As the independent workforce continues to grow, you may find your organization contracting out more work, or sourcing freelancers to deliver on certain projects. This is great and there are so many benefits to working in this way, but one common concern organizations face is how to stay compliant.
In the wake of the Covid-19 pandemic, the way we traditionally work has changed forever. Now, with most of us working remotely, the idea of hiring an independent worker from across the other side of the world doesn’t seem so crazy. But it doesn’t come without its own set of rules. Things to consider include tax regulations, communication, logistics, and payment.
For those of you who are new to working with the independent workforce, you might not know the ins and outs of compliance (sounds boring, we know!) but to make the process a little less daunting, we’re sharing with you our top five tips for keeping your independent working relationships compliant.
Make sure you agree on a contract
Contracts are no longer just for employees. Whilst it may be tempting to forego a contract since it’s “only a small job” or you have an already established relationship with the person, it’s in your best interest not to skip this formality. In fact, many States and countries now have laws to protect freelancers, so ensure you’re up to date with the laws in your region and produce a contract that complies with that. It doesn’t have to be chapter and verse, but something clear and simple will make sure everyone is safe and happy with the working arrangement.
Create a solid set of outcomes
Having a clear set of outcomes and deliverables is not only going to keep your project on track and ensure your independent worker has a clear understanding of what’s expected from them, but it’s going to keep you compliant too. Setting clear goals or creating a SOW (Statement of Work) will clearly show the deliverables on which the freelancer’s pay is based. This can be an important piece of evidence should you have any discrepancies with the work delivered when it comes to payment, or should you face any tax or classification issues, which we share more about below.
Classify your workers correctly
It is the organization’s responsibility to classify their independent workers correctly. Failure to do so could lead to a hefty fine – but don’t let this put you off hiring a freelancer. Classifying your workforce is simple, as long as you can clearly determine that they are either independent or an employee. The general rule of thumb is that independent workers are defined as such if they have control over where and how the work gets done. This is where points one and two also come in handy – a clear contract and clear outcomes should provide all the evidence you need when classifying your worker as either independent or an employee.
Keep an audit trail
We know time is precious, and it can be easy to want to go full steam ahead with a project to get it done and out the door ASAP. But failing to properly document the process could lead to miscommunication and discrepancies in the work along the way. While it might be a little tedious, be sure to keep clear records of the project in progress from start to finish. We’ve already mentioned a few things here such as the contract and outcomes, but also considering things like lines of communication – make sure you get everything important in writing and have a clear sign off process that can be seen and reviewed at a later date, especially when it comes to the final delivery of the project and payment. An audit trail is the simplest way to document and evidence the work being assigned and delivered.
Clearly review and promptly pay
This is a bit of a sore subject for some, as according to the Freelancers’ Union, there are millions owed in unpaid freelancer invoices, not to mention numerous hours lost chasing said invoices. When juggling both a roster of employees and independent workers, there’s bound to be the odd mistake here and there, we are only human, after all. But I’m sure you wouldn’t stand for an employee not receiving their pay on the 1st of each month when their salary is due, so don’t leave Indies hanging either.
Of course, things work slightly differently with independent workers than they do with employees, and the work is often based on meeting the deliverables. Therefore, make sure you have a clear, fair, and efficient review process that ensures invoices are paid promptly upon delivery of the desired outcome. Again, following all of the above points including contracts, clear outcomes, and audit trails, will all help when it comes to the review and payment process too.
There’s lots to consider when starting a new project, especially if you’re choosing to work with a freelancer or contractor but stick to the top tips above, and you’re sure to have a smooth experience with excellent outcomes!