Freelancers are a valuable way for companies to temporarily bring specific expertise into the team without making long-term commitments. Whether for innovative projects or short-term bottlenecks - working with freelancers creates a flexible solution that combines efficiency and specialization. At the same time, freelancers benefit from the freedom to decide on their own working hours, location and projects. This is precisely where caution is required, as this is where a freelancer contract differs from conventional employment contracts. In this article, you will find out what is important in a freelancer contract, what special features need to be taken into account and how you can avoid legal pitfalls.
A freelancer contract is a written agreement between an independent service provider - the freelancer - and a client. It regulates the collaboration for a specific project or a clearly defined task without establishing a fixed employment relationship. Instead, the freelancer remains independent and assumes responsibility for the agreed services.
The special feature of a freelancer contract is its flexibility and individual adaptation to the respective project basis. It defines the rights and obligations of both contracting parties - including agreements on remuneration, deadlines, liability and intellectual property. Unlike a traditional employment contract, the freelancer undertakes to provide a specific service without being integrated into the client's organizational structures.
A well-drafted freelancer contract ensures that both parties know exactly what their rights and obligations are. It creates clarity and provides a secure basis for a successful partnership.
The term freelancer basically describes people who are in an independent employment relationship on the basis of various contracts. A freelancer is often also referred to as a freelancer, but is also an independent service provider who works flexibly and independently for various clients. They are often confused with freelancers - but the two terms are not the same.
Freelancers can work in almost any field and offer their services on an independent basis. They decide independently which clients they work for, how they organize their work and which projects they take on. They are neither bound by instructions nor integrated into the client's structures and bear their own entrepreneurial risk.
Freelancers can work both on a freelance and commercial basis . Many freelancers operate a trade and are subject to the Trade Regulation Act, which is associated with the payment of trade tax. A clear distinction is therefore important here: not every freelancer is a freelancer, and most self-employed people do not fall into the limited category of freelance professions.
Freelancers are often equated with freelancers, but this is not correct. The term "freelancer" is clearly defined by law and only covers a limited group of professions listed in Section 18 (1) EStG. These include doctors, lawyers, tax consultants, artists and lecturers. Many of these professions also require membership of a professional association, such as the Medical Association or the Bar Association.
The misunderstanding often arises from the flexibility and independence that both groups share. However, freelance work covers a wide range of activities, while freelancers can only work in the legally defined professions. The distinction is important as it has tax and legal consequences.
A freelancer contract regulates the collaboration between a client and a freelancer and serves to create clear expectations and legal certainty. The following components of such a contract are explained in detail.
This section clearly defines who the contracting parties are. The names and addresses of the client and the freelancer are stated in order to identify the contracting parties in a legally sound manner.
Example wording:
"The following contract is concluded between [name and address of the client] and [name and address of the freelancer]."
What is the purpose of this section?
The clear designation of the contracting parties ensures transparency and traceability. Incomplete or incorrect information can lead to ambiguities in the enforcement of claims or in communication. Especially in projects with international partners, it is important to use the correct data in order to avoid misunderstandings or delays in the process.
The service description forms the core of the freelancer contract and describes exactly which tasks the freelancer is to perform. A precise and concrete description of the main tasks and subtasks minimizes misunderstandings and creates a clear basis for the collaboration.
Example wording:
"The freelancer is responsible for creating a homepage with WordPress. The tasks include the integration of an online store and the creation of four subpages based on existing marketing material."
What is the purpose of this section?
A detailed service description (or description of results) creates transparency about mutual expectations and reduces the risk of conflicts. It ensures that the collaboration remains flexible by not restricting the freelancer with rigid specifications. The definition of the service also helps to create a clear distinction from dependent employment relationships.
This section regulates the freelancer's remuneration and the client's support obligations.
Example wording:
"The freelancer shall receive remuneration of [amount] per working hour. Travel expenses and unforeseen additional expenses shall be reimbursed after prior agreement. The client shall provide the freelancer with all necessary documents and access in order to provide the service properly."
What is the purpose of this section?
The remuneration clause lays the foundation for fair payment. The various remuneration models each have advantages and disadvantages:
The client's obligations to cooperate ensure that the freelancer receives the necessary resources to complete the work efficiently and on time. It should also be specified what happens to these resources at the end of the collaboration.
This section regulates how confidential information is to be handled and how the freelancer's liability is limited.
Example wording:
"The freelancer undertakes to treat all information obtained in the course of the collaboration as strictly confidential. The freelancer shall be liable for damages caused by simple negligence up to a maximum of the agreed remuneration."
What is the purpose of this section?
The confidentiality clause protects sensitive information as well as the client's business and trade secrets. Attention should be paid to a clear formulation and definition of confidential information, as well as how sensitive data is to be handled or preserved. A more comprehensive arrangement can be made via an NDA, which, if necessary, is also valid after the end of the contract. In addition, a limitation of liability offers the freelancer security by limiting liability for simple errors.
This section regulates whether the freelancer may work for competitors and who owns the work produced under the contract.
Example wording:
"However, if the freelancer wishes to work for a direct competitor of the client during the employment or within two years of the end of the employment (i.e. for companies in the XY sector or similar), this requires the prior written consent of the client, which may be refused."
"All works created under the contract shall become the property of the client without restriction in terms of time, space and content."
What is the purpose of this section?
The non-compete clause serves to protect the client's business interests by preventing the freelancer from working for direct competitors at the same time or after the end of the contract. A frequently used upper limit is a time limit of a maximum of two years after the end of the contract, as applies to employees in the German Commercial Code (Section 74a (1) sentence 3 HGB). In addition, the prohibition may not go beyond what is necessary to protect the legitimate interests of the client, for example limited to specific competitors or areas of activity.
The transfer of rights of use ensures that the client can use the created works without restriction. The freelancer should clarify whether and how they may use the work as a reference, e.g. in their portfolio.
The term of the contract and the termination conditions are regulated here.
Example wording:
"The contractual relationship begins upon signing and can be terminated by either party with two weeks' notice to the end of the month."
What is this section for?
Freelance contracts often offer more flexibility than permanent positions. While a contract can theoretically be terminated without notice, it is common to agree a reasonable cancellation period to compensate for loss of earnings. Alternatively, the general provisions of the German Civil Code (§§ 620 ff.) apply, which also permit extraordinary termination for good cause.
These standard contents of a freelancer contract often serve as the basis for a legally secure collaboration. Of course, depending on the type of project or the individual needs of the contracting parties, further provisions can be added in order to adapt the contract to the specific requirements in the best possible way.
A normal employment contract and a freelance contract differ fundamentally in their structure, rights and obligations as well as the legal regulations. While an employment contract establishes a dependent employment relationship, a freelancer contract creates an independent, project-related collaboration.
A traditional employment contract regulates the rights and obligations between the employee and employer. In the contract, employees undertake to perform work in accordance with instructions and in personal dependence. The employer can specify the content, performance, working hours and place of work. In addition to the salary, which is paid regardless of performance , an employment contract often contains provisions on vacation, continued remuneration in the event of illness and termination. The employer also pays part of the social security contributions, including health, pension and long-term care insurance. These protective mechanisms make the employment contract attractive for many employees.
Freelancer contracts, on the other hand, are based on the self-employment of the contractor. Freelancers decide for themselves when, where and how they work. They are neither integrated into the client's organization nor bound by instructions. Remuneration is based on the agreed model - for example as a lump sum, on an hourly basis or performance-related. As freelancers do not receive any social security contributions from the client, they are responsible for their own insurance. In return, they enjoy greater flexibility and higher fees to compensate for these additional costs. However, they are not entitled to paid vacation or sick pay.
A freelance contract can take various forms, depending on the type of collaboration:
A key difference lies in the legal relationship: while an employment contract creates a dependent employment relationship that is regulated by numerous protective rights such as protection against dismissal, the freelancer remains legally independent. This has advantages for clients, as they do not have to pay social security contributions, but also harbors the risk of bogus self-employment.
Pseudo-self-employment occurs when a freelancer formally acts as an autonomous contractor, but is in fact integrated into the structures of a company like an employee. This legal construct is intended to prevent companies from avoiding social security contributions and undermining labor law protection measures by using freelancers. If bogus self-employment is established, there can be considerable legal and financial consequences for the client.
Characteristics of bogus self-employment:
Bogus self-employmentis usually assessed on the basis of certain criteria. These include:
Consequences of a finding:
If the German Pension Insurance (DRV) discovers bogus self-employment during a company audit, the employment relationship is retroactively classified as dependent employment. The client must then pay all social security contributions, including late payment surcharges, and risks additional penalties. At the same time, claims under employment law such as protection against dismissal or continued payment of remuneration in the event of illness can be asserted.
Avoidance of bogus self-employment:
To avoid bogus self-employment, the freelancer should not be treated like an employee in the actual collaboration. They should be free to decide on working hours, location and manner, use their own resources and clearly act as an external service provider. In addition, a status determination procedure with the DRV can provide security.
Bogus self-employment is a complex issue that can have considerable consequences if ignored. Careful planning and a clear distinction between employees and freelancers are therefore essential in order to minimize legal risks.
There are no fixed rules for freelancers in Germany regarding how many hours they are allowed to work. As they are self-employed, the provisions of the Working Hours Act (ArbZG) - such as maximum working hours, minimum rest periods or regulations on working on Sundays and public holidays - do not apply to them. This flexibility allows freelancers to organize their working hours freely and adapt them to their individual needs or projects.
However, statistics show clear differences in the workload of freelancers compared to employees. The exact workload of freelancers varies greatly and depends on individual assignments, deadlines and their own workload. However, compared to employees, many freelancers tend to work more, especially on challenging projects or in the start-up phase of their business. At the same time, it is important to note that freelancers enjoy less legal protection in terms of overwork or break times.
In summary, it can be said that freelancers enjoy a high degree of flexibility, but also have less legal protection with regard to working hours. It is therefore all the more important that freelancers are fully aware of their contract and regulate their workload independently in order to remain productive and healthy in the long term.
A well-designed freelancer contract template creates clarity and security for both parties and is the basis for a successful collaboration. Companies benefit from flexibility and expertise on demand, while freelancers can maintain their independence and implement attractive projects. At the same time, clear regulations are crucial to avoid legal conflicts and bogus self-employment. Understanding the specific requirements of a freelancer contract and implementing them precisely lays the foundation for a productive and legally secure collaboration.
Professional and efficient contract creation and management is essential for companies. ContractHero makes this process much easier. The platform supports you in customizing freelancer contracts, designing them in a legally compliant manner and managing them centrally. From the digital signature to the clear management of your documents - ContractHero helps you to save time and optimally secure your legal basis. Rely on ContractHero to make your collaboration with freelancers smooth and efficient.
Download our freelancer contract template now and start your next collaboration with confidence!
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