In his latest Business Advice article, David Walker, founder of Grid Law, guides readers through each step of terminating a temporary contract to fire a freelancer.
Business owners love hiring freelancers because the relationship can be extremely flexible. If they’re not working out, or you don’t need them anymore, you just let them go without the risk of any come back on you.
Well, that’s what many people think, but the reality can be very different.
Embracing the gig economy certainly has many advantages for a business, and yes, the relationship can be extremely flexible. But it’s not the ultimate solution to all your recruitment problems. It still has its risks, particularly when you want to end the relationship early.
In previous articles, weve looked at whether hiring freelancers is right for you, and if it is, what you should include in your contract with them. If you get the hiring right, ending the relationship early should be relatively straight forward because you simply do as it says in the contract.
However, if you don’t get the first two stages right, letting the freelancer go early could put you at risk of legal action. This is especially true if the freelancer thinks that they’re really an employee, or if you don’t have a written contract with them.
Employees have greater legal protection against being dismissed than freelancers. If you need to let an employee go, you must do so fairly and lawfully. If you don’t, you could face a claim for wrongful or unfair dismissal and have to pay them compensation. This is why some freelancers will claim to be employees.
This doesnt mean you can treat true freelancers unfairly and get away with it. Far from it. You still have to comply with the terms of their contract and if, by ending the relationship early, you breach their contract you could still face a claim.
So, if there’s a chance that the freelancer could in fact be an employee, or it you don’t have a written contract with them, how do you end the relationship early, and keep the risk of legal action to a minimum?
Were going to look at ending the relationship early in three different situations when you simply don’t need them anymore, when there’s an issue with the standard of their work and where there are conduct issues.
Let’s look at each of these situations in turn.
The freelancer is no longer needed
Most written contracts have a termination section. It explains the circumstances in which you can terminate the contract and, for example, how much notice you have to give.
If don’t have a written contract with the freelancer, and only have a verbal agreement, the chances are this isnt something you will have discussed. If a notice period hasn’t been specifically agreed, you have to give them a reasonable? amount of notice.
The trouble is, you and the freelancer may not agree what’s reasonable.
You may think a week is reasonable but the freelancer may disagree. They may think that a month, or even longer, is reasonable and try to sue you for three or more weeks? pay.
Therefore, you may need to err on the side of caution when deciding what is reasonable.
If the freelancer thinks they’re an employee, they will think they have legal protection against being laid off. Dismissing an employee because you no longer need them usually involves making them redundant and paying redundancy pay.
If you don’t follow the correct procedure and you don’t follow it fairly, they could threaten a claim for unfair dismissal.
The quality of work is sub-standard
When you hire a freelancer, it’s likely to be for a specific piece of work with a clear objective. If they don’t achieve this objective they’re likely to be in breach of contract. In most cases this doesnt mean you can simply terminate the relationship there and then.
David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.