Startup? How To Legally Work With Freelancers

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When launching your startup, you’ll quickly learn some of the most valuable assets to your business comes in the form of freelancers. Ranging from design, copywriting, marketing, data entry, admin, web development, you name it – freelancers are an increasingly growing group of professionals. It’s hardly any wonder that more and more entrepreneurs and companies are relying on services provided by freelancers to keep their businesses alive and kicking. After all, it is cheaper and takes less time, which are two of the most important qualities when you’re elbowing your way through today’s dog-eat-dog market.

The statistics are here to prove the popularity of freelancing. “PeoplePerHour, the online freelance market, reckons self-employment in the UK and the US is currently growing at an average rate of more than 3 per cent. That would mean one in two people in both countries would be working as freelancers by 2020”, reports Forbes.

Indeed, delegating and outsourcing certain tasks to freelancers can be very empowering for your up-and-coming young business – but only if done correctly. Otherwise, it can become a slippery ground that can cost your startup it’s legal and financial health, so if you want to get it right, precaution is key. A mere two documents can do wonders in legally protecting your business:

1. Contract

The best legal practice, and main prerequisite to work on the up and up with freelancers, is to put the agreement in writing.

No matter how much you like or trust the freelancer, do not fail to honour your agreement in writing. This may seem like an unnecessary step, until it doesn’t. Namely, a contract ensures the freelancer delivers on the work he or she committed to, regulates payment, and can prove extremely valuable should a litigation arise. (The only exception may be if you’re hiring through an online freelance platform like Elance or oDesk, given that these websites have their own terms of service that protect you in case of malpractice.)

The contract, or making of one, doesn’t have to be a costly or time-consuming affair. As long as you list down a couple of key clauses and both parties sign it, you have a legally-binding document.

Here’s a list of things you should keep in mind when formalizing the agreement:

What is the scope of work? (This is where you describe and list the project details and duties and responsibilities of the freelancer, including the criteria for assessing their work and the expected results.)
Who takes ownership of the work produced? (The freelancer needs to assign all intellectual property rights to you.)
How is the payment regulated? (This can involve date and/or frequency of payments, payment methods, minimum and maximum hourly rates, late fees, deposits, reimbursements, etc.)

Side note: If you want to gain a broader understanding of the matter, take a look at our last blog post for an extensive overview of employer contracts.

2. NDA

Apart from a contract, you will also need an NDA, or a non-disclosure agreement.

Confidentiality is extremely important in every professional relationship. It is never to be taken lightly, but confidentiality is usually implied in the employee-employer relationship. The issue will require even more attention when you’re dealing with a freelancer.

Put simply, the NDA states which information cannot be shared publicly by the freelancer, which is especially crucial when it comes to the financial and legal aspects of your business. Needless to say, make sure you sign the non-disclosure agreement with the freelancer before he or she gets access to confidential information. And yes, you will need this document even if you know the contractor very well and trust him/her to the Moon and back. We’ve once witnessed a case when the owner of a promising tech-startup ended up losing the opportunity to cash in a brilliant application idea. The culprit? He hadn’t legally protected it, the word got out quickly, and the app concept was snatched. You guessed it, the freelancer never signed the NDA, and to make matters worse, the two of them have known each other for years. As the proverbial saying goes, it’s better to be safe than sorry.

Feel that you need an expert to jump in and help you legally hire a freelancer? We can match you with the finest lawyers and contractors in the UK, so don’t hesitate to get in touch.

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