Avoid legal trouble and stay compliant with the law through a bulletproof contract

Ian de Swart from Charipickers explains how contracts lay the foundation of every successful freelance project
We invited Ian de Swart from Charipickers to lift the veil on freelance contracts and explain why they aren't just another admin headache, but a fantastic tool, which can protect us from legal liability if things go wrong, as well as strengthen our professional image in front of clients.

Ian has over eight years of experience managing external professionals for companies (such as freelancers) and dealing with freelance contracts, compliancy, and more. He is also the co-founder of Charipickers, an external hiring expert, which helps companies organise their contingent workforce in a more efficient way. They promote the growth of companies through freelancers and other independent talent and building fair and transparent relationships between clients and freelancers.
What is a contract?
Simply put, it is a legal document which lays out the ground rules for collaboration between two or more parties.

There are different types of contracts, such as:

- General terms and conditions - This is the most basic format, which should cover all aspects of the relationship (scope, deliverables, pricing, etc). Beware that some clients can make you waive your own terms and conditions, which can be risky.

- Framework agreements – this is also a general document, laying out all the stipulations of the collaborations.

If you work on individual assignments, most of the time they will be two types:

- Statement of Work (SOW) – a project, which defines what work you will do for a set compensation

- Time and Money (T&M) – this works similarly to an hourly rate, where you choose to work a certain amount of hours on a project

In Ian's advice, he suggests that T&M is preferable, as you face more liability with SOW projects.
Who writes the contract?
It depends on how the client is organised. Big companies who are used to working with independent professionals will have their general contracts. Smaller organisations are more likely to allow you to propose your own contract. Whichever case you are in, make sure the rules you stipulated in your terms and conditions are kept.

Should I work directly or use subcontractors?

Many freelancers wonder if they should source projects from subcontractors or work individually? Which is the better option legally?

Ian shares: as the main point of contact with the client, you have more negotiating power and will be able to receive a better rate. This will also result in a more fair and transparent relationship. However, sourcing clients yourself will require you to spend time and effort on sales and marketing.

Working with subcontractors often eliminates that need (as they often have a broad network of clients), but will result in lower rates due to them taking a percentage of the payment. These relationships can often be less transparent and can also incur higher liability. What is more, some subcontractors can include a contract clause, forbidding you from working directly with clients, so you need to be aware of that.

It is also possible for the subcontractors to loose their contract with the client, so you need to make sure there is a contract clause stating that if that happens, you should be allowed to continue working directly with the client.
Am I compliant with the law?
Nobody wants to be on the wrong side of the law, and if you are a freelancer working with clients from different countries, there are many things you need to consider to make sure you are a complainant. How can contracts help with that?

Ian warns about fake independence: in Belgium, in the case of a social inspection, you may be considered an employee and not a freelancer if the client has too much control over what you do. In the contract, state the will of both parties to perform the task and manage their time independently. Outline which instructions the client can give (such as health, security and safety-related) and which they cannot.

Another way to prevent the risk is to add a contract clause stating that you are allowed to work with other customers.

If you are an EU freelancer, you need to register with LIMOSA before you come and work in Belgium, which will determine where you pay your taxes. More information at limosa.be.

Information from Limosa.be website:

"Are you a
foreign employer, or their agent, wishing to post one or more workers to Belgium on a basis? Are you a foreign employer, or their agent, of workers working part-time in Belgium?

Are you a self-employed person established in another country, coming to provide services in Belgium on a temporary or part-time basis?

If so, you need to declare your presence as a self-employed person or that of your workers before they begin to work in Belgium.

Are you a Belgian or foreign employer wishing to employ a worker or post a worker to Belgium (from outside the EEA or Switzerland) for more than 90 days? In that case you also need to apply for a single permit.''

Finally, make sure to create a data processing agreement with your client – state what data you will process and how you will process it, in order to be compliant with GDPR regulations.
How to protect myself from liability?
There are several ways you can protect yourself if things go wrong in a project.

Civil insurance – it covers basic risks (like causing accidental harm) and is recommended for all freelancers.

Professional liability insurance – it will cover you in case of any breach or mistake in your assignment, including administrative mistakes. It is a good investment, as you will be well protected against mistakes which cause a lot of damage.

For every breach of contract which can lead to legal liability, Ian stresses that it needs to be proved by the client – you need to add this to the contract. You should also add an obligation of conduct, which promises that you will do your best endeavours to reach a result. Do not guarantee results in writing, as that opens you up to liability!

Finally, always include a maximum liability amount in your contract, and make sure it is not higher than your insurance!

You can read more about insurance here. And if you are in the UK, check Superscript.
What to do in case of conflict?
First, set up a conflict procedure. Ian recommends a three-step process:

Step 1: consultation – discuss what is wrong and how it can be improved.

Step 2: recovery period - if you are in breach of your obligations, have a recovery period in which to amend your mistakes

Step 3: legal way – unfortunately it can come to that, but if you do not have a conflict procedure, often clients can take legal action immediately

When you have a conflict, make sure you have everything in writing. If you agree you will fix something in a time frame, make sure it is in an email so you can prove it in court.

If it comes to legal action, get help – and have a budget!
Checklist
Here is a list of things Ian suggests you put in the contract:
charipickers freelance contract checklist
More details on each can be found in the full masterclass here.
Dos and donts
Finally, Ian shared some contract basics:

- No interpretations – everything should be clearly explained and written down.

- If you work with a subcontractor, ask them the right questions – ask about whether they already have a contract with the client, how many projects you do with them, etc.

- Do not accept vague terminology.

- Never sign contracts you are not comfortable with. Find companies who work transparently and don't be bullied in signing a contract you feel is not right.
What more did we learn?
Ian shared so much valuable information we couldn't fit all of it here. Learn whether it is legal to work with a client without a contract, how to manage the intellectual rights over your work, how to terminate a contract and what is the best notice period and more in the full free masterclass here.

In case of further questions, please connect with Ian here.

If the chance to tap into a vast, on-demand talent pool for your organisation sounds attractive, get help saving time and money with Charipickers, who will optimise your external hiring strategy. Access expert contract management, sourcing strategies and more here.

See our upcoming masterclasses and rewatch our past ones (on investing, websites, virtual assistants and more) here.
About Charipickers
Charipickers are specialists in freelance contractual and legal matters, working with organisations and freelancers to advise both on best ways of collaboration. You can find out more at them here.
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