How To Make Legally Binding Contract To Hire Independent Contractors

Last updated: December 06, 2022 3 min read

So, picture this. You recently decided it would be more beneficial to you and your company to hire independent contractors instead of employees for a particular project or for long-term work.

You realize the unique set of skills needed for such a project is absent amongst your current staff, so you start to search for this unique group of workers; independent contractors.

Before doing this, you must understand that there are three categories of independent contractors to consider. The first is project-based, referred to as freelancers.

While the others hired on a continual or long-term basis are employed from within or outside your country (remotely).

For this article, let us refer to freelancers and remote independent contractors outside your country. To find these types of contractors you can use freelancing platforms and even LinkedIn to do so.

So back to the scenario. The interview went well, and you both agreed to work together. In the same way, a contract between you and your regular employees is needed; the same goes for independent contractors you are about to hire.

A contract/agreement is a vital component in hiring after you have secured new talent to protect the rights of all parties involved. It sets the terms and conditions between you, the employer, and the independent contractor/freelancer.

It should most importantly clearly outline the work they will do, the timeline, and the agreed amount to pay them.

But before you consider what a contract like this should include and why it is crucial to have one first, bear in mind some other key aspects of the hiring process for this unique group of workers.

Things to Consider when Hiring Independent Contractors

As mentioned in our first article regarding independent contractors, they are on the rise in today’s workforce. So, there are many elaborate aspects to consider when adding them to your team. However, here are some key concerns in a concise list below:

1. Outline a budget for the project(s) if they are freelancers or the rate you are willing to pay.

2. Clearly define the skillset(s) you desire from the contractor and what their job description would look like.

3. What platforms to use to source candidates, and how will you screen them.

4. Bear in mind labor laws for independent contractors outside your country.

5. What details to include in the contracts.

6. What software or communication tools to use to manage them.

7. Types of payment methods.


Why You Need a Contract/Agreement

One of the most important and obvious reasons to have freelance agreements is to protect yourself and the independent contractor, especially in court, if the need arises.

It details the type of relationship between you and the freelancer, the expectations of both, and ensures the work gets done and that you pay them on time and in full.

In addition, it acts as a reference guide to hold you guys accountable should anyone decide to backtrack or try to opt out of what was explicitly agreed upon. If any violations occur, then legal measures can be implemented to penalize either party.

Also, having freelancing contracts in place affirms your business is legal and professional, one to be taken seriously.

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What to Include in the Contract/Agreement

Contracts for freelancers and independent contractors hired outside your country must have some important clauses to ensure safety for both parties is guaranteed and that terms and concepts are clear and not misunderstood.

Below are some important elements to have in those contracts:

Freelance Agreement

1. Names and contact details: Make a distinction in including the business names of your company and the business of the freelancer so it is clear you are undergoing business as legal entities rather than as individuals. Be sure to also include contact numbers, email, and mailing addresses.

2. Project preview: This entails the details of the project and specifics of the job description of the independent contractor, including the length of time the project is expected to take and the hours the contractor is expected to work.

3. Project deliverables: This means defining explicitly what the freelancer is expected to produce or complete.

4. Pricing and rates: This should clearly state the type of pricing you agreed to pay and the sum thereof. Will it be hourly or at a flat rate based on when the project is completed? These factors all depend on the nature of the work being done.

5. Deadlines/timelines: Every contract must have a date when the business relationship begins and ends. While it may only sometimes be possible to have a pre-decided deadline, it is good to have a date on which you expect to end.

Be bold about being extremely detailed about penalties for missing timeframes.

6. Ownership/copyright: This determines who owns the work done, so this is very important. The common thing is that the freelancer owns the work until you pay it, but they no longer bear any rights to use or resell it afterward.

7. Dates for payments and options: Within this clause, you state the type of payment method, the timeline for that payment, and the currency of it. You may also include what would happen if payments were late.

A payment schedule or timeline should specify if you will pay 50% upfront and then the remainder afterward or in three installments. Whatever you and the freelancer agree on should be included.

8. Termination and kill fees: This clause ensures that the contractor still gets compensated should anything arise that cause the project to stop or you decide to cancel due to changing plans.

Whatever the reason that may cause the project to be terminated, be clear about the amount or rate they should be compensated.

9. Signatures: The signatures of you and the freelancer are what complete the contract, making it a binding legal document.

10. Legal terms: These are definitions of the legal terms that are important for both parties to understand their obligations.

See an example of a freelance agreement below:

Freelance Contract Template

Freelance Contract Template

This free example was downloaded from Freelancermap.

Contract/Agreement for Long-term Independent Contractors hired outside your country

1. Names and contact details

2. Duties/services: Clear description of the type of work to be done

3. Compensation: The amount agreed upon to be paid and how often

4. Payments options.

5. Deadlines/timelines.

6. Work Requirements: Tools and equipment required of the independent contractor to work remotely.

7. Work Schedule: This should outline how often the contractor is expected to work weekly/monthly with clear time slots to start and end.

8. Benefits: Perks the contractor will receive other than regular compensation.

9. Probation: Details of when a probation period will start and end to determine if the candidate should matriculate to permanent employment or continue the probation period further.

10. Termination of Employment: This clause should detail the violations that can cause an employer to terminate the contractor's employment as well as the stipulated amount of notice to be given and required notice to be provided by the contractor if they decide to quit.

11. Ownership/copyright.

12. Legal Terms.

13. Signatures.

See below an example of this type of contract:

Independent Contractor Agreement

Independent Contractor Agreement

Independent Contractor Agreement

This free example was downloaded from Signaturely.

Jason’s Insights

“You should also keep these things in mind when managing and recruiting remote freelancers:

1. The cultural differences that exist between you and the people you hire. Depending on the country, things such as holidays and job titles hold different weights.

2. Research the pay rates of job roles based on each country you are hiring from.

3. Try hiring from countries where you already have people so that you can have greater synergy and manage holidays, schedules, and time-offs more easily.

4. Make sure you have an overlap period where everybody's schedule intersects; it should be a minimum of 3-4 hours.

5. Set a default time zone for your company to keep everyone in sync.”


Tailoring freelance agreements that cover all your bases can be tedious and may require you to seek legal help in drafting them.

But in the end, they are beneficial because they protect those involved by holding everyone accountable, affirm the relationship between parties as legal and binding, ensure protection, and that legal measures are taken if anybody involved violates them.