What is an Independent Contractor Agreement?
An Independent Contractor Agreement is a legal contract that allows a business to engage a contractor to provide services.
Independent Contractor Agreements are very common and can be used in almost any industry. They can be used when you outsource work to a contractor for on-demand services, expertise in a particular area, or to complete specific tasks for a project.
A well-written agreement will not only provide you with legal protection; it will also help manage your contractor’s expectations.
Who can use this template?
- Business hiring a contractor
- Independent Contractors
- All Australian states and territories
Do I need a contract?
Yes, definitely! A contract protects both you and your contractors.
Putting things in writing protects both parties and gives certainty.
Contracts are about more than wrapping your contractors up in red tape and telling them what they can’t do. Think of your contract as relationship insurance: it does all the hard, boring work of keeping the relationship on track so that you can focus on the fun part – the actual business.
Other names for an Independent Contractor Agreement
- Contractor Agreement
- Freelance Agreement
- Consulting Agreement
- Services Agreement
What does this Independent Contractor Agreement template include?
Our Independent Contractor Agreement template covers everything you need:
- Contractual Relationship – makes it clear that the contractor is not an employee, agent or partner
- Term – how long they will be engaged
- Services – the services to be provided by the contractor
- Scope – the scope of the services the contractor will provide
- Equipment – generally, contractors provide their own equipment
- Payment – covers payment terms
- Statutory Obligations, Licences and Registrations – to make sure contractors comply with their legal obligations
- Compliance – to make sure contractors follow your policies and procedures
- Restraint – to protect the interests of the client. In practice, this can be difficult to enforce.
- Confidentiality – to keep confidential information private between the two parties
- Intellectual Property – this covers the rights to intellectual property created
- Guarantee and Warranties – guarantee as to due care and skill and any warranties provided by the contractor
- Indemnity – an important legal clause
- Dispute Resolution – process to manage a dispute if a problem arises
- Termination – this explains how either party can terminate the agreement
- General – includes standard contract clauses such as Assignment, Severance, Entire Agreement, Waiver and Governing Law
- Job Sheet – table with a summary of the Job (services, scope, start date, key responsibilities etc.)
Can this Independent Contractor Agreement template be used by both contractors and businesses hiring them?
Yes, this template is suitable if you are a contractor or a business looking to hire a contractor. However, if you’re a contractor, you may prefer to use a Service Agreement as the terms have been drafted to be more favourable for the contractor (service provider).
Differences between an employee and a contractor
Whether you are an employee or a contractor depends on many different factors.
Independent contractors generally:
🔹 work for themselves and are their own boss
🔹 are free to accept or refuse work
🔹 control their own working times
🔹 provide their own tools and equipment
🔹 have no guarantee of future work
🔸 work in someone else’s business
🔸 are subject to controls on how, where and when they do their work
🔸 are paid a wage
🔸 receive employee entitlements, such as sick and annual leave
🔸 have the expectation of ongoing work
We recommend you visit the Fair Work Ombudsman website to read more. If you’re an employer, visit the ATO’s website to learn the tax and super obligations for both employees and contractors and read more about the differences between them.
What is sham contracting?
A sham contracting arrangement is when an employer attempts to disguise an employment relationship as an independent contracting arrangement. This is usually done to avoid paying employee entitlements. Even if you make an innocent mistake, you can still be fined!
If you’re convicted of sham contracting, you could be hit with a fine of up to $12,600 as well as a back-payment of wages and entitlements.
Our Independent Contractor Agreement template makes it crystal clear that you have a true independent contractor arrangement.
Does the contractor get paid a fixed fee or an hourly/daily rate?
It’s up to you to negotiate fees with the contractor.
For a specific project, you might like to have the cost certainty of a fixed fee, but it’s very common for contractors to charge out at an hourly or daily rate.
Some factors that can influence the fees include the length of the project, the skills required to do the job and the scope or size of the project.
Is this Independent Contractor Agreement template legally binding?
All of our templates are written by qualified Australian lawyers who hold an Australian legal practicing certificate.
We are affiliated with a commercial law firm based in Sydney.