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This article is written by Vidhya Sumra, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Introduction

People are talking about freelancing more than ever before, thanks to the advent of the gig economy. This is because there are more freelancers today than there have ever been. Now, let us discuss what freelancing is. 

Freelancing means working independently rather than being employed by any organisation. Freelancers are self-employed people who work for themselves. They are also known as independent contractors. Freelancers are engaged by different organisations on a part-time or short-term basis for a particular project or specific assignments. They do not receive the same benefits or salary as full-time employees, and neither do they have the same level of obligation to any organisation. A freelancer works on multiple projects for different clients at the same time. A freelancer must manage their priorities, time, and workload. That may seem like a lot to handle, but being your own boss can be very enjoyable. A freelancer can work from anywhere in the world, and most of the time, it means working from home.

What is a freelancer’s letter of agreement?

A freelancer and a company or business sign a letter of agreement, which is a contract between the two parties. The contract lays down all of the terms and conditions of the freelancer’s and company’s work, ensuring better understanding and involvement. There are many platforms on which freelancers can be part of the work. For example, Fiverr, Upwork, WorkNHire, etc. 

Fiverr is equivalent to LinkedIn, however, it is more focused and geared towards freelancers. Fiverr is a platform that allows freelancers to market their skills to potential clients. This gives you a better chance to market your work to a worldwide audience. You must first build your profile by filling in basic information such as your name, profile picture, professional qualifications, and interests (which must be specified in order to attract potential clients), and then submit a request for clients. Fiverr is unlike any other platform because it offers freelancing in practically every field imaginable, including translation, graphic design, and astrology.  Now, let’s discuss hiring a freelance motion graphics designer on Fiverr. Then, what all terms and conditions should be part of the agreement.  

The following are the brief details about the agreement between the Fiverr and freelancer. 

  • Compensation: The agreed-upon sum to be paid after the work is completed.
  • Timeline: A mutually agreed-upon deadline.
  • Scope of work: Defines the nature of the freelancer’s job for the term of the contract.
  • Additional services: The freelancer sets the payment terms for any extra work.
  • Late payment clause: A freelancer might charge interest or impose additional conditions if they are paid late.
  • Payment in advance: This clause enables freelancers to set a fixed fee in advance.
  • Termination: Situations in which the client has the option to end the contract.
  • Confidentiality: During the contract period, a freelancer should keep the job information confidential.
  • Privity: Highlights the freelancer’s relationship with the client.
  • Jurisdiction and Dispute Resolution: It is contingent on both parties’ nationalities.

Importance of drafting terms and conditions

Contracts are legal agreements that are intended to secure both the freelancer and the hiring company during and after the employment relationship. Establishing freelancing terms and conditions as a hiring manager ensures that the freelancer will complete the assignment according to the agreed-upon timetable and parameters. At the same time, the freelancer receives assurance that you will pay them according to the terms agreed upon, including the amount, payment method, currency, and timeframe.

There are a few more valid reasons to create and sign a contract with each freelancer you hire:

To avoid misunderstandings

Contracts help you avoid disputes over who is liable for particular tasks, such as covering business expenses, providing training, or issuing equipment, down the future. When establishing a contract, you may address all of these concerns right away, ensuring that there are no ambiguities or misinterpretations.

Court defence

Contracts are legal papers, which means they can be used in court if one party is violating the agreement. For example; if the freelancer is not completing the work, then the firm will have grounds to sue them, and they will be able to sue the firm if the firm is not paying them. We can also add jurisdiction and arbitration clauses in the agreement in case of any event of default by either party. 

What should be included in a freelance contract?

All elements of the employment agreement should be covered by comprehensive freelance terms and conditions. This usually consists of the following items:

  1. Contact information:  Both parties’ full names, phone numbers, and email addresses are included. The freelancer’s identification number, as well as the company’s mailing address, are frequently supplied as well.
  2. Scope of the project: Describe the task you are hiring the freelancer to accomplish, including the project’s goal, the projected duration, and the number of hours the freelancer will be working.
  3. Deliverables: Make it clear what the freelancer is expected to do or deliver.
  4. Rates and pricing: The amount you will pay the freelancer for their services is discussed in this section. How much does he or she charge? Do they work on an hourly basis or a flat pay per deliverable?
  5. Payment options and terms: You will specify the freelancer’s payment method, schedule, and currency in this section.
  6. Timelines and deadlines: While it is not always necessary to provide particular deadline dates in a contract, you should, at the very least, say when the working relationship begins and when you anticipate the task to be completed. It is also a good idea to state whether there will be consequences if the freelancer misses a deadline.
  7. Ownership/copyright: This establishes who owns the work after it has been done. The freelancer usually has the rights to the work until you pay them. After receiving money, the freelancer is unable to use or resell the work to anybody else.
  8. Legal term: To ensure that both the freelancer and the hiring manager are aware of their legal obligations, provide definitions of key legal terminology and concepts.
  9. Fees and cancellation policies: Provide rules for compensating the freelancer if the project is cancelled before it is completed. For example, you may pay the freelancer a set rate based on the number of hours they have worked thus far.
  10. Expenses and equipment: Certain sorts of work may necessitate the acquisition of specific tools, software, equipment, or training by freelancers. In this part, you should specify whether your firm or the freelancer is accountable for the expenditures.
  11. Signatures: Finally, both parties’ signatures are required for freelance terms and agreements to be legally binding. To put it another way, the contract is only binding if both parties sign it.

Documents required for freelancing agreement

We will need the following documents for preparing the freelancing agreement. 

  • Address proof of both the parties to the agreement.
  • Business proof of the company as well as of freelancer.
  • Documents that confirm the identities of the parties or organisations involved.

Additional legal documents for freelancing

You may require the freelancers you hire to sign additional legal documents in addition to the standard contract, such as:

  1. Confidentiality Agreement: This legally enforceable contract, also known as a non-disclosure agreement, establishes a confidential relationship between your firm and the freelancer. It ensures that any sensitive information obtained by the freelancer will not be shared with others.
  2. Intellectual Property Agreement: The transfer of intellectual property rights from one party to another is established by this agreement. When working with freelancers, this usually entails the freelancer handing over the intellectual property rights to their work to the company.
  3. Non-compete Agreement: A non-compete agreement is a contract in which the person agrees not to work for other companies that are competitors of the employing company for a set period of time after the contractual relationship has ended. These agreements also restrict the person from disclosing confidential information or confidential info to anybody other than the hiring company.
  4. Data Privacy Agreement: If a freelancer needs access to sensitive company data to do their task, you will want them to sign a contract obligating them to follow your firm’s data security and confidentiality standards.

Intellectual property for freelancers

For freelancers, intellectual property refers to the work they do while working for a company. An invention, design, brand, or any other production over which an individual or business has legal rights is referred to as intellectual property. One of the most prevalent freelancing jobs is content creation. However, there are legitimate concerns that arise from that line of work. The first difficulty is that ghostwriters may be hired by institutions and independent publishing houses/authors. Ghost-writers are someone who writes on behalf of an author but does not have their work published in their name.

This implies they won’t be recognised as the work’s original author, and they won’t be able to claim any intellectual property rights over it. There is another scenario to consider in this situation. In the majority of content writing situations, the copyright belongs solely to the client. There is, however, a distinction in both circumstances.

One example is when you are creating an entire book that will be published under the name of another author. Another scenario is when you are producing material for a client. From the standpoint of ethics and morality, the former scenario may be contradictory.

Below are a few examples of intellectual properties: 

  1. Trademarks: It protects trademarks, signs, vocabulary, and tone that set your products apart from the competition.
  2. Copyright: This protects your original music, background scores, scripts, book, site material, or any other creative work you have created. According to Section 13 of the Copyright Act of 1957, copyright in literary works belongs to the original author who first published the work. This means that the original author has the right to reproduce the work, to make any cinematograph film or sound recording, to translate the work, and to do other things as set forth in Section 14.
  3. Patent: Businesses frequently patent their inventions because they worry that someone else may do the same. This category includes any innovative solution, creation, process, software, or product design commercial product.

Conclusion

Traditional employer-employee relationships do not provide for the self-control, flexibility, or diversity that freelancing does. While it is advisable for individuals who wish to continue experimenting with their professional alternatives by branching out into new industries, it may not provide the long-term financial stability and security that one seeks in order to live a better life.

As the work-from-home culture grows in India, the freelancing business is undergoing significant changes. This not only permits the marketplace to welcome people from all over the world who may be great for the job, but it also signals that the degree of competition in these jobs has increased. While India is undoubtedly a promising market for freelancing, fundamental precautions should be taken in India, as described in the article above, because the activity is conducted online and there may be issues of accountability.

References

  1. https://razorpay.com/learn/freelancer-agreement-guide-2020/
  2. https://www.stoketalent.com/blog/freelance-terms-and-conditions/
  3. https://www.thebalancesmb.com/sample-contract-a-letter-of-agreement-1360549
  4. https://www.freelancermap.com/blog/nda-for-freelancers/#:~:text=It’s%20a%20 legal%20document%20that,information%20between%20two%20contracting%20parties.&text=For%20freelancers%2C%20NDAs%20are%20usually,to%20any%20 other%20confidential%20information.
  5. https://www.freelancer.in/about/terms
  6. https://www.lawinsider.com/clause/non-compete
  7. https://www.freelancewriting.com/ghostwriting/what-is-a-ghostwriter/
  8. https://h2o.law.harvard.edu/text_blocks/27048

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