Within a Service Agreement, there’s a contractor and a client. The contractor (also known as the service provider) provides a service for the client, who pays the contractor for their work. Either party can be an individual or an organisation. Also, the client might be two or more people, such as a married couple. Similarly, the contractor could be two or more partners who all sign the agreement.
What is a contractor?
A contractor is a skilled person (or organisation) who provides services for other parties. Often, individual contractors are self-employed and run their own business. Generally, contractors don’t have employment protections because labour laws don’t apply to independent contractors.
If an organisation hires a contractor, they hire the contractor as an external worker, rather than internal staff, for a set time (or project). For example, a company may hire a freelance accountant rather than employing one to work in-house.
Outsourcing work to professional contractors with specific skills is very common and allows clients to access the exact services they need without hiring new staff. Contractors can come from every industry and include labourers, skilled tradespeople, and freelancers.
Typically, contractors:
- Have more than one client
- Send invoices to their clients
- Use their own tools or equipment
- May hire employees or subcontractors to help complete services
- Don’t receive employment benefits from clients