A well-written freelance or contractor agreement protects both you and the client by clearly setting out expectations, reducing misunderstandings and providing a reference if disputes arise. For UK side-hustlers, founders and e-commerce sellers working with contractors, including the right details from the start helps avoid costly problems later.
This guide explains the key sections every agreement should contain, with practical steps and examples of why each matters. Focus on the must-cover areas of scope of work, payment terms, intellectual property ownership and IR35 considerations while keeping the document fair and professional.
Why a Written Agreement Matters for UK Freelancers and Clients
Verbal agreements rely on memory and goodwill. A written contract creates a clear record of what was agreed, which is especially useful when projects change or payments are delayed. For early-stage founders outsourcing design, development or marketing, or e-commerce sellers hiring help with product listings and advertising, a simple agreement prevents assumptions about deliverables or deadlines.
Start by agreeing the main points in conversation or email, then put them into a short document both parties sign. This does not need to be overly formal or drafted by a solicitor for straightforward work, but it should be specific enough to be useful. Keep a copy for your records and review it if the working relationship evolves.
Scope of Work – Define Deliverables Clearly
The scope of work section describes exactly what the contractor will deliver. List specific tasks, milestones and any exclusions so both sides know when the job is complete. For example, instead of writing "build an online store", state "create a Shopify site with product pages for up to 20 items, basic theme customisation and integration with one payment gateway".
Include deadlines for each stage and a process for agreeing changes. A change-request clause explains that extra work outside the original scope will be quoted and agreed in writing before starting. This prevents scope creep that can lead to unpaid work or late delivery. Review the scope together before signing so the client understands what is included and what is not.
Payment Terms – Protect Cash Flow for Both Sides
State the total fee or hourly rate, when invoices will be sent and when payment is due. Many UK contractors request 30-50% upfront for new clients or a staged payment schedule tied to milestones. Specify acceptable payment methods and what happens if payment is late, such as the right to suspend work after a certain number of days.
Include details on expenses: will the client reimburse travel, stock imagery or software licences? List any that are included in the fee and any that will be charged separately with prior approval. For e-commerce sellers hiring help with photography or advertising campaigns, make clear whether the quoted amount covers ad spend or just the contractor's time. Agreeing these points early avoids surprise costs and keeps relationships positive.
Intellectual Property Ownership and Rights
IP ownership is critical for founders and e-commerce businesses. The agreement should state who owns the copyright, design rights and any other intellectual property created during the project. In the UK, the default position for contractors is that the client does not automatically own the IP unless the contract says so. Therefore include a clear clause assigning all rights in the deliverables to the client upon full payment.
Consider whether the contractor needs a licence to use any of your existing branding or whether they can show the work in their portfolio. A simple portfolio licence can be included without transferring ownership. For software or code, specify if the contractor may reuse libraries or standard components. Being specific here prevents later arguments about who can use the finished website, logo or product images.
IR35 Considerations for UK Side-Hustlers
IR35 rules determine whether a contractor is treated as an employee for tax purposes. If you engage contractors through their own limited company, check whether the engagement falls inside or outside IR35. The responsibility for assessing this usually sits with the client for medium and large businesses, but smaller clients should still understand the factors HMRC considers, such as control, substitution and mutuality of obligation.
Include a clause confirming the contractor's status and responsibility for their own tax and National Insurance. Many agreements state that the contractor is not an employee and is responsible for complying with IR35 if applicable. Side-hustlers working as contractors should keep records showing they run a genuine business, such as having multiple clients and using their own equipment. Both parties should review the current HMRC guidance because rules and tests change. If in doubt, seek professional advice rather than relying on the contract wording alone.
Additional Practical Clauses to Include
Add standard sections covering confidentiality, data protection and how the agreement can be ended. A confidentiality clause prevents the contractor from sharing your business ideas, customer lists or pricing. For GDPR compliance when handling customer data, include a short data-processing clause that sets out what data is shared and how it must be protected.
Termination terms explain how either party can end the contract and what happens to work in progress or final payments. A notice period of 7 or 14 days is common for short projects. Also cover liability limits so neither side faces unlimited risk, and specify that the agreement is governed by the law of England and Wales. Keep these clauses short and in plain language.
Putting It All Together and Next Steps
Use a clear structure with numbered sections and headings. Both parties should read the full document before signing and dating it. Electronic signatures are usually acceptable. Keep the tone professional but approachable; aggressive legal language can damage early relationships with contractors.
Review the agreement every time the scope or rates change and keep versions clearly labelled. For UK founders balancing side-hustles with early-stage ventures, a reusable template that you adapt for each project saves time. Free resources on GOV.UK and Companies House explain related obligations such as registering as self-employed or forming a limited company. Platforms you use for payments may have their own terms that interact with your contract, so check those too.
Loomworks in West Yorkshire offers selected early-stage founders free desks, a registered address and mentoring with no fees or equity taken. Such support can give breathing space while you put solid legal basics like these agreements in place.
Frequently asked questions
Do I need a solicitor to create my freelance agreement?
Not for straightforward projects. A clear, specific template covering scope, payment, IP and IR35 is often sufficient. Use plain language and ensure both parties understand it. Consider legal review only for high-value or complex work. Always check current GOV.UK guidance on contracts and self-employment.
What happens if a client does not pay on time?
Your agreement should state the due date and what happens if payment is late, such as the right to pause work or charge interest where permitted. Keep records of all correspondence. Late payment legislation exists but thresholds change, so refer to current GOV.UK business finance guidance.
Who owns the work I create as a contractor?
By default the contractor owns the intellectual property unless the contract assigns it to the client. Always include an explicit IP assignment clause that transfers ownership upon full payment. This is particularly important for websites, branding, photography and product designs used in e-commerce.
How do I know if IR35 applies to my contract?
IR35 looks at whether the working relationship is more like employment. Factors include control over how the work is done, right of substitution and whether there is a genuine business-to-business arrangement. Check the latest HMRC CEST tool and guidance because responsibility and tests can change depending on the size of the client.
Should my agreement mention data protection?
Yes. If the contractor will handle personal data such as customer emails or order information, include a short clause outlining their GDPR responsibilities. This helps both parties demonstrate accountability. Refer to the current ICO guidance for exact requirements as rules are updated regularly.
Related reading: Supplier Contract Checklist for E-commerce Businesses, Legal Requirements for Your UK Refund and Returns Policy, How to Write an Effective Website Disclaimer for Your Startup. Browse all company admin & legal guides or apply to Loomworks.