The past blogs focused on contracting team members. We looked at the difference between hiring an external contractor or employing someone. We looked at important annexes to consider when contracting. In this blog, we will look at the contract itself. What are the basics of your contract when contracting work?
Mandatory
There are some basics that are required by law to be included in a contract. These are so basic that without them it would be hard to understand what was agreed by whom. These basics are: the name and address of the person contracted and of the organization. The location(s) where the work is done. The job title or main tasks. The start date of the contract and the end date. The number of hours to be worked per week. The salary and payment frequency (mostly monthly). The number of leave hours or days. Information about the probationary period, if applicable. The notice period in case of termination by either side. Applicable benefits such as pension schemes. Applicable collective agreements. And the applicable law.
Stop right there
If you have included all the above in your contract, you could stop right then and there as basically everything should then be clear in regard of what is agreed between whom and for what period of time. You could add some annexes as per my previous post. And you might hand out a personnel guide with some more details on workplace rules. So, your whole contract could probably fit on one page or one sheet of paper at most.
Employee versus self-employed external contractor?
The basics are the basics for any type of contract. It does not matter whether you hire an external contractor or freelancer or employ someone who will be on your payroll. Obviously, the content will differ. For an external contractor you will likely agree to pay per hour or day or per product, on the basis of an invoice the person will send to you. You will not agree to paid leave and you will not have a probationary period. Your notice of termination period may be shorter (some organizations put this at two weeks for external hires!). So yes, there are differences in the things you will agree on and the conditions of work, but if you follow the above list, you will be able to tick off all the basics for external hires, too.
But how come most contracts are much longer?
As you will have noticed, most contracts are much longer than one page or one sheet of paper. Why? Because most organizations want to provide clarity on some other important issues. Some of these are very practical, while some are more issues of principle.
What practical issues?
Some contracts specify the organization’s rules on reimbursement of expenses. The contract may also detail the working hours: that a working day starts at 9am and ends at 5pm, for instance. And in conjunction with that, the contract may highlight the rules of overtime. Other practical issues include what to do in case of a complaint. Or how to handle organizational property. And, importantly, rules around security and safety. As you can imagine, many of these practical issues apply to employees more than to external hires.
What issues of principle?
Issues of principle that are often included in the contract are, for instance, a non-competition clause, a confidentiality clause, a conflict-of-interest clause and a clause on whistle blowing. Another issue that is included deals with representation: can the person represent the organization and if so, to what extent. When taking part in events, for example, the person must be aware of their representational role and of the requirements and limits that go with that pertaining to how to behave in public when acting as a face for the organization. Many of the issues of principle will apply to external hires, too, such as the confidentiality clause and the conflict of interest clause.
Top tips
My top tips for you:
- Make sure the person you contract actually reads and understands the full contract, including annexes. You may need to allocate some time to go through it together, article by article, to be sure it is all clear and understood. (Yes, this tip is based on personal experience!)
- Many of the practical issues can be (and usually are) addressed in a personnel guide which is easier to keep up to date. The contract can then refer to this guide and you can ask your team member to sign off for receipt of the guide at the time of contracting.
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