Freelancers and contractors will generally have no legal right to reinstatement if their Client terminates or chooses not to renew their contract.
However, you may be due a paid notice period from your client if they end the contract early, or a sum of money may be owed to you on early termination as compensation (often referred to in freelancing circles as a kill fee).
Our Crunch advisors are only able to answer accountancy related questions. If you have an employment question, please either leave a comment below or phone the Acas Helpline on 0300 123 110.
Contracts & agreements
A contract is any agreement with two or more parties, that can be written (on paper or e-mail), oral, implied or a combination of these. A written contract will still be usually binding even if you haven’t signed it – if you’re working on the project or assignment (as you’ve ‘accepted’ the terms of the agreement by beginning work).
Some freelancers and employers don’t like a written contract of any description, but we would recommend it to ensure clarity of what has been agreed so there’s no confusion or dispute later. If you don’t have a written contract, it can be more complicated to enforce the rights contained within the agreement.
The main elements of a valid contract for services (that the self-employed have) are:
- The intention to enter into legal relations
- The offer (of work) and its acceptance (an agreement)
- Consideration (e.g. in return for doing work/providing a service the ‘worker’ receives payment)
The contract is the main legal document but it can be supported by other documents that are referred to in it. These include:
- The proposal – the client’s requirements and the action that you will take to deliver the work
- The schedule – the agreed start and delivery dates and any progress points in between
- You may have standard Terms and Conditions under which you operate e.g. cancellation terms, copyright ownership issues
Assuming you are a genuine freelancer/contractor (see our guide to determining your employment status here) and not a worker or employee, there are no legal minimum notice periods you or your client need to provide each other to terminate the contract early, or at its natural end.
If you have notice rights, these should be written down in any agreement between yourself and the client (including third parties, e.g. Recruitment Agencies).
The contract should clearly set out the way in which termination will be handled and ideally should allow that either party can terminate the agreement immediately or with notice, whether a breach of contract has occurred or not.
With regard to notice periods, if you have a written agreement:
- Check to see if there are any written termination and notice clauses for either you or the client to give each other included in it;
- If there are written termination clauses, what do they cover? Common clauses that allow a client to terminate the contract include misconduct on your part if you’re unable to fulfill the work, if you breach any terms of the contract, if they’re unhappy with your work, or if you fail to meet deadlines. There may be a ‘for any reason’ clause that allows both you and the client to end the agreement for any reason at any time (with or without notice);
- Sometimes, there may be a provision for some level of financial compensation if the agreement is terminated early by the client. For example, where you’re not at fault but the contract has to end for other reasons (this could be a percentage of the total fee that would’ve been due over the total contract period).
Some industries have, as common clauses, “cancellation rights” that allow the contractor to be paid a sum if the agreement is cancelled at short notice by the client before it starts (but these must be agreed between both parties to the contract).
Unfair Dismissal Rights
As a genuine freelancer, you have few employment rights and Unfair Dismissal is certainly not one of them. As a freelancer/contractor, you have these rights:
- You shouldn’t be discriminated against in the workplace in most cases, and if you are, you can make a claim to an Employment Tribunal. This protection only applies to freelancers who fall under Part 5 of the Equality Act 2010 – that is, those who are described as ‘contract workers’ and are contracted personally to do the work (i.e. you cannot claim discrimination against your employer if you’re contracted for the provision of services and hire someone else, or sub-contract someone else, to do the work – you must do the work yourself personally);
- You’re entitled to a safe and healthy working environment (as above) – see www.hse.gov.uk
- You should be paid for the work that you’ve done and receive any expenses you’ve incurred and are due
- If you ‘re paid late, you have the right to add interest to your outstanding payments under the Late Payment Regulations
- You may also be entitled to Statutory Maternity Allowance if you’re pregnant and have recently left an engagement
- Contractors working through Employment Agencies also have rights under The Conduct of Employment Agencies and Employment Business Regulations 2003 – see our guide here
- On the occasions that you’re classed as a ‘worker’ (for employment rights) but self-employed (for tax purposes), you may be entitled to workers rights if you perform the work personally (e.g. in certain circumstances freelancers can be classed as ‘workers’ and receive paid holiday and are entitled to rest breaks under the Working Time Regulations).
- If you’re registered as a limited company and provide your services on a freelance basis to a client organisation (as a provider), you’ll not receive workers rights from this organisation – it’s up to you to provide yourself with workers right as you’re employed by your own limited company.
Breach of Contract
If your contract has been ended in a way the agreement doesn’t allow, your client may be in breach of contract and you may be able to sue for damages. This area of the law is complicated and you would need to take advice from a qualified person to understand whether you can make a claim for the full value of the contract or alleged loss, or you need to mitigate your losses. There are also different categories of damages whether you’re making or defending a claim for breach of contract.
You also could be in breach of contract if you do not fulfil the terms of the contract.
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.