03 May 2022

What puts the "independent" in independent contractor?

Submitted by SchoemanLaw Inc

An independent contractor is a person or entity enlisted by way of an agreement to perform certain services for another person or entity without the conclusion of an employment relationship. The key ingredient is the service which the independent contractor will provide. This underpins the contractual arrangement between the parties.

Key Provisions In An Independent Contractor Agreement

There are a number of protective provisions for both parties to the agreement, which should be catered for regardless of the contract form. Specifically regarding independent contract agreements, however, the following needs to be addressed:

Identify the relationship: There is a number of ways and forms that the relationship between the parties can be identified. It is key that the service-driven nature of the agreement is identified and emphasised to set this agreement apart from similar ones such as an employment contract.

Set out how the service is to be rendered: This requires clearly defining the deliverables in terms of the agreement, when these deliverables need to be met and the form they are meant to take.

Provide for termination: Ensure that the agreement includes a termination clause. The termination clause should clearly indicate when the contractual arrangement comes to an end and if there is a prospect of renewal.

Differences Between an Independent Contract Agreement and an Employment Contract

An employment contract usually requires an exclusive relationship between the employer and the employee. On the other hand, with an independent contractor, the contractor will usually have multiple agreements with different entities or individuals.

Independent contractors are often business owners in their own right and often specialise in their field of work. Ideally, the agreement is therefore based on a main agreement or project or a task. With an employee-employer relationship, the employer exercises a certain degree of control and authority over the employee. Working hours, lunch breaks and personnel policies are common occurrences in respect of these relationships.

With independent contractors, deadlines may be contractually agreed upon, but lunch breaks, working hours etc are usually not part of the arrangement. Independent contractors are often labelled as ‘freelancers’ which speaks to the less controlled aspect of the contractual relationship.

With employees, although canvased by job specifications, the kind of work required is often flexible and encompassed under the general tasks that the employee is expected to execute and complete. However, the work of the independent contractor is fixed, in line with the terms of the contract.

Conclusion

Disputes are inevitable. When a dispute arises, the last thing anyone wants to happen is to be caught off guard regarding their contractual relationship. Therefore, contractors need to familiarise themselves with the defining criteria of an independent contractor and seek legal advice before entering into contractual agreements.

Contact an attorney at SchoemanLaw for your commercial and contractual needs by visiting our website at www.schoemanlaw.co.za.

SchoemanLaw Inc

SchoemanLaw Inc Attorneys, Conveyancers and Notaries Public is a boutique law firm offering its clients access to high quality online legal documents and agreements, together with a wide range of legal services. The firm has an innovative and entrepreneurial mindset that distinguishes it from other law firms. We apply our first-hand understanding of the challenges facing entrepreneurs (regardless of their business size) to develop proven, practical solutions incorporating legal compliance, risk aversion and business sense. We achieve this by offering clients tailored, yet holistic support comprising of legal gap analysis, the design of tailored legal solutions and the practical implementation thereof through training and automation. With your personal interests in mind, our ultimate aim is to implement measures that protect the results of your hard work as effectively as possible.