Do you struggle keeping your projects on track? It might come down to that freelance contract!
Our poor rhymes aside, generous legal eagle Paul Gordon is joining us to talk you through freelance contracts.
Known for his well thought out responses and helpful comments in the Freelance Jungle, Paul will be talking you through:
- Why terms and conditions are important
- How to work out what you need to include
- Why contracts are important between freelancer and client
- How to negotiate with a client who has a contract
- Great resources to consult to make sure you cover all bases
Catch the action replay of creating better freelance contracts with Paul Gordon now
Rebekah: I’d like to start off by welcoming the traditional owners, sorry, my welcome to country with the traditional owners of the land where we’re gathering today.
Rebekah: I’m from Windang which is the land of the Wodi Wodi people in the mighty Dharawal nation. I believe Paul you are from the land of the
Paul: I’m on the beautiful Kaurna country.
Rebekah: Beautiful Kaurna country. For those who are not informed, that is Adelaide. Beautiful Adelaide, frosty little Adelaide. And today we’re going to be talking about those sorts of things that you have problems with commonly as freelancers, because I’ve noticed that Paul has been typing his little fingers off into a lather, answering all of your individual questions.
Rebekah: So it was [00:01:00] about time that I actually stopped contributing to his RSI and got him up on a Crowdcast to talk to you today. So we’re going to talk about contracts and terms and conditions, but keep in mind. that your individual circumstances do influence how the law views things. If you need law advice, best thing to do, talk to a lawyer, right?
Rebekah: We’ve got one here captured today in a jar. We’ll see how far we get with him. You can also Ask questions at the end of the presentation. There’s an ask a question feature. We’ve got a poll running so that we know what shape you’re in at the moment with these terms and conditions and the contracts.
Rebekah: And if you want to catch Paul, you can catch him at https://wallmans.com.au/ as well for other advice. Enough about me. What sort of legal documentation do we need, Paul, as freelancers?
Paul: It all depends upon what level of risk you want to run. If you are very comfortable with the fact that your clients might not pay you, that you might [00:02:00] unintentionally give away things that you didn’t mean to, then you don’t need anything.
Paul: But in reality, at bare minimum, you need something which sets out the key fundamentals. And that doesn’t have to be 30 pages of legal jargon. It can be quite simple. It can be an email. I’m not here to try and sell people having formally drafted contracts, whilst I think you should in a lot of circumstances.
Paul: If you get nothing else out of today, Make sure that when you actually enter into a business deal, you set out in an email at the very least, what are you doing? What are you being paid? When are you going to perform your services? What format are they going to be provided in? How are you going to invoice?
Paul: How frequently? What kind of payment terms do you have? Are there late fees? Are there penalties if people don’t pay on time? Who owns the IP? Now, I’ve just rattled off [00:03:00] By my very rough count eight to ten things there, which we should all be thinking about whenever we do these deals. And I think people often either fall into the trap of just getting excited about a job and launching into it, or thinking that legal is going to be a handbrake and slow me down.
Paul: And I think we really encourage you, it doesn’t have to be a handbrake. slow you down. It’s there to protect you just like you would have insurance.
Rebekah: Absolutely. And I love the fact that it’s actually just set up to make sure that we’ve got a safety net. rather than being something that clonks us on the head.
Rebekah: So why should freelancers have a terms and conditions of their own?
Paul: The main reason for that is that if you work with a client’s terms and conditions or a client’s contract, nine times out of ten, that’s drafted in their interest. It’s not necessarily going to be, I would love to say that every business out there is going to provide you with [00:04:00] a very balanced, fair and just set of terms and conditions.
Paul: In reality. They will have had a lawyer who would have prepared something looking after their client as they should and it’s not necessarily going to align with what is in your best interest as a freelancer. So that’s why I always suggest having your own terms and it’s a lot easier to just say here are my terms along with my quote, but the other thing that you can do if you have your own terms and a client comes to you with their own contract is you can do a comparison.
Paul: You can hold up one against the other and say, okay, this one says that I get paid. 60 days after the end of the calendar month, when I invoice, which means it’s I’ve seen it so many times. So 90 days in reality, whereas mine say I get paid on 14 day terms. Is that okay? And then it’s a matter of you deciding what is actually acceptable for your business and being able to buy food.
Rebekah: [00:05:00] That’s, the really important thing. And I think also too, what do you do when you have that client that has the terms and conditions that says I’ll pay you the first full moon after the 90 days after the hippo dances with the penguin?
Paul: Yeah, so your options are either buy a hippo and a penguin or to consider the commerciality of the deal.
Paul: And this is the challenge which a lot of freelancers face is that And I’ve come from my own shop before and I know how hard it is to say no to a client because you want the job, you want the improvement in your reputation, your word of mouth gets out there. But at the end of the day, You need to balance how important that getting that job is against actually running your business in a way that allows you to have a life.
Paul: And if you are sweating on the fact that you’re not gonna get paid for a substantial period of time, where there’s almost always a multinational or a big [00:06:00] company who can absolutely are paid, afford to pay you on 14, 21 day terms, but just don’t like to I always ask people. So how long have you decided to be a bank and fund this other company’s cash flow?
Paul: Because that’s what you’re doing. And so sometimes you have to say no. Not everyone has the luxury of doing that. I fully concede. But, where you can push back, you should, and the more people who push back, and this is, we need to get a freelance union going the more people who consistently push for fair terms, not unreasonable we’re not asking to be paid in advance or whatever we are, people who, consistently maintain a set of reasonable standards of doing business will mean that the, you, Companies out there who might take advantage, not all of them will, but will have less of an ability to do so because everyone’s seeing from the same song sheet.
Rebekah: Absolutely, and even if we don’t have the union, although [00:07:00] that would be bloody lovely, it teaches them better habits because they’re used to hearing that from a freelancer.
Paul: Exactly.
Rebekah: Fantastic. Look, there’s over 120 vocations in the freelance jungle. Every time I do the survey, it’s like, what category do you fall into?
Rebekah: What are the top three or four inclusions do you think need to go into a Terms and Conditions to make sure that we’re covered across that broad range of everyone from drag queens through to copywriters?
Paul: Yeah, I think that basically, let’s define it down. We’ve got 120 vocations at the end of the day.
Paul: As freelancers, we are generally people who will be providing a service of some kind to a third party in exchange for money. Now, there might be a few people who make physical goods that they provide. I’m imagining that might not be the case. majority, because there’s actually quite a [00:08:00] lot of specific elements for them.
Paul: So let’s just deal with the service delivery. And I’m sorry to anyone who’s a product manufacturer out there. The key things that you want to make sure are one payment terms, et cetera, as I’ve discussed, that’s a big one that people fall down on. And in particular, want things like, should you be getting paid super?
Paul: Should you what are your invoice terms and things like that? Number two is milestone expectations. When are you meant to get things done? And what happens if there are delays? Particularly if those delays are caused by a client who doesn’t provide you with timely information or get back to you on certain revisions.
Paul: The third thing is that warranty and revision piece. When I’ll just contextualize to my, work, people will often come to me and say, can I have a fixed quote? I’m like, absolutely. To draft you this [00:09:00] contract, I will give you a fixed quote, and provided that what I have produced for you is lined up with the instructions you gave to me, then no matter how many revisions I have to do to get us to that point, it’s this quote.
Paul: However, if you come back to me and say, oh, I forgot to tell you about this, or what about this eventuality that we didn’t, that I didn’t think of. then that’s not within the scope of the fixed quote. And so making sure that there is a very clear expectation of what is happening, when it’s happening, and what is included in the price is really important.
Paul: Now, one other thing that is a really interesting one from a freelance perspective, it is different to if you were going out and getting services yourself, is that it can sometimes be in your interest not to deal, with intellectual property in your contract. And the reason that I say that is, I’m a little bit cheeky, so I apologize for being a bit cheeky, [00:10:00] although I’m a lawyer, maybe I’m not being cheeky at all, this is really conservative.
Paul: Under the various pieces of legislation, if you are a contractor other than a portrait photographer, sorry guys, you’re different, when you create something, And you are not an employee, you own it. And so if there is nothing in your contract that talks about IP, and the client happily signs it up, then you own that
Audience: IP.
Paul: They have a license to use it for the purpose for which they’ve paid you, but you own it. And so you can do with it what you like. And they also have limitations on what they can use it for. Now, as I said, it’s been a bit cheeky, and in, in reality, I would always say, make it clear up front. You don’t want to sneak things past people.
Paul: But if, the real point is that if people on the other side are getting a little bit antsy about copyright, it might be best to say, look, let’s just cut it out, and let’s not talk about it in the [00:11:00] agreement, and we’ll deal with it as is. the law deals with it. It can be a nice negotiating point for you to think of that it’s not necessarily the worst thing in the world to cut out the IP clause in order to preserve your position.
Paul: That’s
Rebekah: really, just a reminder for anyone that’s got any questions or anything at any time, just use the ask a question feature and we’ll grab at the end of the session. But that’s really interesting to know, especially from the art perspective or the photography perspective that we’re actually far more protected than sometimes we realize.
Paul: Absolutely. And the other thing that people don’t often remember is their moral rights as well. So you’ve got, I can go on about IPV is you’ve got copyright, which protects the reproduction or an adaptation of works and then moral rights, which protect three things, attribution, the right to have your name on it the protection against false attribution.
Paul: So stopping someone from putting their name on it and integrity of your work, which means that it [00:12:00] can’t be used in a way which holds you up to score. The first of those in particular is something which you can absolutely insist on, and that applies whether you are an employee or a contractor. You as the individual creator of the work have that moral right.
Paul: Your contract can waive that though, and so it’s really important to understand if there is a moral rights waiver, what does that mean? If, for example, you’re a sign writer I always use this as an example, I don’t think it’s fair to expect that you will have a big Coles sign and then by Paul underneath it, maybe, apologies to any prideful sign writers.
Paul: But if you are providing photography, if you’re providing videography or copy, you technically have a right to have your name on that, and if you’re giving it up, that’s fine, but you need to be aware of it. You need to know what a moral rights waiver means, which means that you’re saying that anyone can claim that it’s theirs, or just not have your name on it [00:13:00] and price that into your work.
Paul: And that’s the other thing back on the copyright issue, is if you are going to assign copyright to someone, have you priced that in? Are you giving access to raw files if you are a graphic designer? Is there a premium for you doing that? Absolutely.
Rebekah: I remember that from having a film production company, and we’d charge extra for the TVCs outright versus the TVCs in circulation for a year.
Paul: Exactly.
Rebekah: So you’ve answered so many questions in the jungle. I was joking about the RSI before, but quite honestly, so many questions have been generously answered in the freelance jungle, Paul. What are the most common ones that you say that you find yourself repeating over and over again that you just really wish that people knew.
Paul: I think that there are often [00:14:00] variations on themes. There’s often, I did this work, we didn’t have an agreement, they haven’t paid, or they’re being difficult, how do I get out of it, that sort of thing. The, real issue about not having anything in place. And as I often say, it’s fine until it’s, it isn’t, and the number of, and I, what I do wish is that I had less dispute coming to me because people had good conversations up front and documented what the deal was, because there are so many times when, and people will come to me with a dispute saying this person has not paid me, the person has badmouth me out to the community or whatever it is.
Paul: And I have to say to them, you can either spend tens of thousands of dollars on me, or you can let it go and focus on your business, which is often the right [00:15:00] answer pragmatically, but it’s not the right answer on the basis of principle. So I think that’s, one of the key things I see is, trying to triage people who haven’t got it in writing up front.
Paul: Copyright’s another very common one. This person has gone off and I created this design for them three years ago for this business. They’re now using it in another, is that okay? Or, I’ve been asked to make an adaptation or modification of someone else’s work. What does that mean? Can I do it?
Paul: If I change 10 percent, is that okay? Those are the, two main lines of things that we see. There’s a whole bunch of, either more individual elements. But those are the two key ones.
Rebekah: So starting that conversation and agreeing on those terms, I guess one of the things that I always try to do with people in the jungle is say that if it’s, one thing to say something to someone, but they have to sometimes [00:16:00] have consequences to convince them.
Rebekah: that they should follow through. So if someone is scope creeping or they’ve said I’m going to pay you in 60 days and then they’re just not, they’re lollygagging down the road, what kinds of consequences should they face? Because people are scared of law because they’re worried that it comes with a big stick and everyone’s going to go off to court and people will be sued and debt collectors will arrive.
Rebekah: Are there other ways to do it?
Paul: So I think that the first one is the pre engagement protection. So having very clear statements of what will happen. You have to be super careful with contracts because there’s actually a law against there being penalties that are not linked to your actual loss. So you’ve seen cases with Telstra and Optus and all of those where they had, if you broke your plan, you’re going to pay a stupid amount of money, which was in no way connected to you.
Paul: What their actual loss was. Same thing applies to freelancers. So you can’t say, if you fail to pay within 60 days, [00:17:00] you’ll be giving me 50 percent interest every 10 hours. That’s just not going to hold up. But having an appropriately written, what’s called a liquidated damages clause, having something which says that, In reality, if I don’t get paid, I might have to borrow money.
Paul: If I borrow money, it’s going to cost me this much to borrow, and take me this amount of time, and take me this number of these fees, etc. So I need to factor in that if you’re not paying me on time, then there’s going to be interest at four percent or five percent, and it’s going to be, Claimable as a loss.
Paul: So that’s your pre contractual protection. The next thing is, and this is I guess the other thing is, should I use a debt collector? Should I use a some form of debt recovery service? They can be highly effective for people who aren’t familiar with how they work, or they can just be really annoying to people and annoy them into paying, but unfortunately debt collectors don’t have any special legal powers.
Paul: They, [00:18:00] are just as able to annoy someone as you are. And so I always query what kind of fees are you getting? I think there’s an online one which is quite good and reasonably priced. It’s mentioned in The Jungle sometimes. But realistically, you need to consider what kind of risk you’re willing to take when you take on a job and maybe look at things like deposits.
Paul: Should I get a deposit up front of 50%? and then milestone payments and making sure that you are comfortable, particularly if it’s a new client. And that’s one way to sell it to people and say, look, it is a substantial deposit because this is our first engagement together. Depending on how this one goes, we can revisit that on the next contract.
Paul: That’s the only other real way that you’re going to be able to completely avoid getting people into, court, into legal things. But the other thing to remember is that in [00:19:00] most states and territories, different each one, so I can’t give you any accurate uniform advice here speak to a lawyer, but there’s also generally a small claims or minor civil claims division in the courts, and that’s a lawyer free zone.
Paul: It generally is quite cheap to start. You can send a jury. angry looking pre action letter that the court auto generates that looks very official, 20, 30 bucks. If you need to actually commence proceedings against them in court, it’s,
Paul: One to two hundred dollars, and then you rock up to a magistrate, there’s no rules of evidence, you don’t need to worry about formal procedure try and be respectful in the court, and wear something nice, Sadly, that actually does make a difference, but then you can run your own race there, and worst case scenario it’s a no cost jurisdiction, which means that if it all goes badly, the worst thing you’ve lost is some of your time and your filing fee.
Paul: Unlike [00:20:00] if you go to court properly, as in, regular jurisdiction with lawyers, where Firstly, you’ve got your own legal fees, but if you lose, you pay the other side’s legal fees. In the small claims jurisdiction, it’s pretty risk free, and if you’ve got time on your hands and, really enjoy the process.
Paul: Law and order, then suits, I should, I’m, I know it’s a new series of law and order, so I’m no longer aging myself. But if you are willing to do that, it’s, the magistrates who deal with that kind of stuff are very experienced in dealing with small business owners, which we all are and them trying to get some kind of justice.
Paul: The other thing that you can do that often will increase the pressure on the other side. is to do with copyright. Always, even if you are giving copyright to your client, [00:21:00] always make sure that it only vests, so transfers to them, on full payment. Because you can then say, if they go out and start using your material without having paid you, that not only have they breached your contract, they’ve also breached your copyright.
Paul: And then there’s this wonderful clause for, from a creator’s perspective, in the Copyright Act, For those who are eager for section numbers, it’s section 115, subsection 4 of the Copyright Act. Got that? I remember very few section numbers, but that’s my favourite one. And it basically says that if someone breaches your copyright, and they do so in a way that is flagrant, so not only did they breach your copyright, but they knew what they were doing and they did it anyway, then you can be entitled to not only compensation for your loss, But also additional damages because of how flagrant they were.
Paul: And you often see cases [00:22:00] where you get an award of damages against someone for copyright infringement of 100. and additional damages of 15, 000. So it’s a very nice way of reminding people that it’s copyright matters and as long as you’re within the monetary thresholds of your small claims division, you can still do it.
Paul: Magistrates sometimes don’t know what that means and you have to remind them of what the Copyright Act says. But that is another way in which you can increase your bargaining position just by carefully having a new contract that you own the IP until the end.
Rebekah: And it’s a nice advocacy point for all of us as well, because the higher the fee that they have, the more deterred they will be for the next freelancer.
Rebekah: That’s awesome. I really like these kinds of things. I should have had you on earlier.
Rebekah: What’s the difference between a contract and a terms and conditions [00:23:00] for all of us potatoes out there that don’t speak legal?
Paul: In reality, Legally, there is no difference. The practical difference, though, is that terms and conditions are generally things which are static, so they’re not there for negotiation, they’re just a set of terms that apply to anything that you quote, and by virtue of someone giving you the job, they are deemed to have accepted them, provided that they were made aware of them.
Paul: A contract normally would be something that you might have more negotiation on, and that you sign at the end of the day. Now, One thing to be mindful about terms and conditions for that reason is some recent changes to the Australian Consumer Law, which say that unfair contract terms in standard form contracts, terms and conditions, are unenforceable.
Paul: And there’s some movement that may be looking at actually completely invalidating contracts entirely if they have unfair terms. So if your terms and conditions have something like, we can [00:24:00] unilaterally increase prices, or we can terminate contracts. But you can’t. Then you’re walking into dangerous territory that might make your entire contract completely pointless.
Paul: And so it’s important to If you’re doing it a standard form contract, to consider, is this fair that I’m putting in here? If you’ve negotiated your contract, so you’ve had a proper bona fide negotiation where you’re talking about different terms and changing things, and you still have those unfair things, that’s fine.
Paul: There’s no protection for someone making a bad deal, but there is protection if it’s standard form, and there are those unfair elements, which is why there’s a bit of art to craft in terms of conditions. But in, in terms of the question, what’s the difference both are legal contracts. One, you sign one, you don’t.
Paul: The other key thing though about terms and conditions is that you can’t just have them on your website and hope that people know that they’re there. The best practice is to provide [00:25:00] a copy of them with your quote, second best is to have on your quote something saying this quote is subject to terms of conditions, those terms and conditions can be found here, website address, By engaging me to provide this service to you, you acknowledge that you have been made aware of those terms and accept them.
Paul: There’s a line of case law that says that if your terms and conditions are listed somewhere that people might not expect to see them, then they’re not enforceable. It was all about cases generally about car parks, and you drive into a car park that’s going to charge you and they don’t have a sign that says what their fees structure will be.
Paul: People have apparently back in the past had enough time and money on their hands to challenge that in court, and, that was found that where they weren’t appropriately displayed. Those fees were unenforceable. There was also some dry cleaning cases where they had the terms and conditions on in tiny print on the back of a receipt and that was not deemed to be enforceable either.[00:26:00]
Paul: When we talk about terms and conditions, it’s important to make sure that people are aware of where they are. If they don’t read them, That’s their problem, but you need to be able to avoid them being able to say oh, I didn’t know that they were there I didn’t know that they applied and I didn’t think to agree to them
Paul: Yep. And, yeah, click wrap is really interesting. A lot of, and I always encourage people to go for the checkbox as opposed to just clicking okay, because it makes it harder for people to get out of it. And that’s why you’ll often see with those software pieces that you have to actually literally scroll to the bottom before you can check the box and click okay.
Rebekah: Yeah, even though we’re just all scanning past and thinking about favourite TV shows. You
Paul: haven’t read all of Amazon’s 900 pages of Terms and Conditions? You want to sound enraged.
Rebekah: Look, I don’t know what you’re wallpapering your [00:27:00] bathroom with, but I’m certainly not doing that. Should freelancers use contracts if they’ve got terms and conditions?
Paul: I would say that if you’ve got standard terms and conditions that you’re comfortable with, use those unless there is a reason not to. And the general reason not to is that you’re taking on a project that is either very different to what your terms and conditions were designed for, Or it is a project of a magnitude greater than what you would normally do, and there is higher risk for you, in which case you might need some bespoke terms in a contract.
Paul: Otherwise, I would say that you should have terms and conditions that work sufficiently for your business that you don’t need to change them every time.
Rebekah: What should a freelancer do? And I’ve got this question written down here, it took me a little bit to What should a freelancer do if the client isn’t keen on honouring elements of your terms and conditions or the contract?
Rebekah: Should we [00:28:00] just refuse to work with them? Or should we try to find a middle ground?
Paul: It’s going to depend upon what they’re objecting to. If they’re objecting to you. whether or not the jurisdiction is South Australia or Victoria, you can probably make some kind of accommodation. If they are wanting to change your payment terms from 14 days to 21 days, then it’s probably something that you can, manage.
Paul: If however, they are insisting on different warranties that you can’t provide, or wanting to add in contractual indemnities in particular. I’ll go, we’ve got, if you’re happy with me John, I might go through indemnities. I think that’s actually a really important point in contracts. Indemnities are things which say that if something goes wrong, in addition to what I might ordinarily be able to get from you from breach of [00:29:00] contract, you’re going to cover everything that I’ve lost.
Paul: So that’s my legal fees on a full rate. That’s. any consequential damages that arise, et cetera lost opportunities and lost profits, all of these kinds of things that you otherwise wouldn’t be entitled to. And big companies love putting these in to say that if something goes wrong, then the little freelancer who has clearly lots of resources, provide the big bad company with a lot of money that doesn’t exist.
Paul: Indemnities are dangerous for a number of reasons. Firstly, because they are agreeing to do something that is far in excess of what you otherwise would have to do. Secondly, they often will invalidate your insurance. And so a lot of, freelancers. I hope everyone has got appropriate professional indemnity insurance.
Paul: It’s important. If you are ever going to agree to an indemnity, you want to check that with your broker to make sure it’s not going to remove your insurance because the insurance [00:30:00] company might say, you voluntarily accepted extra liability that you didn’t have to. So if a client came to me and said, I want to insert an indemnity and I’m not going to do this deal without it, and the indemnity was unreasonable, then I would be saying, can’t do business with you.
Paul: Similarly, if they are going to say that they want to own the copyright before they get paid. So before you get paid, I would not be wanting to do business with them. What you need to do is assess what’s your risk appetite, how valuable is the job to you? in terms of money, but also reputation in terms of is it something that you just love doing and you’re willing to take that risk?
Paul: And what is the impact of the change that they are demanding? If it is, and we often come across these high impact, low probability risks, You might be willing to say, yeah, look, if it happened, it would be disastrous. But the chances of it happening are so slim that I’m willing to take that [00:31:00] risk. And then, yeah, go ahead, work with them.
Paul: But always think about what those impacts are. Do your risk assessment. And also consider if it’s a red flag. If, a client, we often see these toxic clients who come in and they want all the power, none of the responsibility. In a deal and it can be a recipe for disaster. You can often we all get we can tell when those clients are coming in.
Paul: This is not going to be worth the money that I’m going to make on this. And it’s about having the strength to say there will be other jobs out there. Appreciating entirely that at certain times in life that might not be an option. You sometimes have to take the bad client because you need to pay the bills.
Paul: But if you have got that luxury of, doing that, it’s definitely worthwhile saying no when you can.
Rebekah: Absolutely. So no semaphore clients when they’re coming in with all the flags and none of the benefit. That’s great. [00:32:00] What are your top tips for negotiating when you’re speaking to a client and you’re about to push back?
Paul: So the top tip I have is know your non negotiables. Figure out ahead of time what are the things that if I don’t get right, I’m going to walk away. Have that list. in, in front of you when you’re in your negotiation and, know that you’re not moving on them, and don’t let your have, the discussion with yourself in advance.
Paul: If they really pushed me on this, would I actually change it? If the answer is that, then that’s not what your bottom line is. Your bottom line is beneath that. Pressure test yourself, understand what your bottom line is, then come to your actual negotiating position, which is definitely, which is often higher than your bottom line, and be willing to move on those things.
Paul: The other thing is, do the opposite. Say, which of these [00:33:00] things in my contract do I actually not really care about? The lawyer put them in there, doesn’t really make a difference to me if X or Y happens. And be willing to give the other side little wins that actually don’t negatively impact you. Once you’ve done that, you just have to, it comes, it becomes reasonably simple.
Paul: Because you know what you’re willing to give away. You know what your walk away point is. You go into the discussion and say, you go back and forth, and if you get to a point where you just can’t get to those terms, you know that you’ve already had that discussion with yourself. Look, I’m not willing to work other than on this basis.
Paul: And if they’re not willing to do that, then that’s the end of the discussion. If you get to a point where you are willing to move on those, and you haven’t done the first exercise fully, because you are actually, your bottom line is lower than where you thought it was.
Rebekah: It’s a really good point. So you know how to triage what you’re willing to fight for, and what, it’s okay to go to the keeper.[00:34:00]
Paul: Yeah, and we see this in, so I do a lot of negotiations, mediations, and I always say this to people before we go into those really high pressure negotiations, which is different to what we’re talking about now, which is just getting a job. It’s a lot lower pressure, but the number of people who think they know their bottom line, then after 15 hours in a room with me, on my side, decide they just can’t cope with it anymore and they’re willing to go lower, is astounding.
Paul: It happens on both sides. Negotiations that can be marathon sports, and if you try and approach it in a sprint, you’re not going to get anywhere. In just a regular commercial negotiation, you should never get to that point. But I do think it’s important that you pressure test your bottom lines before any negotiation, no matter what it is, So that you know if you, for yourself, you get to this point, I’m out.
Rebekah: Yeah, it’s fantastic advice. It sounds almost like the auctioneer advice when you know your upper limit for that house. Even if you’re in love with that kitchen, you can’t possibly spend that [00:35:00] extra 50 grand or 500 grand as Sydney seems to put it. What are the most common contract mistakes that you see with our freelancers?
Paul: Most common ones are knowing who the parties are, it’s just a simple basic one, have you got the right ABN in there, have you got the right contract details. Number two, the next one is leaving things out. Sorry. not covering everything that’s been said in there. Number three would be not understanding what the boilerplate in the contract is.
Paul: This is when you’re getting a contract from a client. Always look to see, is there a little clause in there that says that this contract replaces all other conversations, communications between the parties, and is the whole contract for everything we’re doing. Because you’ll often have an email before the contract is sent out saying, Yep, we agree [00:36:00] to X, Y, and Z.
Paul: And then your contract doesn’t include x, y, and z, or says something different to x, y, and z, and you say, hang on a second, I have this email, and they’ve got an entire contract clause that says, too bad, it means nothing. So those are, the, biggest ones that I would see, not biggest, those are the most common ones I see people miss that and misunderstanding how, copyright and intellectual property works.
Rebekah: This is, my brain is lighting up and it’s not just the coffee, I’m feeling very educated now, Paul. Thank you. Okay, so a lot of freelancers ask for advice with the tricky client situations. Sometimes people suggest tactics like name and shame, and also, Oh, just hit them with a late fee that you didn’t have in the contract before, that’ll teach them.
Rebekah: I always get freaked out as you’ve probably seen. From a legal perspective, am I being a little bit overly [00:37:00] cautious? Or is there something to worry about when we go and name and shame people?
Paul: Okay, so let’s deal with name and shame first. In general, where we’d be talking with name and shame, there are two things that someone could pin you on.
Paul: Oh, sorry, three. One is Miscellaneous Deceptive Conduct, if they were to say that you’re saying something which is leading others into error about their business, probably not the biggest concern. Two big ones would be defamation, or what’s called injurious falsehood. Defamation is actually going to be a lot harder for people to bring against you these days, because there’s been a change to the legislation that says that unless you can prove that someone has suffered serious harm, We’re as likely to suffer serious harm on the basis of the statement.
Paul: They can’t bring an action for defamation against you. So that’s one thing. The second thing is that any business [00:38:00] with 10 or more employees that is for profit cannot sue for defamation. However, their staff could. So we then come to the question of it’s not defamatory if it’s true. So saying something that is true about a business is fine and not defamatory.
Paul: But the difficulty that you’ll have is. that if you simply name and shame and saying Joe blogs and co haven’t paid me in five weeks contract says four but there’s actually a dispute about the deliverables Then even though what you’re saying is technically true. It contains an imputation defamation speak for It alleges something that isn’t true.
Paul: So Joe Bollingco, it’s true, haven’t paid. However, they haven’t paid because they are exercising a right under the contract not to pay until they’ve resolved a dispute or they’re exercising a right of set off. And so the reason why it is [00:39:00] probably still the right decision to be cautious about name and shame is because it will be difficult to ensure that you get the full context of the situation.
Paul: in a post on Facebook. If it’s black and white and it’s absolutely clear that something’s wrong and technically on a case by case you could, who’s got time to properly moderate the naming and shaming in reality? And you’ve got plenty of hours in the day to do that, surely, Bec?
Rebekah: If I could get to sleep, sure.
Rebekah: Yeah,
Paul: And that’s why, so I advise a number of community managers and it is generally best not to allow naming and shaming for the reason that whilst technically it might be okay, it’s just a risk that you don’t need. Now, differences may appear if there is form for someone. And so it may be that this is off the top of my head, what you could do is potentially have confidential naming and [00:40:00] shaming of people to the moderator that is not published.
Paul: And then if you find out that business X has just ripped off five freelancers in a row, you We might consider is it appropriate for a comment to be made, but just allowing people to randomly name and shame is very risky because of the defamation risk. There’s also this thing called injurious falsehood that businesses with more than 10 employees can use.
Paul: It’s just, it’s basically defamation but hard, is the easiest way I can describe it. And so I think it’s generally best to err on the side of caution, but we might find ways if there is. persistent exploitation to deal with it in another manner.
Rebekah: And I think it’s really important too, that within all of that too, you need to know what’s happened with between two people to actually have a full assessment of what, where the, antagonism lies.
Paul: Absolutely. And then on the second part of that about, I’ll just hit them with a late fee, in absence of contractual [00:41:00] agreement to pay late fees, there is no way you will enforce one. Yeah. There is no such thing as an implied term of a late fee. The way the courts look at it is, if you haven’t been paid and you didn’t have funding for a late fee, your remedy is to sue them for breach of contract.
Paul: And you can then get there’s penalty in, there’s interest that the courts will apply on the basis of, what, you’re alleging. outside of that, you’re not going to get anything and it’s just going to be a massive headache for you to try and push forward. You might get lucky sometimes that you get an ignorant business on the other side who doesn’t know that you can’t do that, but I, my general approach with these things is being honorable will in the end get to the right position in business.
Paul: It might, you might lose the battle because you’re doing the right thing and being honorable, but in terms of your long term career, [00:42:00] having a reputation for integrity and honesty in how you conduct yourself, I know, I’m told I’m an optimist, but I believe that will pay dividends in the end.
Rebekah: That’s okay, you’re in a good crowd because I’m a cynical optimist, but an optimist nonetheless.
Rebekah: But it also helps to sleep at night. Yeah, exactly. You’re not doing the naughty things as well. Okay, so how do we spot, and this is the other question that often comes up, and I don’t Really don’t know the answer. Sham contracting. How do we spot it? Do, how, when someone comes up to us and says, all right, I want you to do the XYZ for me.
Rebekah: How do we know that’s actually a sham contract versus a contract role versus just a freelance gig?
Paul: This has become a lot more difficult to answer in the past Six weeks because there’s been a high court decision, which has completely thrown everything that we thought we knew about the law up in the air.
Paul: Previously, [00:43:00] sham, so sham contracting is basically saying you should be an employee, but they signed you up as a contractor to avoid paying you benefits. That’s, basically what we’re talking about with sham contracting. And so there is a whole bunch of different things that you would look at. Am I predominantly working for this, personal business?
Paul: Am I using their equipment or my own equipment? Am I allowed to work for their competitors? Am I holding myself out as being part of their business on my email signature, wearing a uniform or things like that? And you’d weigh these two, two lists of things up and one’s in the employee column, one’s in the contractor column and whichever one it came out as, that’s what you were.
Paul: Now, the recent case that’s come out has basically said sorry, Contractors if the contract says that it’s a contractor position and you agree to it Then it will be very difficult to say that you’re not and so that has unfortunately for Contractors out there made [00:44:00] life a bit more difficult in terms of sham contracting So the most important thing is look at the contract and decide if you’re going to do it Is this actually going to require me to work pretty much exclusively for this business?
Paul: If yes, it shouldn’t be a contract, it should be an employment contract. So it should be a contract agreement, it should be an employment contract. The other thing though, and we touched upon this briefly before the session, I’m going to shoehorn it in here, Bec, is that even if you are a contractor, you are entitled to superannuation.
Paul: And the only time that changes is if you are not being engaged for your labor. So if you’re providing widgets, products, then this doesn’t apply to you. Or if you have a right to subcontract to someone else. So if you’re, if you personally are being employed, not through a company, not through a trust, personally being employed for your labor, then [00:45:00] you have a right, and in fact there is a legal requirement that you be paid superannuation.
Paul: Now, Up until the end of this month, there was a threshold that if you didn’t earn, I think, I always get, if it’s fortnight or month, I think it’s month, 450 a month or less, you don’t have the right to super. As of 1 July, that is being, that threshold is scrapped. So from dollar one, you must be paid super.
Audience: You
Paul: must be paid super into an accountant. So if you have a contract that says you’re a contractor, you’re not an employee, you get no benefits, you have to look after your own super. and you’re being paid predominantly for your own labour, then that is unenforceable. And you can actually, this is the one thing which is really great for contractors, so it’s balancing things.
Paul: You don’t need to find a lawyer to get that money back. You can just go to the ATO and report failure to pay superannuation to you, and then the ATO will go off and investigate. And it might take you a long [00:46:00] time, but you’ll eventually get your extra 10 percent in super. I’ve raised this just because I’ve been saying this to pretty much every client I’ve had on both sides of the fence.
Paul: Oh, and I’ve got do you want me to answer questions? They’re coming up in the feed or leave them till the end?
Rebekah: We’ll leave them for the moment. Cause otherwise we’ll get a flood of questions.
Paul: Excellent. So it’s really important that you be aware of your rights and that you price it in. It’s fair to, and this thing, it’s fair to everybody.
Paul: If everyone knows what the deal is up front. So maybe instead of charging a hundred dollars now, you’re charging. 91 plus, there’s a reason I did law not accounting, I’m terrible at maths, but you subtract the 10 percent and, get the rest paid into your super. But, it’s if ever, if no one gets anything from this other than this point, be clear, up front, [00:47:00] ideally in writing with what the deal is, and you will avoid the majority of problems that you’ll have and this is no different.
Paul: So whether you are a contractor or an employee Figure it out up front and make sure the contract reflects and if someone is insisting upon you being a contractor and not an employee even though You’re working there. You can’t work for Competitors etc, Then that is a there’s your semifinal client once again Huge red flag that they’re trying to do something dodgy
Rebekah: Absolutely.
Rebekah: We’re running out of time, so I just want to ask before we get into the questions, where do we go to get information? Like, where are the go to resources that we can go to as freelancers to read?
Paul: Yeah, absolutely. There are a couple of really good sources. There is hate spring for another law firm but Allen’s [00:48:00] in the eastern states have produced something called the A Suite for Entrepreneurs.
Paul: It’s a set of standard contract documents including a non disclosure agreement, website terms, conditions, etc. They are reasonable to use for low risk circumstances. I wouldn’t want you to use them for anything high risk because they have not been customized for your business but it’s worth looking at.
Paul: In terms of other places for all of the art related people. The Arts Law Center is this fantastic not for profit who provide low cost legal assistance to artists across all ranges of that term, and they have some great free resources as well. I think you can also, they’ve got a couple things, I used to do it, I need to get back onto it, they’ve got something called the Document Review Service, so if you become a member of the Arts Law Center then They will connect you with pro bono lawyers who will look over your [00:49:00] contracts for you and give you tips.
Paul: So that’s a really great resource. If you have any questions about how copyright works, the Copyright Society, which is from memory, copyright. org. au, have incredible fact sheets that are great plain English summaries of how copyright in Australia works. So those would be my three tips. A word of warning about the legal document production services that you find out there.
Paul: There are plenty of them out there law depot, legal vision, clear docs, et cetera. Like the A suite, they are fine to a point. They have not been designed for you. And I’m not just saying this as part of a sales pitch. They just literally have been designed for the broadest common denominator that they can find out.
Paul: And whilst they’re better than nothing, if you’re going to use them, you need to make sure you understand how every clause in that document works. Because you are signing up to [00:50:00] whatever is in it. So just be mindful of those elements.
Rebekah: And that’s so true too with the delivery of our services as well, because one of the limitations of those sorts of things is if you buy a template for copywriting, for example, and you are a legal copywriter or a medical copywriter, you face different indemnities and different problems.
Rebekah: We’ve got so many questions. We’ve got questions coming out of our ears. I’m going to the Ask a Question feature because that’s where I’ve got my little disability reader pointed. So if I look away, it’s not that I’m disinterested. My head’s actually buzzing. So we’ve got a question here that says,
Rebekah: Not everything. How should we navigate asking them to sign our own independent contract in addition to theirs? Paul also talks about divergent T& Cs. Is it a matter of negotiating and changing theirs, adding to theirs, or pushing for your own to be signed instead? In other words, [00:51:00] is it standard for two contracts, one from a supplier and a client to be in play, or how do you manage that?
Paul: We always want to avoid what’s called the battle of the fools, or the battle of the contracts. Because the worst thing that you can have is two documents that are inconsistent with each other and then you have a fight about which one applies. I would say it’s one or the other, either they’re using your terms or you’re using theirs, and whichever one you settle upon, you need to negotiate until it is an informant that is acceptable to you.
Paul: Never have both signed, or if you’re going to, You need to make sure that it’s clear which one takes precedence in the event of inconsistency. And so what you might, so if you’ve got a client’s terms and conditions which cover 90 percent of the field, but not 10%, you might supplement it with a brief signed document that says we end, we agree that we’re entering into these other terms and conditions, however they are subject to this addendum, and the following points are added in, [00:52:00] x, y, and z, in the event of any inconsistency, this addendum takes precedence.
Paul: Something like that. But never have your terms and their terms that are inconsistent. It’s just a recipe for disaster.
Rebekah: It’s not a race between the two. Leone asks, Do the terms and conditions have to be produced by a legal professional such as yourself? So she’s written her own, they’re in plain English.
Rebekah: Would it stand up to scrutiny? Has she got it all or does it have to come from a proper contract or a proper law talking guy?
Paul: It does not. As I said, bullet points in an email. are just as binding. The danger with doing it yourself is that you might either miss something or you might express something in a way that is insufficiently precise, so that if it ever did get to court, you’d have problems.
Paul: And, my, my war story is that when I was working at the courts for a judge, there was a case for [00:53:00] a 300 million no, 300, 000 contract that two engineering companies decided they didn’t need a lawyer involved in. The court costs ended up being ten million dollars over a contract that they thought they’d written themselves, and it was plain English and it was fine.
Paul: At the end of the day, that was just stupidity, but it’s showing you the extremes. It’s a risk question. You can absolutely, there is no legal state principle that says that they have to be done by a lawyer, but the old saying, person who represents themselves as a fool for a client may apply in certain circumstances.
Rebekah: Yeah, and on to jargon as well, Ian’s mentioned that, there, It’s full of legalese, it’s full of jargon and [00:54:00] all the rest of it. Are plain English contracts a thing?
Paul: They are, and we, and honestly if you wanted to see, they are but they are to a point. Australian lawyers are actually pretty good comparative to US lawyers in particular.
Paul: When I get a U. S. contract, it starts off with the word whereas at the beginning, and then the parties therefore, herein, under, sign, just all these ridiculous words that have no purpose. We are a lot better than that, but there are certain terms of phrase that we need to use because we know that there are court cases that have interpreted them in certain ways, and so there’s certainty about what they mean.
Paul: Sorry. I will always try, whenever I’m drafting something, you should definitely understand it. If I, if you get a contract that you don’t understand, either you speak to your lawyer to say, does it need to be written in this way, or can we make it simpler? And if it needs to be written to the, in, [00:55:00] in this way, explain it to me so I can actually understand
Rebekah: it.
Rebekah: Absolutely. Claire’s asked about payment cycles. So say you, your client’s got the once a month supplier invoice, and they say, we only pay them on these days. It’s too bad, so sad, if you’ve been paid at a different times. How do you push back on that? Can you push back on that?
Paul: It’s, that is a commercial matter.
Paul: And it’s a commercial matter that you need to consider during your negotiations with them. If they won’t move on it, you need to think about is that going to be a problem? too problematic for me to accept, or do I need the job and I have to just deal with those payment cycles? There’s no legal ability to change that.
Paul: Theoretically if it’s completely unreasonable, Hippo and the Penguin have to dance, you might say that’s an unfair contract term. Otherwise, you, it’s a risk decision for you to [00:56:00] make as part of your business.
Rebekah: I’m loving this rapid fire legal thing. I could do this all day, Paul.
Rebekah: We won’t do it all day, I promise. Amanda’s got a really good question. Imagine if the client has paid you in full. What’s the deal with terms and conditions and timeframes if the client is dragging the chain but they’ve paid for what they want?
Paul: Your terms and conditions need to specify what happens if there is a termination.
Paul: Firstly, you want to make sure that you have a right to terminate. So I often would say that you need to have an ability to terminate for cause, which means Something goes wrong, you can snap your fingers and you’re out, or potentially you might also want to have what’s called termination for convenience, which basically means I’ve had it, I’m out.
Paul: If that happens, your termination should say what happens to unexpended funds that have been paid. It needs to go both ways. So firstly, you say that if I’ve done work that I’ve not been paid for, or if I’ve, more importantly, incurred expenses to third parties that I can’t avoid [00:57:00] because of a termination, and you’ve terminated for convenience, then you should have to repay me those.
Paul: Equally, if I’ve terminated the convenience, I shouldn’t be able to call that back for me. That was my decision to say, I’m out, and I have to wear third party expenses. And also, if there is, if there are funds that have been provided for work not delivered, work not produced, then I have to refund those expenses.
Paul: On a fair proportion, pro rata, etc.
Rebekah: It’s, always a dilly of a pickle. I’m thinking of every government contract with the best case scenario timeline they’ve ever had and how right they always run. So Annette has asked a specific one about end of life workers. So they often encounter heightened emotional responses.
Rebekah: Is there any way to include protection of workers and the right to end a meeting or leave a session if language is abusive or threatening or you feel like your personal safety is somehow being put to, to threat at that [00:58:00] point.
Paul: Look, it’s a very tough industry and I would always encourage someone that if you are feeling unsafe, you should leave no matter what the contract says.
Paul: Money can be replaced, your health can’t necessarily. In those particular circumstances, that’s where you definitely don’t want an off the shelf contract. You want something that will go through and include protective behaviors in there as well and provide you with a right to terminate a session in the event that you have any feeling in your own absolute discretion and perception.
Paul: of being unsafe. So I think that is very important to have written into your terms and conditions. You want to make sure that’s pretty much in bold red font so that no one can miss it.
Rebekah: Absolutely. And that should apply to we’ve got GPs, we’ve got psychologists, counsellors and those sorts of things as well.
Rebekah: Absolutely. Never continue if you feel unsafe, folks. Someone’s asked, I don’t suppose there’s a ballpark figure [00:59:00] for how much it would cost to have a personalised TNC and contract prepared. How long is a piece of string really?
Paul: And this is why I often will so I actually try not to ever give quotes to people on the phone or by email because it depends on your business.
Paul: So what I always, not everyone, but I will always sit down with someone for a no charge meeting to find out how is the business structured? What are you providing? What are the risks? And based on that, I will then come up with an estimate. It can be anywhere from. 400 to 5, 000 to do a fully bespoke one.
Paul: The 5, 000 is when you’re doing a major engineering project online. For most freelancers, I would say, four to 800 would probably get you a bespoke one. Apologies for not being the cheapest industry out there. Just one of [01:00:00] those things. But yeah that’s where I think you’d be looking at depending upon the business.
Paul: But, I’m just, so this isn’t just for the jungle, but for anyone, I’m always happy to have a no obligation, no cost chat just to give you an idea of what getting it legally customized would look like. And if you look at that and think, you know what, the risk is not sufficient to justify me paying that legal insurance, then don’t, there’s no issue with that at all.
Paul: But it is good to get an idea of what there is often during those exploration meetings that we have, we identify other things that you haven’t thought of. about you. You come in for terms and conditions and you come out realizing that I, I need to have a plan for corporatizing my structure or registering that trademark or getting into a, proper agreement with my, partner in business or my partner in life.
Paul: All of those kinds of things come out of those sessions.
Rebekah: Fantastic. Now we are absolutely on time here, Paul. Have you got [01:01:00] time for one or two or do you have to be a law talking guy somewhere?
Paul: I’ve just got a message saying that my next client is here. Let’s do one more.
Rebekah: Okay. So the last question that we’ve got here, I’m going to skip to Amanda’s, which was in the chat, which is how does the, how does it work with the super business?
Rebekah: If we’re say, we’re engaging another freelancer to help us out with a project.
Paul: So if they are based in Australia, the same thing applies. So any worker in Australia, it applies if they’re offshore. I’m afraid our law doesn’t actually protect them at all. And so you can pay them. whatever whatever your conscience lets you pay them.
Paul: And they, if they’re based here in Australia, if you hire someone as of 1 July from the first dollar you pay, 10 percent in super.
Rebekah: Thanks for coming in today and answering all of our questions, Paul. We’ve gotten some very warm comments there in the chat. Folks, it’s Paul Gordon. He’s often answering your questions in the jungle.
Rebekah: I’m going to [01:02:00] let him go now. But if you have any further questions for Paul, I’ll start a thread and then he can pop through when he’s got the chance. And where do we find you if we want to hire you to do that chat?
Paul: https://wallmans.com.au/ or I’m on the Jungle, just ask. I’m in the group or on Twitter at Paul Gordon.
Rebekah: Fantastic. Thanks so much for your help today, Paul. It’s been an absolute pleasure. Maybe we’ll get you back in to talk about that super stuff a little bit later on in the year.
Paul: Wonderful. Thanks so much, everyone.