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Independent contractor clause: meaning and sample wording

This clause records that a person is engaged as an independent business, not as an employee, and that they are responsible for their own taxes, insurance and working arrangements.

When to use it

Include it in every contractor, freelancer and consulting agreement. It sets expectations, although it does not decide the legal question on its own.

Sample independent contractor clause

The Contractor is an independent contractor and not an employee, worker, partner or agent of the Client. The Contractor determines the manner and means by which the Services are performed, may provide services to other clients during the term of this Agreement, and supplies its own equipment.

The Contractor is solely responsible for all income tax, social security contributions and other taxes and charges relating to its fees, and shall indemnify the Client against any such liability. Nothing in this Agreement entitles the Contractor to any employee benefits, and the Contractor has no authority to bind the Client.

What to check

  • The label does not decide the questionTax authorities and courts look at how the work is actually done: control, integration, financial risk and whether the person can send a substitute. In the US that means tests such as the IRS common-law test and, in California, the ABC test; in the UK, the IR35 off-payroll rules.
  • Make the contract match realityA contract saying the contractor controls their hours, while the client sets a timetable and supplies a laptop, undermines itself.
  • Tax indemnityIf the relationship is reclassified, the client may owe employment taxes. An indemnity from the contractor shifts some of that risk.
  • SubstitutionA genuine right to send a substitute is one of the strongest indicators of self-employment in some countries.

Make the variable parts fill themselves in

In a Word template, replace the details that change with {tags} and wrap optional wording in a section. Clausery turns them into questions, so each document only includes the parts that apply:

The Contractor is an independent contractor{#has_substitution_right} and may appoint a suitably qualified substitute to perform the Services, at its own cost{/has_substitution_right}.

Paste this into your own template, then check it with the free template tag checker or read the template syntax.

Questions

Does calling someone a contractor make them one?

No. The legal status depends on the substance of the relationship. The clause helps show what the parties intended but is not decisive.

What happens if a contractor is misclassified?

The business may owe back taxes, penalties and employee benefits such as holiday pay or overtime, depending on the country.

Can I use this sample wording as it is?

It is a general starting point. Contract law differs between countries and states, and the right wording depends on the deal, so have it reviewed before you rely on it.

Free templates that use it

Related clauses

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This page is general information, not legal advice. Laws differ between countries and states; have wording reviewed for your situation before you rely on it.