Freelance is a form of employment. Here, you will find a short guide to freelance agreements, including what the difference is between freelance and regular employment.
When are you freelance?
Freelance is a form of employment. In this case, the employer contracts the freelancer’s workforce from task to task. Typically, the relationship is regulated through a freelance agreement or a consultant agreement. The employer seldom has any obligations regarding vacation, sick leave or parental leave. Furthermore, you have to provide the necessary tools and office space by yourself, if you work freelance. Also, you are either partially or completely self-employed. It is very common to form your own company if you are freelance, e.g. a one-man-company or an entrepreneurial company.
Freelance is common in journalism, photography, the construction industry and other fields, where only short term and occasional employment on a fee basis is needed. Since the job market increasingly demands flexibility, it has become more regular to work freelance.
Freelance or regular employment
Companies occasionally try to circumvent the law on salaried employees and other employment-related laws by hiring freelancers. This way, the employee works at their own expense and risk. The salary is not guaranteed and the employer can withhold payment if they are unsatisfied with the work.
In a regular employment it does not matter, if you call it freelance or not. You would be covered by regular laws and enjoy privileges like a notice period, continued payment during parental leave, holiday pay and such.
It plays a role, whether the freelancer is allowed to hire others for the job. If not, then it is an employee relationship. That is still true, if the company incurs expenses connected to the work, the employee receives a monthly salary and completes the work in the company’s name.
If instead you are self-employed and registered for VAT-purposes, it is a freelance employment. This is also applicable, if you advertise your services independently and earn your living by completing freelance work for many different companies. In this case there are a number of rights and privileges that don’t apply to you, such as holiday allowance. But instead you are free to work whenever you decide to. Also, you often get paid a higher hourly wage.
The rules are very complicated and often demand evaluation on a case to case basis. Consider reading our article on consultant agreements too.
As with any other kind of work and cooperation, it is important to have a very clear and precise contract. One should make sure to receive the appropriate payment for their time and to minimize the risk of disputes about price and delivery.
The agreement should include an extensive description of the work that is to be completed by the freelancer. This includes a description of the material, quantity and deadline for delivery. Furthermore, the fee and method of payment should be specified as well. Should it be paid continuously? On delivery? Is it a fixed amount or an hourly fee? And what if the work is unfinished? How is the fee to be paid in that event?
At the same time, it is necessary for both parties to make it clear who owns the copyright for eventual publications. Who owns the rights? How long does the copyright last? How may it be used? Finally, it could also be helpful to agree on who is credited for the publication and who is allowed to edit it.
If employed using a freelance agreement, one typically needs to issue an invoice as opposed to receiving a paycheck.