In today’s rapidly globalising, modern technological era, employers are more discerning with whom and how they employ resources for their businesses.

It is not uncommon for people to be hired as contractors, sometimes referred to as consultants. When an employer hires a consultant or an individual works as a consultant, there are a number of important considerations that should be taken into account, set out below.

Contractors Contract

It is essential, no matter what your work arrangement, that you have a Contractors Contract in place, preferably one that is drafted by an employment lawyer. In the Contractors Contract, the type of work expected should be clearly explained, along with an estimated time for completion of the work. If the work is to be completed in stages, then a breakdown of these stages should be identified in the Contractors Contract.

Fees and pay

Negotiate (or have your lawyer negotiate on your behalf) the rates of pay for the services. This should include how much pay the contractor will be paid, as well as the intervals for pay. Before you enter into negotiations regarding pay, make sure you are aware of the standard industry rates.

Costs

As a contractor, there will be various expenses involved in the completion of your work. These expenses and costs will need to be tracked and monitored so that there is no confusion as to who will be paying for what during the course of your services, particularly if the business requires large sums of money to be spent on specialised equipment or goods in order to complete the work. Be clear about this in the Contractors Contract.

Confidentiality

As a contractor, you may be working for a number of people and businesses, sharing your time between clients. Contractors can provide their expertise to any number of businesses at one time, and, as a result, may end up working for competing businesses.

A business would be wise to communicate to its contractors the importance of maintaining the confidential nature of the information that they come across during the course of providing their services. The best way to do this is to identify what information is confidential, and clearly prohibit the use, or disclosure of the information outside of the contractor arrangement.

Have your lawyers draft a confidentiality clause into the Contractors Agreement, or otherwise draft a separate Confidentiality Agreement.

Due Diligence

If you are a business considering engaging a contractor, it is important that you conduct due diligence on them to assess their suitability for the work being offered. Make sure you are well informed about their referrals and determine whether or not the contractor, with his or her work experience and skill set, is appropriate for the job. If the applicants do not match the job requirements criteria, take your time and continue searching until you are confident that the contractor can complete the work to your satisfaction.

Intellectual property rights

When contractors produce works, it is sometimes the case that they are creating intellectual property. This might be in the form of designs, plans, writing, or software to name just a few.

The issue of who owns what intellectual property during the engagement should be clarified from the very beginning, and set out in the Contractors Agreement. The question is: Who will own the intellectual property after the work has been completed?

This can be quite complex when you consider the intellectual property that a software developer, for example, may wish to retain after they have completed the work. It is often worth having an IP lawyer draft these terms and conditions into an Intellectual Property Assignment Agreement.

Conclusion

Are you considering hiring a contractor for your business or are you an individual looking to provide services as a contractor? Having trouble drafting your Contractors Agreement so that you are well protected? Why take the risk when you could have the Agreement drafted by a professional?

Speak with one of LegalVision’s contract lawyers about drafting an effective Contractors Contract. As an online law firm specialising in business law, it’s an area we have much depth of experience in.

James Douglas

Next Steps

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