The 1 essential clause that should be in every independent contractor agreement.

– Do you wanna know the one key clause that should be in every independent contractor agreement? Well, stick around and I’ll tell ya.

Hi everyone, Simon here from the Contract Company. Contracts, it’s what we do all day, every day, and sometimes overnight.

So, you’d like to know the one key clause that should be in every independent contractor agreement? Well, I’ll tell ya.

What is the one essential clause in an independent contractor agreement?

It’s a subcontracting clause. What does that mean, you ask?

Okay, let me tell you. One of the keys is using every independent contractor agreement isn’t actually with the agreement itself.  It’s the ATO‘s interpretation as to whether that person is, in essence, truly an independent contractor. That or whether they should be deemed or classified as an employee.

So, in any independent contractor agreement, to keep the taxman off your back, which is a good idea, you wanna have certain things in there.

And one of the key things is that you wanna make sure that the independent contractor actually has the ability to subcontract their services. The inclusion of that clause is one key indicator to the taxman that the independent contractor truly is an independent contractor.

Now, you, as the business owner, may need some sort of certainty when you’ve signed a contract with the independent contractor.  Like you don’t want the independent contractor now engaging someone you don’t know to provide the service.  What you can do there is just put a little sentence at the start of the clause about subcontracting. An essential clause that basically says that they can’t subcontract without your consent.

So that way, you get the substance and benefit of the clause to keep the taxman happy.  You also have the control that the independent contractor can’t just go and subcontract the services to anyone. Hope that helps.

If you have any questions or queries, please get in touch with us, simon@contractcompany.com.au or 1-800-355-455. Thanks very much.

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