Freelance Workers: Legal Considerations Every Employer Should Know

Over the last 20 years, many businesses have been prompted to adapt their recruitment process to accommodate the vast increase in professionals opting out of traditional employment to join the more flexible approach of freelance work. Hiring freelancers can offer numerous benefits for businesses, such as cost savings and access to specialised skills when they are required.

However, it is crucial for employers to be aware of the legal considerations that come with working with freelancers. This article will explore the key legal issues that employers should be mindful of when engaging freelancers and provide guidance on how an employment solicitor can navigate these challenges for your business.

Drafting a Freelance Contract:

Although a freelance contract is not a legal requirement, it is highly recommended to instruct a solicitor with an understanding of employment law principles to draft a comprehensive agreement which clearly establishes the expectations and obligations of each party.

It should cover the scope of the work involved and what deliverables are, including when and how they should be delivered by the freelancer in return for their specified remuneration.

Having these terms clearly outlined acts as an important safety net to protect your business in the event of a breach. The agreement should outline how any disputes will be handled, whether through alternative dispute resolution methods or civil litigation. It should also contain a termination clause which details the specific circumstances and conditions by which either party can end the contract.

Payment Terms

Freelancers may have their own preferred criteria, but employers should also consider which terms align best with their business needs and have them clearly defined in the agreement to avoid financial disputes.

For example, if the freelancer prefers to charge on a time-spent basis, then employers should consider how the hours will be measured and recorded. A payment timescale should then be agreed, which specifies both the frequency and method of invoicing. It is also important to clarify whether they are VAT registered to ensure any tax implications are addressed before the first invoice.

Intellectual Property Rights

One of the primary legal concerns when working with freelancers is the issue of intellectual property (IP) rights. While employers generally have implied rights to use the material created by freelancers, it is essential to establish clear guidelines to avoid potential disputes.

It is important to reach a mutual agreement between your business and the freelancer regarding the exclusivity, usage, and future relationship with the content, which can then be included in the contract.

For example, your business may consider holding the exclusive rights to the material produced by the freelancer in return for crediting them for their work, instead of keeping it anonymous. It is also important to establish with the freelancer how the material will be used, especially if it is for promotional purposes, and whether your business has the right to edit the work in the future.

By addressing these considerations upfront and documenting them in a consultancy agreement or terms and conditions, employers can mitigate potential IP disputes.

Non-Disclosure and Exclusivity Agreements

Permanent employees are bound a duty of confidentiality to their employer to not disclose the company’s confidential information, such as trade secrets. However, this duty does not automatically apply to freelance workers who may have access to the same sensitive information.

A business can protect their interests by implementing a non-disclosure agreement (NDA) to ensure the freelancer will not disclose any confidential information pertinent to their business or clients. Additionally, an exclusivity agreement can prevent the freelance worker from engaging in a similar project for a competitor for a specific period.

However, the courts can invalidate these agreements if their terms are vague or overly restrictive to the freelance worker, which can place your business in a vulnerable position. An employment solicitor can ensure these agreements are legally compliant to not only safeguard your confidential information, but also to ensure that your business has a route of legal recourse in the event of a breach.

Other Legal Considerations

In addition to the key legal issues mentioned above, there are several other factors employers should be mindful of when working with freelancers:

  • Worker Classification: The law has dealt with situations where freelancers were actually found to be employees or workers because of the nature of the working relationship with the organisation that engaged them. Ensure that freelancers are correctly classified as independent contractors to avoid conflict with employment law and avoid potential liabilities.
  • Insurance Coverage: Assess whether freelancers require their own insurance coverage for errors, omissions, or negligence related to their work. Consider including clauses in contracts to address insurance responsibilities.
  • Workplace Issues: Although freelancers are not traditional employees, they still have the right to a harassment-free and non-discriminatory work environment. Ensure that managers and employees interact professionally and maintain a respectful workplace culture.
  • Licensing and Permits: Some professions may require freelancers to hold specific licences or permits to practice legally. Employers should confirm that freelancers possess the necessary credentials to perform their work.

By proactively addressing these legal considerations, employers can foster positive and compliant relationships with freelancers while avoiding potential legal pitfalls. Working with freelancers offers numerous advantages for businesses, but it also comes with legal complexities, which is why it is crucial to consult legal professionals to ensure your interests are protected whilst complying with relevant laws and regulations.