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Calling it Quits: How to End a Freelance Contract

Last Updated: November 07, 2023

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Key Takeaways:

  • Review your contract and familiarize yourself with the details of the termination clause.
  • Communicate with the other party in a professional and honest manner.
  • Prepare a Termination Agreement so both parties can rest assured that their mutual contract has been cancelled.

Small businesses in America rely on skilled freelancers and independent contractors for various services, including technical support, graphic design, and so much more. In fact, Fiverr reports that 78% of companies planned to rely on freelancers in 2023.
Sadly, there may come a time when you need to terminate a freelance contract. We know what you’re thinkingcalling it quits on a professional relationship can feel scary.
But it doesn’t have to. Believe it or not, staying professional and parting ways with a freelancer is a simple and straightforward process. In this article, we will provide guidance on essential steps to take during the termination process. Plus, read on for tips about maintaining professionalism and protecting yourself from future risks.

Step 1: Reflect

Project shifts, budget fluctuations, mismatched work styles–freelance contracts can end for many reasons. Even though ‘termination’ might feel like an intimidating word, this professional decision isn’t always a bad thing. In fact, many Service Agreements have predetermined end dates based on project completion or fixed terms.
However, if you choose to terminate a contract of indefinite duration (i.e. no fixed end date) several steps must be followed. First: Reflect on why the contract is ending and ensure that these reasons are justifiable.
As a business owner, you may choose to terminate a contract for several reasons, including:
  • Financial reasons: New budgetary restrictions, diminishing returns, or higher freelance rates.
  • Contractual reasons: Missed deadlines, incomplete work, or failure to fulfill tasks as laid out in the Service Agreement.
  • Business reasons: Cancelled projects, different skills are required, or company downsizing.
On the other hand, a freelancer may choose to end their working relationship with a client. This might be a result of several factors, including:
  • Contractual reasons: Missed and/or late payments or other contractual violations from the client.
  • Business reasons: Moving into full-time employment or being overwhelmed with other clients/projects.
  • Personal reasons: Taking some time to recover from personal, familial, or other circumstances that are beyond the control of the freelancer.
Here’s the bottom line: ending a professional relationship that’s not working out is often the best-case scenario for both parties. The business owner now has extra funds to use for other business opportunities, and the freelancer now has more time to focus on other clients and reach out to new partners with projects that are better in line with their specialized skillset.

Step 2: Review

So you’ve reflected on the reasons why your freelance contract is coming to an end. What now?
It's time for the moment of truth—reviewing your Freelance Contract. This is an important step that can't be skipped!
Crucially, a Freelance Contract will often include information about terminating the contract. This might include:
  • Information about notice periods
  • Compensation
  • Return of property
  • Any other legal details
Pay attention to the termination clause in your Freelance Contract. This clause will outline if the agreement can be terminated before the outlined services have been completed. If so, this clause will also state how much notice is required.
Here’s an example of a termination clause in an Independent Contractor Agreement:
In the event that either Party wishes to terminate this Agreement prior to the completion of the Services, that Party will be required to provide 10 days’ written notice to the other Party.

But what if I don’t have an Independent Contractor Agreement?

Don’t panic! You can still let go of your independent contractor, even without a written Freelance Contract or a termination clause. In this case, simply schedule a meeting regarding the end of your working relationship. At this meeting, both parties will mutually agree to the terms of the contract’s termination. Make sure to get these terms in writing and, in the future, use an Independent Contractor Agreement!

Sep 3: Prepare

Reflected on your reasons? Check. Ensured that you are not violating your Freelance Contract? Double check. By following these simple steps, you are on the right track for ending a freelance relationship in a professional and legally compliant manner.
You might think preparing for a termination meeting goes without saying. However, collecting, reviewing, and preparing documentation before the termination meeting has many essential benefits. Ask yourself: Are there any additional documents you need to support the termination? Do you need to draft a Termination Agreement? Are you prepared to provide a testimonial or reference?
Whether you are a business owner or freelancer, the other party may request further information about your decision to terminate your working relationship. In other cases, collecting evidence of missed deadlines, inadequate workmanship, or other violations of the Freelance Contract can be crucial if there are any misunderstandings down the road. Plus, in the most extreme cases, having your evidence ready and easily accessible is highly beneficial if either party decides to take legal action.
This documentation might include, but is not limited to:
  • Emails containing unprofessional communication
  • Evidence of missed deadlines or incomplete work
  • Project plans
  • New budgets
If you have an Independent Contractor Agreement in place, make sure you follow the steps set out in the termination clauses. If you don’t have a written contract, or if termination is not adequately provided for in the agreement, you may also want to draft a Termination Agreement in preparation for your meeting. A Termination Agreement is a legal document that is used by both parties to mutually cancel a contract.

Step 4: Communicate

Now that you have a solid foundation, you can move on to one of the final steps in the termination process: communicating the contract’s termination with the other party.
Clear communication around the termination of a freelance contract is absolutely essential. Depending on your existing working relationship, meeting about the end of this agreement can be done in person, over the phone, or virtually. Reflect on how you have communicated with the other party in the past, and then inform them of the contract’s termination using the same method.
In other words, if you’ve primarily used email to communicate with your freelancer about other matters, then a polite and professional email telling them about your decision is considered best practice. Other communication methods include a meeting, phone call, letter, or even an audio message.

Remember: don’t ghost them! Although the conversation might be a tough one, both parties will benefit from honest communication. Plus, this leaves the door open for a potential working relationship in the future.

Step 5: Finalize

You’ve done the hard part. All that’s left is to wrap up any loose ends. This might include:
  • Finalizing any outstanding payments
  • Deciding on a final date
  • Removing access to shared materials, project management tools, or accounts like Google Drive, LastPass, or social media platforms.
Make sure to review your Freelance Contract one final time for any other clauses relating to the agreement’s termination.
You should also determine if there is any outstanding work and, if so, how it will be allocated. Some professionals suggest having a backup plan for any remaining projects, just in case the termination doesn’t go according to plan.
Finally, if both parties end the relationship on good terms, consider providing a testimonial. This shows that, although you’ve chosen to part ways, the working relationship was positive, and you would recommend their services to others.

Each Freelance Contract is different

Remember that every working relationship has different circumstances, and terminating a Freelance Contract isn’t easy. However, by doing your due diligence, reviewing your Freelance Contract, and communicating in a professional manner, this daunting task might end up being a little easier than anticipated.

Managing your Freelance Contracts is easy with LawDepot

Looking for your go-to guide to the legal side of freelancing? We’ve got you covered. Check out our Freelancing Guide, which includes links to essential documents for anyone providing services, from babysitters and freelancers to contractors and consultants. This guide also includes top tips on getting paid, drafting contracts, filing your taxes, and more.

Read more in our comprehensive guide to freelancing.