Your Guide to Freelance Service Agreements in Singapore
A freelancer is a self-employed person who offers services to others. From the perspective of the business owner, employing freelancers is both efficient and economically pragmatic. Employing freelancers allows you to tap on the unlimited potential of various individuals with numerous talents for your business needs.
As a freelancer, this arrangement accords you a lot more freedom than being an employee of a firm and gives you more flexibility in your job hours and commitments.
A freelance service agreement essentially puts into clear, written language the roles and responsibilities of both the freelancer and the client. Such contracts are a good safeguard to ensure that both parties are on the same page before any work has begun. If you are a freelancer, you are advised to negotiate and/or clarify any terms that you are unsure of.
What terms should a freelance service agreement contain?
A freelance service agreement should generally contain the following essential terms:
(1) Scope and nature of service(s) provided
Both freelancer and client should agree on the role of the freelancer and the nature of the services he will provide to the client, and state these in the freelance service agreement.
Another key term to include would be whether the freelancer is free to work for other clients at the same time or if he/she is restricted to working for only one client at a time.
(2) Terms of remuneration
Another term of crucial importance in all business contracts would be the terms of remuneration and the agreed billing structure. For example, the freelance service agreement should state whether the freelancer is to be paid according to milestones or whether he/she will receive the entire payment in one lump sum at the conclusion of the project.
A complete freelance service agreement would also state the grace period within which the client can make payment after the date stipulated. The standard practice is 30 days, but this is subject to the parties’ agreement.
Finally, the freelancer may consider charging late fees and/or interest for late payments. If so, this term should be clearly stated in the service agreement.
(3) Interim charge caps
Freelancers who agree to undertake a major project for a client, or are doing several smaller projects for one client, may want to consider providing for an interim charge cap in the freelance service agreement. This term will reduce the likelihood of clients promising freelancers high-paying work without keeping their word in the end.
An interim charge caps limits the amount of outstanding debt the client may incur over the course of the project. Once the client’s total outstanding payment exceeds a certain stipulated sum, the client will need to make an interim payment for the freelancer to continue work, or risk the freelancer suspending work on the project.
Freelancers may consider omitting an interim charge cap from the freelance service agreement if the client is one they trust greatly, or have a long-standing relationship with.
(4) Central Provident Fund contributions
Freelancers are required by law to contribute to their Medisave account if they earn a yearly net trade income of more than $6,000.
The freelance service agreement should state whether the freelancer or the client will be bearing the cost of such Central Provident Fund contributions. However, it is generally the freelancer who does so.
(5) Freelancer’s tax liabilities
The freelance service agreement should also state whether the client or the freelancer will bear the freelancer’s tax liabilities.
(6) Rights to intellectual property created in the course of the freelancer’s engagement
The freelance service agreement should state which party will own the intellectual property rights to work created by the freelancer.
Some freelancers prefer to have the rights to the work they create in the course of their service to the client, or at the very least retain the right to showcase their work in their résumé or portfolio.
The freelance service agreement may also state the client’s rights (if any) to modify or use the final product.
(7) Indemnity clause
An indemnity clause will state which party will be required to indemnify the other party if that other party is sued in relation to the work created by the freelancer.
If the freelance service agreement states that the freelancer will be required to indemnify the client for e.g. any losses, damages or expenses that may arise through the course of the project, freelancers should be wary if a client asks them to do anything that may potentially be illegal or harmful.
For example, if a client wants the freelancer to include images in a blog post without possessing the necessary copyright, the freelancer will be the one held liable for copyright infringement, instead of the client.
(8) Client’s termination of services
The freelance service agreement should state the minimum fee(s) chargeable by the freelancer should the client choose to prematurely terminate the freelancer’s services.
To further protect the freelancer, the freelance service agreement can also state that any work created by the freelancer which is rejected by the client cannot be used in whole or in part, and that breach of this provision by the client will be actionable in court.
These terms will prevent clients from prematurely terminating the services provided by the freelancer without remunerating the freelancer for the time and effort already spent working on the project, and then proceeding to use the freelancer’s ideas and/or work without further due compensation.
(9) Unforeseen or sudden termination of a project
In the event the performance of the project is disrupted or if it becomes impossible to continue on a project already in progress, the client needs to know the alternatives made available to them.
The freelance service agreement may therefore state that in such an event, the freelancer is to hand over all files and assets used and/or created by the freelancer to the client. This way, the client will be able to have the work continued by another freelancer if the project is prematurely terminated.
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