Working with freelancers, to work or not to work with a written agreement?

The last “COVID-19” years have not been easy for companies in the event sector. For such companies maintaining a team of employees and engaging new employees implies costs that should not be underestimated. A salary, the social security contribution, holiday pay, end-of-year bonus and occupational accident insurance and eventually additional benefits…can weigh heavily, even with the compensations premiums that have been paid by the Belgian State during the COVID-19 crisis.

It is therefore interesting for companies to work with freelancers, or persons who are self-employed. Indeed, these persons have to bear their own social security costs, insurances and taxes. So less administrative obligations for companies. Also, the strict dismissals rules for employees will not have to be abided when working with freelancers.

With the event sector undergoing its renaissance, extra hands and brains are highly necessary and working with freelancers seems the perfect solution. However, it is not risk free. Some things to consider to mitigate these risks.

Freelancers in theory are independent workers who generally decide for themselves how to perform the job they are signing up for, where, when and how they execute it, it being understood that in such relationship as well, certain arrangements about where, when and how can and should be made in order to have the work properly performed. In practice, however, it can occur that the company and the freelancer do not define clearly in writing how they will collaborate. During the execution of the agreement it can then turn out that the company actually treats the freelancer as an employee (for example, to execute a certain work under strict instructions and supervision, to abide fixed working hours and working locations, and to bear no entrepreneurial risk). When this happens, there is a real risk that the Belgian social inspection services (“RSZ-inspectie”; “l’inspection de l’ONSS”) and tax administration will consider that the contractual relationship is in fact a sham self-employment contractual relationship. In such case, the agreement can be requalified as an employment contract. Such requalification implies not only a big administrative burden but mainly a financial setback as the company will have to pay retroactively unpaid social security contributions and taxes as well as penalties and interests, and additional salaries and advantages to the freelancer, who will be considered to have been an employee since the start of the collaboration. Additionally, the company risks being criminally sanctioned for the violation of the employment and social security laws. A clear and comprehensive agreement that defines the collaboration is therefore essential to avoid or at least minimize such risk of requalification.

Another risk to take into account is the fact that the contractual relationship between a company and a freelancer will also have to abide the rules on B2B unfair contract terms introduced by the Law of 4 April 2019 in the Belgian Code of Economic Law (the “B2B Law”). The B2B Law provides a general prohibition on unfair terms that would create a significant imbalance between the rights and obligation of the parties and foresees a list of unfair clauses in contracts which are deemed to be unfair (see example in the frame). Unfair clauses are null and void. Any individual or legal person acting in the course of a paid activity (directly or indirectly), such as a company, a self-employed person registered with the CBE, an independent professional or an association, is concerned by the B2B Law. The B2B Law therefore applies when drafting, executing and interpreting an agreement between a company in the event sector and a freelancer, working as an individual or through his own management company.

In light of the abovementioned risks, an oral or basic written contract is simply not sufficient to protect the parties against a requalification of the contractual relationship. Moreover, an oral or basic written contract also implies a difficulty to prove what has actually been agreed between the parties. More potential conflicts can arise as no clear agreements have been put on paper. A poorly drafted agreement, that contains unfair clauses is neither a good idea. It is important to note that parties should not rely on template agreements available on the internet as they are simply not adapted to the concrete relationship that the parties want to have and may not be in conformity with the last legal requirements, such as the B2B Law. Moreover, parties should also take into consideration novelties introduced by the new Belgian Civil Code, which will apply in principle as from January 1, 2023. Some principles could already be used in current agreements, for instance provisions about the possibility to change the contract in case of so-called “changes in circumstances”.

It is thus essential for a company as well as for the freelancer to negotiate and to draft a clear and comprehensive agreement in which the cooperation is detailed and specific protection clauses are included (such as for example, the object of the cooperation, compensation, termination, intellectual properties, confidentiality…).

So, working with freelancers, absolutely yes! But with a comprehensive written agreement.

Example of an unfair clause

The company gives itself the right to terminate the agreement with a notice period of 15 working days while the freelancer can only terminate the agreement with a notice period of 3 months; although there is no clear justification for such different treatment. In this case, the clause will be considered unfair and void as it creates a manifest imbalance between the rights and obligations of the parties.