Having a written agreement 

Having a written agreement is not the law — but we strongly recommend it. A clear, straightforward written agreement can help everyone know what is expected of them.  

A written agreement sets out what you and the independent contractor have agreed about the work and payment arrangements. It can include other things too, like who owns the intellectual property, and how you will deal with a dispute.  

A written agreement does not have to be a formal written contract. For example, it could be an exchange of emails.

Understand the arrangement: Be sure they are an independent contractor

The first essential step for hiring independent contractors is knowing that you’ve got the work arrangement right. 

Knowing your work arrangements is set out in our Essential: Know your workplace laws.

An independent contractor work arrangement is different to an employment arrangement.

Independent contractors also sometimes called freelancers, self-managed artists, independent artists, sole traders or self-employed. They run their own businesses and are their own boss. 

They usually have their own Australian Business Number (ABN). They invoice their client to get paid. They have control over how they run their business and how they do the work and can often delegate or subcontract work to other people.

Sometimes a person is hired and called an ‘independent contractor’ but, in practice, they are an employee. Sham contracting is misrepresenting an employment relationship as an independent contractor work arrangement. Sham contracting is against the law.

It isn’t always on purpose, and sometimes intentions are good. But sham contracting is illegal, and there can be significant penalties. 

Agree on the work to be done

It is essential to be clear on the work you want an independent contractor to do. This means knowing:

• the service they are to provide, or
• the outcome they are to deliver. 

An independent contractor can negotiate with you about the work you want them to do. 

You and the independent contractor need to agree on:

• what work they will do
• any incidental work that may be required
• any milestones or timeframes for when the work is to be done.

If an independent contractor is also being asked to provide cultural knowledge, cultural guidance, community engagement or other forms of cultural labour, these contributions should be clearly discussed and appropriately scoped.

This is sometimes called a scope of work, a creative brief or a commission brief. 

Agree on the fees and payment terms

You and the independent contractor are generally free to negotiate and agree on the fee or payment for their work. 

The rate you agree on should be fair and appropriate for the work. It should reflect the full scope of work, including preparation time, specialist expertise, how the work is used or reproduced, any cultural knowledge, travel, any community engagement and any other agreed responsibilities.

You should also agree on payment terms. Payment terms are how and when you will pay the independent contractor. For example, payment may be required: 

• when the work is completed
• at certain stages or milestones
• in advance – for example, a deposit
• on a percentage-basis – for example, royalties or a portion of ticket sales
• a combination of these approaches.

Arrange any necessary insurance 

It is essential to think about insurance when engaging an independent contractor. 

Insurance provides protection if something goes wrong, such as an injury, property or equipment damage, or faulty or defective work. 

Your own insurance may not cover independent contractors or their work. 

In addition to your own insurance, you may want your independent contractor to have certain insurance arrangements in place, such as professional indemnity insurance, or public liability insurance. This may depend on the risk you or they may be exposed to from the work arrangement. 

In some cases, independent contractors may be legally required to have their own insurance depending on what services they are providing (e.g. certain professional services, or builders providing services to creative organisations).

Pay your superannuation obligations 

Some independent contractors are entitled to receive superannuation (super).

It is essential that you know whether you are required to pay super for the independent contractor you are engaging.

An independent contractor is entitled to super if they are a sole trader and:

• mainly being paid for their labour and skills (rather than to provide materials or equipment or to produce a result)
• performing or presenting including films, recordings and broadcast
• working in connection with performing or presenting including films, recordings and broadcast.

An independent contractor should not invoice for super. You are responsible for calculating the amount and paying it into their super fund. 

Know how you will deal with a dispute and when you can end an arrangement 

Some independent contractor work arrangements do not go to plan.

For example, there may be concerns about the work quality or whether the work has been completed.

It is important to know what lawful options are available to you if have a dispute with an independent contractor.  For example, on what grounds you can terminate the agreement, or at what point you can proceed to legal action. 

Clear communication, early conversations and respectful negotiation can often help prevent or resolve disputes before they escalate.

Tip:  It’s a good idea to include a dispute resolution clause and a termination clause in your written agreement. It can include steps about how the parties will try to resolve a dispute, who can be involved, what kind of payments will be made (for example, for undisputed work), and timeframes for these things to happen. 

It’s also important to be aware of what options may be available to the independent contractor if you aren’t able to resolve the dispute between yourselves. For example, in some cases, an independent contractor may apply to the Fair Work Commission for help resolving a dispute about unfair contract terms.