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Independent Contractor

Reviewed by Annapoorna | Updated on Jun 10, 2021



There are times where a company or service provider may need to employ an independent person to do a particular job in which the company has no experience. Hiring an independent contractor or employee will leave the company vulnerable to several risks. So, it is vital to have an independent contractor's agreement in place to protect the company from any legal liabilities.

Who is an Independent Contractor?

An independent contractor is a person employed by a corporation. He needs to complete a particular job or project rather than assigning that work to an employee. The business assigns the task to the independent contractor, i.e. it is not the business that determines whether the project or job is to be done.

It covers the products used, the expertise, and strategies that have been introduced and the extra labour that the independent contractor is employing.

Independent Contractor vs Employee

An independent contractor is different from an employee in that the independent contractor is a separate entity which runs its own business and conducts the work for other companies or individuals. An employee is someone employed by a corporation or individual. He performs such duties as assigned, in the manner specified by the employer.

An independent contractor may be an entity or business providing services to the hiring company or person without being subject to their responsibilities as an employee. At the other hand, an employee may be a person who is obliged to perform the tasks according to the company's guidelines.

Independent Contractor Agreement

In employing an independent contractor for any work, it is necessary to have a valid contract in place. It should set out the terms and conditions relating to the assigned job and other details of the hirer-independent contractor relationship.

This arrangement is known as an Independent Contractor Arrangement which will shield all parties from potential violations or legal issues. Most of the businesses that outsource jobs to independent contractors or startups who employ freelancers to do jobs for them use an independent contractor arrangement.

An ideal independent contractor agreement consists of the following clauses:

  • Details of the hirer and independent contractor
  • Nature of services
  • Period
  • Duties, responsibilities, and payment
  • Additional expenses
  • Confidentiality
  • Termination
  • Breach of agreement
  • Law and Jurisdiction

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