Are You a Freelancer Whose Client Owes You Payment? Here’s What You Can Do

Last updated on July 5, 2024

Woman frustrated while looking at computer

As a freelancer, you may be facing difficulties in securing payments from your clients. Such an unfortunate predicament is sadly not uncommon.

In 2023, numerous content creators found themselves left in the lurch when creative agency, GetCraft, stopped making payments. Several content creators had already completed their work but found themselves chasing for payment. GetCraft reportedly took a long period of time to respond to their messages and emails regarding payment or ignored the content creators entirely. Eventually, multiple content creators publicly called out the agency on its misdeeds. GetCraft later explained that the agency’s dire cash flow situation was due to delays in the inflow of investor funds. However, content creators continued to face non-payment for completed work and found themselves drawing the shorter end of the stick.

While there is an inherent risk of bad debts in any business, you can reduce such legal risks by building certain safeguards into your contracts and performing certain due diligence checks prior to engagement. You should also know what legal remedies you can pursue if your client does not pay you.

If you are a freelancer and would like to know how to better protect yourself from bad debts, this guide is for you. It will discuss:

Are You a Freelancer, and Why Does It Matter?

Before exploring the various practical steps, you must first clearly establish what is your legal position as a worker in relation to your client. There are several different groups of workers in Singapore, and they would be afforded different rights and protections under the law. The two main groups are self-employed persons and employees, and they enjoy different legal protections and benefits.

Freelancer vs employee: What’s the difference?

A freelancer is a self-employed person who offers services to others. Legally, they are also known as independent contractors. Freelancers are usually engaged for a set scope of services and/or for a fixed period (i.e. on a per project basis). Freelancers are largely entitled to set their own hours, rates, and workload. They are also able to accept and reject work at their own discretion and be able to serve several different clients simultaneously.

Popular freelance occupations would include insurance agents, real estate agents, private hire drivers, private tutors, media-related workers (e.g. copywriting and content creation), photographers, and IT-related workers (e.g. software development).

On the other hand, employees are workers who are directly employed by the company on a regular and ongoing basis. Employees are typically expected to cede to the authority of their employer, to abide by set working hours, and to report to a supervisor. In turn, employers would have greater legal responsibilities to their employees. For example, employers would have to comply with employment laws and regulations, and employers would be vicariously liable for their employees’ actions.

Could a freelancer be deemed to be an employee?

While most freelance arrangements are quite clearly contracts for service, there are situations which are ambiguous. The client and the worker may enter into an arrangement labelled as a contractor arrangement, but it is designed to more closely resemble an employer-employee relationship. Ultimately, it is irrelevant whether the contract itself stipulates that the worker is an independent contractor. The key distinguisher between a freelancer and an employee would be how much control the client has over the worker.

For example, you may have entered into a freelancer contract with your client, but you are required to report to the office and to a supervisor every day. You may also be paid a fixed amount every month and there is no stipulated end date for your services. Another significant factor would be whether you are able to provide your services to other companies at the same time. While your contractual arrangement is in name a freelance arrangement, this mimics an employment arrangement and you may be entitled to employment protection and rights under the law.

If you are at the negotiating stage of your contract and there is a lack of clarity in the nature of the legal relationship, you should seek clarification before accepting the contract. If you find that the proposed arrangement more closely resembles an employment arrangement and your client is requesting for a significant amount of control, you may wish to consider requesting for a formal employment contract. This will afford you clear employment rights.

Where the contract has already commenced and you believe that the nature of your work engagement has been incorrectly labelled, you may wish to consult an employment lawyer for further advice. If you are in essence an employee, you can approach the Tripartite Alliance for Dispute Management for assistance in procuring your outstanding payments.

What is the legal status of gig workers? Are they also considered freelancers? 

There is a subset of freelancers known as gig workers. Gig workers are a subset of freelancers who can decide their own number of work hours but cannot set their own prices or build their own client pool. This would include freelance cab drivers, private hire drivers, and freelance delivery workers.

From the second half of 2024 onwards, new legislation will come into force where gig workers in Singapore will enjoy some basic protections under the law such as CPF contributions, work injury protection and the right to have formal representation through union-like organisations. Under such a structure, gig workers may enjoy additional legal recourse for non-payments in the future.

In any case, if you have established that you are a freelancer who has a contract for service with your client, then this guide will continue to apply to you.

Practical Steps Prior to Engagement With Client to Reduce Risks of Non-Payment

The best steps to limit your legal exposure should be taken prior to your engagement with the client. As seen in the GetCraft saga, there was very little recourse left for the content creators when they realised that they were not getting paid. While the content creators may seek to enforce their contracts, this would entail additional costs and the process can be cumbersome. Further, even if a court judgment is obtained, it may be a futile exercise to enforce the judgment if the client has no money to pay the freelancers. To avoid such a complicated scenario, you can consider taking certain practical steps prior to engagement to reduce your risk of not being paid at the end of the day.

Due diligence

When you start discussing a possible freelance engagement with the prospective client, it is advisable to carry out certain simple due diligence checks. You can assess the legitimacy of the company, the individuals managing the business, the financial standing of the company and the business’ reputation. These various nuggets of information can help to identify any potential problems with payments that may arise later.

Ultimately, you should carry out due diligence checks to weed out potentially bad or difficult clients. These would be clients who have a higher risk of not paying, or clients that you may have difficulty bringing legal action against in the future (e.g. foreign companies, or companies with little assets). The safest course of action would be to only take engagements from legitimate and reputable clients.

Company ACRA reports

For local companies, you can extract an ACRA report on the business. The ACRA report will stipulate how old the company is (i.e. when it was established), who the shareholders and directors are, and the paid-up share capital of the company.

Another useful report to extract from would be the corporate compliance and financial profile, which will provide some basic financial information on the company.

Foreign vs local company

Part of your due diligence checks should include assessing whether the prospective client is based in Singapore or abroad. If it is a company, you should establish whether it is a Singapore-based company or if it is incorporated overseas. Even if they are a local company, you should consider how many assets they might have in Singapore (i.e. if they are a branch of a foreign company that has minimal capital in Singapore).

If the client is not based in Singapore or does not have assets in Singapore, it will be significantly harder to pursue any legal action against them. Even if the contract is governed by Singapore law and submitted to Singapore courts, you may need to bring the court’s judgment to a foreign court for enforcement. Such legal action may be cost-prohibitive, especially in relation to the value of the freelance service agreement.

Where you have decided to proceed with a foreign-based client, do take note of some of the suggested contract clauses you can request for as set out in the sections below of this guide.

Word of mouth

It is beneficial to conduct quick searches for any news articles or posts on social media platforms on your prospective client. You may discover whether this prospective client has an established business in Singapore or if they have a reputation for being difficult to work with.

If possible, you can also reach out to other parties that have worked with the prospective client for their experience working with that client, and if they encountered any issues.

Contract terms

Having a clear and watertight written agreement with your client will reduce ambiguity and allow you to better enforce your rights. You can also build in clauses that will deter non-payment or allow you to identify a bad client at an earlier stage in the project.

Staggered payment structure 

One of the best ways of reducing your risk of falling victim to bad debts is to structure your payment terms.

You can consider requesting a staggered payment structure and require part of your payment prior to the commencement of work.

For example, a staggered payment structure can look like this:

Amount of Payment Milestone
30% Upon confirmation of engagement
30% Upon completion of first draft
40% Upon completion of work

Progress payments allow you to request for payments upon completion of stipulated milestones in a project. If the client starts to experience financial problems and stops payments during the earlier stages of the project, your contract should also provide that you may stop work or withhold further services until payment is made.

The contract may also provide that you may terminate your contract if there is non-payment for a stipulated period of time (e.g. non-payment for 7 days after written notice demanding payment has been given). You may exercise the right to stop work until payment is made if you anticipate that the client is likely to pay and the contract may still continue, and you may opt to terminate the contract if you foresee that the client is no longer able to pay.

Late payment fees

You can consider including a late payment fee or late payment interest clause. This will help deter clients from delaying payments.

Jurisdiction and choice of law clauses

You should be mindful of your jurisdiction and choice of law clauses especially if your client is based overseas. It is generally favourable for Singapore-based freelancers to have the contract submitted to the exclusive jurisdiction of Singapore courts and for the choice of law to be Singapore law. Firstly, it will be more convenient and easier to obtain local legal counsel. Secondly, it will enable you to seek assistance with the Small Claims Tribunal (please see the section below on enforcement for more details).

After Engagement With Client – Enforcing Legal Remedies for Client Payment Defaults 

Despite all the precautionary measures you may have taken, there is still a risk that your client may default on payment that they owe you, and you will need to enforce your contract.

In this guide, we provide a broad overview of the steps that freelancers can take and considerations that are more tailored to freelancers. For a deep dive on debt recovery in Singapore, you can refer to this guide.

Negotiation and mediation

If your client is in a dire financial state, it may not be economically viable to commence legal action in court. Instead, if there is an open line of communication, you may wish to consider negotiating a new payment plan with the client. Or, you can ask the client if they are agreeable to mediation where a mediator can help both parties arrive at an agreeable solution.

For certain freelance jobs, you may consider joining relevant professional or industry associations/organisations for support. These associations may have internal resources (such as legal clinics) or connections with other organisations that may help with enforcement.

For example, if you are a content creator, you can consider becoming a member of the Visual, Audio, Creative Content Professional Association (VICPA), which champions the interests of freelancers in the creative industry. As a member, you can consult lawyers at NTUC’s legal clinics on contract-related disputes. VICPA also has links with the International Institute of Mediators and they offer trade mediation services to assist freelancers who have problems with clients who are based overseas.

Obtain a court order/judgment

If it is economically viable (i.e. the payment due is greater than the legal costs) and the client has left you with no other options for recourse, you can consider pursuing legal action against your client in court.

Prior to commencing legal action, however, do ensure that you gather clear evidence of the breach (e.g., written correspondences with the client where you have given sufficient notice requesting for payment, as per your contract, but no payment has been made). Once there is clear evidence of non-payment, you can seek help from the Singapore courts to enforce payment.

Small Claims Tribunal

You can pursue legal action in the Small Claims Tribunal if:

  • Your claim under the freelance service agreement is less than a value of S$20,000 (or S$30,000 if there is a Memorandum of Consent signed by both parties);
  • Your claim under the freelance service agreement is filed within 2 years of the event which created your cause of action (ie non-payment); and
  • The client is located in Singapore.

If your claim falls within the perimeters set out above, you do not require further consent from your client. Filing a claim with the Small Claims Tribunal is a relatively quick and inexpensive way of resolving a dispute. This is because parties cannot engage lawyers to represent them in the Small Claims Tribunal, thus you can avoid potentially expensive legal fees. In addition, the fees for filing claims in the Small Claims Tribunal are considerably lower than for claims in the civil courts.

Once your client receives a notice of consultation for a Small Claims Tribunal case, they must attend the consultation. Otherwise, the Small Claims Tribunal may make an order against your client (such as a default order) and you will be able to commence enforcement proceedings.

If your freelance service agreement is clearly written and you have gathered sufficient evidence of non-payment, enforcing your claim against the defaulting client with the Small Claims Tribunal should be a straightforward process.

You can refer to this guide on filing a claim with the Small Claims Tribunal for more information.

Civil courts

If your claim does not fall under the jurisdiction of the Small Claims Tribunal, you would need to bring your claim against your client in the civil courts.

If so, it is advisable to engage a lawyer who will guide you through the process and help you assess the best strategy to recover the outstanding payments from your client.

As a first step, the lawyer will help you to draft and send a letter of demand to the client. The letter of demand will set out a list of your demands and it strongly signals to the recipient your intention to commence legal action unless payment is made. If the letter of demand is not complied with, you may direct your lawyer to assist you in commencing legal proceedings. Sometimes, the letter of demand will be sufficient pressure to procure payment from a client as parties may wish to avoid the huge costs of litigation.

If you commence legal proceedings against your client, the lawsuit may take an average of 12-24 months (depending on the circumstances of your case). You would only be able to obtain a judgment via summary judgment during the initial stages of the legal proceedings, or a court judgment at the end of trial.

Please refer to our other article for a detailed guide on civil litigation in Singapore.

Enforcing a court judgment

Once you have obtained an order from the Small Claim Tribunal or a court judgment, the client may comply and pay without further resistance since it is final and binding. However, there may be situations where your client is still resisting compliance with the judgment and making payment. If so, you will need to enforce the judgment.

Clients may be resistant to making payment despite the issuance of a court judgment for a variety of reasons. There are different strategies and legal enforcement procedures to be utilised for these different reasons. For example, some clients are simply spiteful and wish to be as difficult as possible. Other clients may be facing insolvency proceedings, and your court judgment may wind up a mere paper judgment or you may end up having to share what is left in the company with other debtors.

Prior to commencing any legal proceedings, you are strongly encouraged to seek professional legal advice and your lawyer will help you to assess whether you have a real prospect of recovering your debt and enforcing your judgment (if need be).

You can refer to this guide on enforcing court judgment and order in Singapore.

If your client is based overseas, or if their assets are mostly overseas, you would have to ascertain whether the jurisdiction they are based in would enforce a Singapore court judgment. You may need to engage a foreign lawyer based in that jurisdiction to advise you on enforcement of a Singapore court judgment.

Be mindful that legal practices, costs and timelines in foreign jurisdictions may differ significantly from Singapore, and it would be good to have a sense of whether you can effectively enforce your judgment overseas before you commence legal proceedings in Singapore.

No one wants to go unpaid for completed work. While such circumstances can be unpredictable and out of your hands, you can take precautionary steps to mitigate such risks. To summarise, this includes performing basic due diligence checks on your prospective clients and tailoring the right contract terms to hedge against possible payment issues.

One of the most effective ways would be to require partial upfront payments and request for progressive payments that match the milestones of your project. If you are negotiating a contract and would like some support with the drafting and reviewing of your freelance service agreement, you can contact a commercial lawyer.

If you are already in a situation where you are chasing your client for payments, you can consider negotiating new payment terms or suggesting mediation as a first step towards dispute resolution. If such alternative dispute resolution methods fail, you should assess whether your claim can be submitted to the Small Claims Tribunal. If not, you are strongly encouraged to engage a civil litigation lawyer who will help you to:

  • Perform a cost-benefit analysis on whether to pursue litigation against your client;
  • Represent and guide you in the litigation process; and
  • Assess whether you would be able to effectively enforce a court judgment against your client.
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