Tips for hiring a contractor at your startup

Updated: 8 December 2019

These tips will help you with hiring a contractor at your startup.

1. The contract

Your contractor agreement should clearly set out the work terms and cover: 

  • Services - the work that the contractor will complete for your startup;
  • Payment -  when and how you will pay,  invoice requirements;
  • Intellectual property (IP) - IP will belong to the contractor unless you state that work created will belong to you;
  • Confidential information - protection for your startup for confidential information;
  • Insurance - a requirement that the contractor and workers have their own insurance;
  • Subcontracting -  written permission before the contractor can sub contract;
  • Restraint of trade -  a non compete  and non solicitation restriction  for protection from the contractor competing with your startup or soliciting your customers or employees;
  • Variation -  a clause that allows both parties to vary the contract by written agreement;
  • Disputes -  a clause about dispute resolution to stop either party from going to court before attempting dispute resolution; and
  • Termination -  when the agreement will end.

2. Contractor's work conditions

The work conditions for a contractor are different to those of an employee.

How?

In a nutshell,  contractor's have more say about how work is performed compared to employees.

For a full list of all the key differences between employees and contractors, you can read our article: choosing between employees and contractors here.

3. Avoid sham contracting

Sham contracting means to hire someone and classify them as a contractor when they should really be classified as an employee.

Some  employers engage in sham contracting to avoid paying employee entitlements.

There are expensive penalties for sham contracting and if you are unsure about whether you have incorrectly classified a worker you should get legal advice  quickly.

Do you have questions or comments about hiring contractors? Be sure to leave them below. 

I wish you success in your ventures!






Vivian Michael
 

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to deliver the best quality business legal services to entrepreneurs launching an Australian business, wherever they are in the globe.

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