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Independent Contractor Agreement
This Independent Contractor Agreement template is intended to be used to clearly articulate and establish the terms and conditions of a contract between your company and an independent contractor.
Overview
If you’re searching for an Independent Contractor Agreement template, chances are you're planning to hire your first independent contractor. Congratulations! We share your excitement in taking this first step!
There are multi fold advantages to using Independent Contractors such as short-term project specific expertise and cost savings as contractors are not provided with benefits such as medical and vacation leaves. However, be aware that tax regulators in most countries have strict assessment on the definition of independent contractors. It will cost your company money and, in some cases, damaged reputation if your independent contractor is reclassified as an employee by the taxman.
The first step is to put in place an Independent Contractor Agreement before services are provided. We strongly recommend using your own Agreement instead of one provided by the contractor. This is to ensure your company’s legal position is protected and that it’s a fair contract for both parties.
An Independent Contactor Agreement spells out clearly the status of the relationship (i.e. non-employee), services provided, fees, duration of contract, contract termination obligations for both parties and expected code of conduct, among others. The Agreement makes it very clear that this is strictly an independent contractor relationship (very important!) and is written in simple language that’s easily understood and interpreted. To reduce the work in preparing the Agreement, we have put together an Employment Offer Form. The offer form is an internal template that is provided to hiring managers and other stakeholders to fill out and submit to HR. The form contains pertinent information such as fees/compensation, list of services provided and contract start and end dates. All you need to do is transpose/copy the information in the Offer Form to the relevant placeholders in the Independent Contractor Agreement. Review the Contractor Agreement one final time and you’re done!
How is the Independent Contractor Agreement used?
If you are using the Employment Offer Form to prepare the Indepedent Contractor Agreement, ensure all details required for preparation of the Contractor Agreement has been provided in the Offer Form. This is an important step as the Offer Form needs to be approved before preparing the Contractor Agreement.
Once the Indepedent Contractor Agreement has been modified:
- Review all edits made to ensure legal compliance.
- If major changes need to be made to some clauses, use your discretion to decide if legal review is required.
- Human Resources to send the Independent Contractor Agreement to the contractor for review and accpetance before services are provided.
- Allow for some buffer time for contracts to be negotiated. To save time, put together a list of items that the contractors wants negotiated and schedule a meeting with the decision maker in your company to go over the list. Avoid the back and forth via emails. Swift handling of the negotiation will increase the chances of contract acceptance.
Why use an Independent Contractor Agreement?
Clearly articulating contract terms and conditions, and requesting confirmation that the contractor understands and signs off on them:
- Outlines what's expected from each party during the term of the contract and what will happen once you part ways.
- Ensures that the Contractor understands the scope of work and what's expected of them.
- Ensures that the Contractor understands what they can expect from your company.
- Ensures that the terms & conditions are in writing so there are no misunderstandings. The agreement clearly indicates that any oral promises or previous arrangements are nul and void once the employee signs the contract. The parties often forget what they agreed upon and having your terms in writing is critical.
- Contractors are much more likely to deliver on projects and scope of work when they've signed an agreement.
- Helps to ensure protection of your company. If the relationship ends in litigation, you'll have a much better chance in court if you have your terms and conditions clearly laid out.
- If used in conjunction with Staff Policies Manual and Terms & Definitions documents, you'll be clearly articulating conduct policies and expectations before the contractor is hired that provides another layer of protection for your company. See how all 3 documents fit together.
- Protects against a Dependent Contractor claim.
What you risk by not using an Independent Contractor Agreement?
- You have limited recourse in the event that the contractor's behavior/performance does not meet expectations.
- Consequences for misconduct are not clearly articulated.
- Your company confidential information and intellectual property is at risk.
You bet.
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