employer/employee relationship. Your contract should include a thorough confidentiality clause, or both parties should enter into a separate Non-Disclosure Agreement. 10. Intellectual Property. One of the biggest concerns with contractors is their ability to walk away from the relationship and take their intimate knowledge of your business and intellectual property with them. An intellectual property clause in the contract is,of course, an absolute must, but it may also be worth including a restraint of trade clause. A restraint of trade clause can operate to prevent your contractors going into competition with you using information they obtained while engaged with your business. Restraint of trade clauses are often drafted very widely and therefore found to be void at law and unenforceable. A restraint of trade clause must be carefully drafted with consideration as to why there is a legitimate need to impose such a restraint and include a well-defined period of time and geographical area. 11. A dispute resolution clause, because although we all like to believe in the best outcome, disputes can and frequently do arise. Negotiating your contract is the starting point to a well-defined and mutually profitable relationship, and it is important to make sure both parties in contractor relationships (indeed in any business relationship!) are fairly and adequately represented and remunerated. Get started on your Services Agreement today and take one step closer to living the life you love. I did.