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Things you need to know about Independent Contractor Agreement.


Last updated on 3 January 2024

1. What is an Independent Contractor Agreement? 

An independent contractor agreement is a written agreement for a contractor to provide service to the employer as an independent contractor (and not as an employee).  The agreement describes, among others, the (a) service to be provided by the contractor; (b) the compensation due to the contractor; and (c) the nature of the relationship as an independent contractor (and not as an employee).


2. When do you need an Independent Contractor Agreement?

You need an independent contractor agreement if you will hire an independent contractor. The agreement is often used when a contractor is hired to complete a project or task on a short term basis. This is necessary for contractors, freelancers or consultants who want to have a written agreement with their client. An example is when a business commissions a freelance web designer to create the company's website. The business can use an independent contractor agreement to hire the freelancer.


3. How can an Independent Contractor Agreement protect you?

An independent contractor agreement defines the relationship between the contractor and employer as one of an independent contractor (and not as an employment relationship). This allows the contractor to comply with all the legal requirements imposed on independent contractors (i.e. personally pay income tax and comply with BIR filings).  On the other hand, the employer is not required to provide the usual benefits to the contractor because the contractor is not treated as an employee (i.e. SSS contributions, bonuses).


4. What is the difference between an Independent Contractor Agreement and an Employment Contract?

An independent contractor agreement is used to hire an independent contractor.  A contractor is a business or self-employed individual that provides a service to a client in exchange for compensation.  A typical example of a contractor is a consultant or freelancer. A contractor has more control or autonomy over how to complete a project and normally uses his / her own resources to perform the service.

On the other hand, an employment contract is used to hire an employee. An employee works under the direct control and supervision of his / her employer and is paid wages by the employer.  The employee also enjoys benefits which are granted by company policy and the law (i.e. healthcare, vacation leaves).


5. What information do you need to create an Independent Contractor Agreement?

To create your independent contractor agreement you’ll need the following minimum information:

  1. The type of principal (i.e. individual or business) as well as name and details (i.e. nationality and address)
  2. The type of contractor (i.e. individual or business) as well as name and details (i.e. nationality and address)
  3. The service to be performed by the contractor
  4. The compensation to be paid the contractor
  5. The duration of the agreement

6. How much is the document?

The document costs PHP 450 for a one-time purchase. Once purchased you have unlimited use of the document.

You can also avail of Premium subscription at PHP 1,000 and get (a) unlimited use of our growing library of documents (from affidavits to contracts); and (b) unlimited use of our “Ask an Attorney” service which lets you consult a lawyer specializing in your concern.

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