Product Updates — 7 min
Working with independent contractors is a great way to scale your business and attract more diverse talent.
But once you’ve found the right contractor, what comes next? How do you onboard them? And how do you know if you’re legally permitted to work with them?
In this article, we’ll explain how to onboard an independent contractor quickly, efficiently, and — most importantly — compliantly. We’ll also provide a few tips on how to make the entire contractor management process a little easier.
So let’s dive right in.
Once you’ve identified a suitable contractor for your needs, you need to make the relationship formal.
Here are 10 steps to follow to smooth out the process.
As a starting point, it’s worth creating an onboarding checklist. This will lay out everything that needs to be done, and you can use it as a reference point every time you onboard a new contractor.
It should be fairly broad in scope, and cover the following areas:
Collecting key information: List out all the information you will need from your contractor, including contact details, payment details, and any tax or immigration details that are required by law.
Preparing the relevant legal agreements: Outlay which documents are going to be required, such as the contractor agreement, non-disclosure agreements, and intellectual property (IP) declarations. These are vital, as they protect both you and the contractor during the arrangement.
Providing access to resources: Consider which documents, workflow processes, tools, or points of contact your contractor will need. For example, if you’re hiring a content writer, you should provide access to your style guide, and put them in touch with your editor.
If you’re hiring contractors abroad, it may also be a good idea to create sub-checklists for each country. Tax and legal requirements can sometimes differ across borders, and it can save you time if you have everything documented and ready to go.
For example, if you’re hiring US-based contractors, then you will need to fill out a 1099-NEC form — even if your company is not in the US. You could amend your US contractors checklist to reflect this specific requirement.
Hiring a contractor without any legal agreement in place is not recommended, even for “small” tasks. Therefore, you will need to create a robust contractor agreement — to protect both parties.
This agreement should contain:
The scope of work (i.e. what exactly you want the contractor to deliver)
The services being rendered (i.e. what the contractor will actually do)
The length of the agreement (this could be a set time period, or dependent upon a specific task being delivered)
Clarification over the IP rights of the work
The agreed payment, as well as method and currency of payment (note that some contractors may require a full or partial upfront fee)
Any related confidentiality or non-disclosure requirements (if relevant)
Any liability or indemnity-related obligations
Of course, drafting an agreement can be a time-consuming process, which is why it’s advisable to use a contract template.
However, if you’re hiring contractors internationally, a generic template can potentially leave you exposed. Instead, each contractor agreement should be tailored to meet any local legal requirements in the contractor’s country. For example, the template you use for German-based contractors should be different to the one you use in the UK.
This may sound like an awful lot of work, but if you partner with a trusted, experienced global HR partner like Remote, the heavy legal lifting is done for you. We provide customizable local contract templates in dozens of countries, ensuring that your company is compliant with local laws.
Once you’ve created and signed the contractor agreement, you should consider any other documents that might be relevant, such as:
A non-disclosure agreement (NDA): This prevents the contractor from sharing any sensitive company information with third parties.
A non-compete agreement (NCA): You can ask that your contractor does not work with any competitors, but always remember that contractors are able to choose their own clients. This is the case, even if your contractor has signed an NDA.
Tax documents: As mentioned, you and your contractor may have to fill out certain tax forms, such as the 1099-NEC in the US or IR35 forms in the UK.
If your contractor will need to work with certain people, it’s a good idea to start making some introductions.
Clearly explain how your workflows and processes work, too, including which communication channels to use. For example, if you use Slack for day-to-day issues and email for formalities (such as invoice processing), make sure they’re aware (and have the relevant access — see below).
You should also issue any internal documentation that might be relevant to their work, such as style guides, templates, glossaries, or anything else that may be beneficial.
When it comes to granting permissions to your contractor, consider your company’s privacy and security policies. As a general rule, access to internal systems should be granted to as few people as possible, so don’t go handing out passwords unless it’s absolutely necessary. Your company’s IT specialists should be involved in these decisions.
That said, you don’t want to leave your contractor high and dry. Before they start working, ensure that they have access to all relevant tools and software. Try not to leave things until the last minute as, if something goes wrong, the task will be delayed.
If a contractor is working with you on a long-term basis, then it’s worth taking the time and effort to be transparent and build a positive relationship.
Throughout the onboarding process, encourage questions from your contractor — and answer them openly. This will help you demonstrate that you’re dedicated to making your collaboration work out.
Over the first few weeks and (if relevant) months, collect feedback, too. What has put your contractors at ease? What has excited them or, conversely, made them anxious about becoming part of your team? This is a great way to improve and finetune your onboarding process for future contractors.
Paying one contractor once a month might not sound too taxing. But if you’re working with multiple contractors across the world, all of whom are being paid in different currencies, through different methods, and at different times… things can get a little complicated. And that’s before you even consider the possibility of scaling.
Therefore, it’s a good idea to set up automated payments for your contractors during the onboarding phase.
The quickest and easiest way to do this is through a contractor management platform, like the one offered by Remote. Our solution allows you to automate payments for submitted invoices in over 100 currencies, with minimal effort.
To learn more about paying contractors — and how Remote can make the process infinitely easier — check out our dedicated guide below.
If you’ve never worked with independent contractors, then you may be unaware of misclassification risk. This occurs when you treat your contractors — who are self-employed individuals — as employees.
For example, if you are dictating your contractor’s working hours and schedule, providing tools and equipment, or paying for health insurance, these are all hallmarks of an employer/employee relationship — not a contractor/client one.
In almost every country in the world, misclassification is punishable through fines, penalties, and the backdating of taxes and social contributions.
Therefore, you need to assess right away if there are any potential misclassification risks in your working arrangement. Each country has their own guidelines on how to differentiate between contractors and employees, but generally, a contractor should:
Determine their own work schedule and working hours
Perform work (or be able to) for other companies
Set their own rates
Provide their own tools or equipment
Not be integrated into your company and its operations (i.e. they shouldn’t have an internal email address)
Be able to delegate or subcontract work (if relevant)
Work without direction or supervision
In recent years, governments have started to target potential misclassification cases far more aggressively.
For example, authorities may screen your agreements for things like repetitive monthly pay, or contractors clocking the same number of working hours each month.
In some countries, if your contractor works for you for more than six months, the authorities will automatically reclassify them as an employee. This means additional costs and responsibilities for you, such as taxes, employment costs, and statutory benefits. In some cases, you may even be liable for back taxes and social security contributions.
There’s also the issue of financial damage. Between 2015 and 2016 alone, FedEx paid a staggering $500 million in employee misclassification settlements, after it was found guilty of treating thousands of drivers as independent contractors and depriving them of statutory benefits.
Therefore, it’s recommended that you run a worker classification compliance audit every six months, as many countries are reviewing existing laws in this area. Just because a country is relatively open to long-term contractor agreements now, it doesn’t mean that this might not change.
If you want to double-check that your new contractor meets local employment criteria, download our free Contractor Compliance Checklist below.
Benefits are a great way to attract, retain, and incentivize contractors, especially if they are working with your company on a longer-term basis. Contractors can sometimes feel like second-class team members when working alongside employees, and benefits help to ease that divide.
However, you need to be extremely careful, as offering benefits can create a significant misclassification risk. If you want to offer perks, it’s highly advisable to work with an international contractor management expert, like Remote. This ensures that you’re not only offering an attractive package, but that you are complying with local law and avoiding misclassification, too.
Finally, before your new contractor starts working, discuss what you both expect from the cooperation — even if it’s just a short-term project.
Specifically, make sure you’re on the same page as to how you’ll measure success, and how often. Depending on the task(s), you may want to set KPIs, or you may want to check progress more informally. Either way, encourage any questions. This should be a two-way discussion.
Good communication and clear instructions are key. If the contractor knows exactly what is expected and what the end product should be, it makes their job much easier and gives you peace of mind.
If you’re onboarding contractors in different countries (and potentially different time zones), there are several other tips that can be helpful:
Asynchronous (or async) communication is ideal for remote, globally-dispersed teams. It enables workers to focus on their tasks and eliminates the need for continuous and instant communication, creating a more productive working environment.
Therefore, you should encourage your international contractors to communicate in this way.
Async communication is only effective if your company’s documentation processes are robust. As a result, you — and everyone in your company — should document everything.
If you hold an important meeting, write down what was discussed and what the next steps are. This way, those who were unable to attend can bring themselves up to speed without “bothering” their colleagues or managers.
If you want your contractors to work async, then ensure that you tell them where and how they can find the relevant information. Don’t just pass the buck, though. Make sure that your contractor knows who to reach out to if they can’t find what they’re looking for.
It can be tempting to try and control your contractors’ processes and workflows, especially if they are working long-term with your company. However, you should avoid this approach at all costs.
Firstly, it creates misclassification risk. Dictating schedules, working hours, and processes suggests an element of subordination in the working relationship, similar to how employer/employee relationships operate.
Secondly, as independent subject matter experts, your contractors won’t appreciate being micromanaged. You can, of course, check in and ask for progress updates, but in general, give them the time and space to do their work. If you’re going to work with contractors, there has to be a strong element of trust, and it’s not possible to build this if you are constantly interfering.
Once the contractor has started working, minimize communications and trust that your contractors are perfectly capable of doing the work you hired them for. If you have provided them with the right resources and points of contact, then they can come to you.
Just because your contractors are not employees, it doesn’t mean that they should work in isolation. If you want them to feel like they’re part of your team and not just a service provider, it’s crucial to involve them.
Where relevant, invite them to team meetings and coffee chats, although make it clear that attendance is not mandatory. Provide progress updates on things that are relevant to their work, so that they can have some context into their impact.
If possible, you can also invite your contractors to in-person events, such as company retreats, industry conferences, or just simple team-bonding dinners.
As always, you should be careful, though. In some countries, heavily involving contractors in internal company events can create misclassification risk. Even providing a contractor with an internal company email address can potentially be enough to trigger an investigation.
Ultimately, you need to walk a balanced line. Independent contractors are self-employed for a reason, but just because you’re in a B2B relationship, it doesn’t mean that their contribution to the business is any less worthy. Therefore, you should be as inclusive as possible, within the legal limits.
Hiring contractors is a great way to quickly leverage top global talent. But to integrate your contractors and help them hit the ground running, a smooth onboarding process is key.
When you onboard contractors with Remote, the entire process is quick and simple. We:
Tailor your contractor agreements to comply with local laws
Make life easier for both parties with an easy-to-use platform
Make it quick and simple to set up automated payments
Advise you on the best ways to compliantly manage and incentivize your contractors
Alternatively, sign up now, explore the platform, and start onboarding contractors in minutes.
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