Independent contractor agreements are agreements drafted by companies while hiring contractors for a short period and they are different from your regular permanent employees. It is important to have a well-written contract with an independent contractor because of the many differences that exist between a trusted employee and an independent contractor about whom you don’t know much.
Given below are some points to consider and things to keep in mind while drafting and hiring an independent contractor:
Training: Training workers by making them work with one of your employees and attend meetings will help the worker understand the work and the process he is required to undertake. Though in general an independent contractor does not need training, but it will help him get acquainted with the work you want him to commit himself to.
Right to Delegate and Hire: Make sure that your contractual agreement states that the independent contractor must hire assistance, supervise them and pay for them himself.
Equipment and Tools: Be specific of the equipment’s and tools you want the independent contractor to use as an independent contractor generally provides his own supplies and equipments. The independent contractor is independent because he covers most of the personal costs, consider the expected contract price that the contractor will require to cover his cost and pay him a little extra on the condition that he manages within it.
Reports and status of work performed: Try not to enforce periodic written or oral reports and don’t negate them either. Frequently, written and oral reports are not mentioned in the contracts and the employer is then accused of demanding reports, which indicate his need for dominance.
Duration and hours: Having short period contracts are better than longer ones. Applying schedule for workers and their work will help the individual contractor’s efficiency with the right amount of rest and food.
Names and titles: Avoid using nomenclature that is generally used for an employee, this can be done by clearly stating that the person is working as an independent contractor and not an employee.
Exclusivity: Make sure that you state in the contract if the worker is required to do full time or part-time work, as typically independent contractors can have multiple commitments that they have to fulfill and complete transparency from your side is required about work details and your requirements.
Payment and expenses: Pay the contractor not on a periodic basis but as and when he completes the project required out of him. Avoid reimbursements systems as it indicates an employee and employer relationship.
Profit or loss and the public: During the drafting, avoid monetary safety nets that prevent workers from experiencing losses.
Termination: Generally, an independent contractor cannot be terminated unless the contractual specifications are met with. Consider drafting that the termination will occur when the project is completed in a set period of a given time and then the payment will be made along with termination of contract.
It is important for you to judge which aspects are important while contract drafting with a specific contractor. The more detailed you are in your contract the more the chance of long-term success is guaranteed. Business today needs to pay more attention to contracts while hiring independent contractors and finally need to make sure that they hire under legal boundaries and the tax issues are not bound by the contract between both the parties.