Contractors, particularly those that operate through their own limited company rather than an umbrella company, will have to deal with a range of legal issues and contracts as part of their work.
This may be a cause for concern for many contractors but with a good understanding of what to look out for, can be much easier.
Frequent Legal Issues
The most frequent legal issue for contractors is the issue of contracts, whether that be with clients, recruiters or your umbrella company. The first thing to remember is that you should never begin working on a job if you have not actually signed a contract confirming the terms of the agreement, including the services you will be providing and the payment you will be receiving in return. The agreeing of terms will often involve some negotiation but if you have already started the job, it is too late to try and negotiate the terms that you feel are unfair.
The main legal problem that contractors face is when a dispute arises, usually between the contractor and a client. This can be for a variety of reasons whether it be the contractor claiming their client has mistreated them or not done what was agreed in the contract or even the client claiming that the contractor hasn’t done something that they’ve been asked to do. Unfortunately, this is sometimes unavoidable and these disputes can end up costing a lot of money if it ends up with legal action being taken by either side.
Verbal Agreements
Problems can also arise from from verbal agreements that contractors make. Both clients and contractors can make this mistake but verbal agreements are legally binding. and are just as much a contract as one signed by both parties, regardless of whether or not you feel it should be.
The difficult part when differences arise isn’t proving that there was an agreement but the actual terms of the agreement. Wherever possible it is important to try and get any agreement written down or at least the terms of the agreement recorded in an appropriate manner.
If it comes to legal action, it is important that the contractor takes appropriate legal advice. It may be an unwanted expense but the reality is that it will be much cheaper to get advice before than to go through the legal route and end up losing. One option when obtaining legal advice is to use someone with experience in the field – there are some solicitors, just like accountants, that specialise in working with contractors.