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Contracts You Need When Hiring a New Contractor

Monday, March 24, 2014/Categories: hiring-and-human-resources

If you’re planning on using a subcontractor to perform IT work for one of your clients, you’ve got a lot at stake. Even if you carefully screen your subcontractor for experience and client references, if he makes even one critical mistake on the job, your client relationship and reputation are at risk. How can you be sure that your subcontractor will represent you and your company appropriately?

While you can’t control your subcontractor’s performance on the job, you can reduce the risk of misunderstandings and legal liability. Before you put your subcontractor to work, it may be a good idea to get his signature on a contract that eliminates the guesswork, so that both you and your subcontractor are clear on what’s expected from the relationship. Known as a consulting subcontractor agreement, this type of contract governs the relationship between a consultant and a subcontractor hired to perform services and is designed be used whenever you hire a subcontractor to perform duties on your behalf for a client.

Consulting subcontractor agreements, also known as independent contractor agreements, are a convenient way to detail in writing exactly what services your contractor will perform on your behalf. This part of the agreement is called a “statement of work” or “scope of work”, and reduces the possibility of any misunderstanding regarding the work your subcontractor will perform for your client.

The subcontractor agreement can also establish rights and responsibilities for both parties, so both you and the person you hire know what to expect and what limitations cannot be exceeded. You can specify rates and payment terms and outline the approaches you’ll take if you’re dissatisfied with your subcontractor’s work. Specific language can be incorporated to protect your business’s confidential information, intellectual property, and right to terminate your relationship with the subcontractor at any time, for any reason.

Because IT businesses have unique legal contract needs, it’s important for contracts to cover all the right bases. But how to create a legitimate, legally sound contract that fits your business’s needs is often a question. IT contractors can download and customize standard independent contractor agreement forms at ContractEdge (www.contractedge.com), saving time and money. Different contracts for different types of employment

If you’re going to hire W2 employees, rather than contractors, you’ll need a different type of agreement: an employment contract. This type of agreement should clearly spell out what you expect from your employee in terms of intellectual property ownership, protection of confidentiality and non-disclosure. It should also allows you to prevent your employee from stealing away your clients or other employees.

And, it can establish your relationship with the employee as “employment at will,” which reduces your risk of the employee later filing a claim alleging unfair termination. The goal: to build openness, trust, and confidence between you and your employee.

Whether you’re hiring an employee or a subcontractor, laying out your expectations in writing at the outset is a proactive step toward avoiding conflicts later. When writing any contract, keep in mind this tip: in general, the more specific your agreements are, the more protection you’ll have.

At ContractEdge there are many quality pre-written agreement templates that can either be used turnkey or serve as an excellent starting point for a more customized contract. Each comes with convenient software that makes it easy to adapt your contract to your needs and can be used again and again. Visit www.contractedge.com for samples and details.

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