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, we’ve 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 doesn’t 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?
We’re 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 isn’t 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 doesn’t mean you can simply terminate the relationship there and then.
You should give the freelancer notice that you consider them to be in breach of contract (again this needs to be reasonable notice if you don’t have a written contract) and give them the opportunity to put the problems right. If they can’t or they don’t, then you can let them go and you may have the right to claim again them.
When you hire an employee it’s likely to be for an ongoing role so if there are issues with the standard of their work you need to consider how you can help them.
For example, do they need more training or more support to be able to do what is asked of them. If you fire an employee (or a freelancer who thinks they’re an employee) without trying to help them you could once again face a claim.
Conduct is a problem
Freelancers don’t have employment rights such as, for example, the right to sick pay. If a freelancer doesn’t carry out the tasks you have asked them, you don’t have to pay them and you can let them go. Even if they’re ill.
If the freelancer thinks they’re an employee, they may try to claim they have the right to sick pay and protection against being dismissed because they’re ill (even if they’re unavailable for long periods of time).
So, if you find yourself in any of these situations, what do you do?
First you need to be sure of the relationship status. Just because they have the title “freelancer” it doesn’t mean to say they are. If they are in fact an employee, or if it’s a border line case, you need to be aware of the many different rules and regulations you have to abide by. If you don’t follow them, you’re at a greater risk of legal action.
However, just because the freelancer claims to be an employee, you don’t have to give them all of the employment rights they’re asking for if you’re sure they’re not entitled to them. Just because they feel aggrieved and threaten a claim, there’s no guarantee they will win.
Having said that, it’s always best to avoid legal action if you can, so if you’re unsure, take proper legal advice. A solicitor will be able to confirm that the freelancer is a true freelancer, or they will be able to advise on the proper procedures to follow if in fact the freelancer should be classed as an employee.
If you have any questions about how to fire a freelancer, email me at firstname.lastname@example.org and I’ll be happy to help.
Don’t miss our six valuable hiring tips for startups and small businesses
Sign up to our newsletter to get the latest from Business Advice.