Employees vs Freelancers – important advice for all concerned!
In the growing gig economy more and more businesses are using freelancers to undertake work traditionally done by employees. In fact, more and more potential employees are opting to be their own boss and work exclusively as a freelancer.
Whilst this is often good news for both parties it’s important to understand the differences in the legal relationship.
Before we get too carried away, you’ll be pleased to hear that this is not a blog about tax, holiday allowance or sick leave. These are obviously important issues when it comes to employees and freelancers but let’s save them for someone else. Instead, I want to address the question of IP ownership. Often overlooked and yet probably the most important factor to consider at the outset.
The default position in law is that the IP in work undertaken by an employee (as part of their job) is automatically owned by their employer. However, the IP in work undertaken by freelancers remains the ownership of the freelancer, unless there is an agreement to the contrary.
These two sentences are vital in understanding the legal disputes which inevitably arise on this issue. If an employer wants to own the IP created by a freelancer, the parties must agree this in advance (and ideally in writing – sometimes implied agreements can be inferred by the court but this often leads to a messy dispute which is best avoided).
However, I’m afraid that’s not the end of it, in fact things can get a little bit more complicated in circumstances in which the parties think there is a freelancer/client relationship but the court actually decides that the freelancer has been treated like an employee and is therefore an employee. If this is the ultimate decision then the position on IP reverts back to the employer/employee relationship, and the IP is automatically owned by the employer!
Shock horror, so even if you think that you are a freelancer, and you call yourself a freelancer, you might in fact be an employee. This can actually be damaging for both parties; the employer/customer should have been offering employee benefits and the employee/freelancer no longer holds the IP in the work created.
Courts look at all sorts of factors to work out the true legal nature of the relationship but key indicators of an employee can be things like regular payments, fixed working hours, non-compete clauses and the provision of equipment.
So, in light of this, it’s vital that all parties decide from the outset what their relationship will be, set it out in an agreement AND act accordingly.
For advice on any of the issues raised, or if you just want someone to ease your legal headache, please contact one of our friendly solicitors on [email protected]
Written by Will Miles