Talent Development Centre

Tag Archives: contracts

All Talent Development Centre posts for Canadian technology contractors relating to contracts.

Supply Arrangements: What are they and why should they matter to IT contractors?

Morley Surcon By Morley Surcon,
Vice-President, Western Canada at Eagle

Supply Arrangements: What are they and why should they matter to IT contractors?Within the staffing industry there are a dozen or more business models employed by various employment agencies.  There are the smaller staffing agencies who focus their marketing efforts on smaller companies, on very specialized niches, with a handful of very strong relationships they might have, or a combination of these.  There are the huge international recruitment agencies that tend to focus on companies with international operations and may be generalists in the sense that they support multiple lines, from casual labour to general staffing positions to professional positions to technical positions, in an attempt to serve companies that want a single vendor to handle all of their contingent workforce needs.  Between these two extremes, there are the Regional and National staffing agencies that often service or specialize in only one or two different types of hiring needs, but often limit these to provide the level of expertise/focus that means so much to their clients.  Then there are mixtures and blends of the above.

The one thing that most recruitment agencies have in common is that they work to put formalized Supply Arrangements in place with the clients that they service.  A supply arrangement is simply an agreement that defines the relationship between the agency and the company that they serve/support.  Typical to most supply arrangements are the following:

  • Term of Agreement (date range within which the agreement will be valid)
  • Definitions (define the terms used in the agreement)
  • Commercial Terms (concerning insurance, rates, timesheets and invoicing)
  • Performance (defines the service the agency will be providing)
  • Termination (terms under which the agreement might be concluded)
  • Confidential Information (how to manage and keep safe important company data)
  • Indemnity and Limitation of Liability (keeping each party “safe” and legally separate from each other)
  • Signatures/Sign-Offs/Dates/Etc.

If these look familiar, they should!  They are the very same components that incorporated contractors find in any sub-agreement that they would sign with a staffing agency. After all, we jointly enter into a company-to-company relationship, so the terms should include the same content.  In fact, a good number of the terms that a contractor finds in their sub-agreement with their staffing agency are actually “flow-down” terms from the agency’s own supply arrangements with the end client.  That is often the reason why agencies cannot be very flexible with the terms — they have committed contractually to work with their clients in certain ways and must, legally, have their sub-contractors comply to the same terms.

Despite a lot of similarities in the terms between supply arrangements, it is extremely rare that any two supply agreements would be exactly the same.  Employment agencies are required to be chameleons, adapting perfectly to the business requirements of each of their clients.  The best agencies have detailed processes to ensure their compliance across many different agreements. For example, Eagle has tools and processes dedicated to this and is part of our ISO 9001:2008 quality framework.  That big stack of paperwork that we present to contractors at the beginning of each assignment is part of that process.  In this way, we ensure that both Eagle and our sub-contractors stay “on-side” of our supply agreement Terms & Conditions.

So, why should this matter to independent contractors?  Well, that’s a question with many answers. Here are just a few of the reasons why contractors should want to work with agencies that A) create good supply arrangements with their clients and B) have strong mechanisms in place to ensure adherence to the terms (both on their side and by their sub-contractor partners):

  • Legitimacy – Having an official supply agreement in place signifies a deep level of commitment between staffing agencies and their clients. It suggests that the company is committed to using the agency and that there will be a certain level of exclusivity.  If a technology contractor is working with a recruiter that has a supply arrangement in place, you can be confident that the recruitment agency has the right to represent you and that there will be some standardization in place to manage the hiring process.
  • Access to the Best Companies/Jobs – The best staffing agencies have the best relationships. Often there is a barrier to entry for agencies who do not have supply arrangements in place with companies.  By partnering with staffing agencies with many supply arrangements, it means that you will have access to suitable roles that come available at these companies.
  • Confidence in Staffing Agency Rates – Supply arrangements often define what levels of profit are associated with the services provided (also defined), so recruiters are working off a prescribed methodology for setting their rates. Companies agree to pay staffing agencies “X” for their services should they identify, qualify and place top resources into their open roles. For contract work, that means that independent contractors set their rates “Y” and the client is charged “X+Y” (or “X x Y” if “X” is a %).
  • Risk Mitigation – Working for a recruitment agency with a supply arrangement in place ensures that the “rules of engagement” have been set out. Working with recruitment agency who has strong compliance mechanisms in place means that the recruiter will set you up for success and ensure that you are protected against potential missteps.  Be aware of the 2 to 3 page Sub-Agreement contract!  Eagle’s sub-agreements are typically 8 pages at a minimum, but depending on the flow-down terms and requirements, it could add up to 20+ pages for your review.  Ultimately, this all protects you from risk.

Eagle has numerous supply arrangements in place with many of Canada’s largest companies across multiple industry sectors and across all levels of government.  We are national leaders in Oil & Gas, Energy, Telecommunication, Education, Health Care as well as having 3 of Canada’s 5 big banks as our clients.  Our Supply Arrangements with our clients are often 80+ pages long and our sub-agreements to our sub-contractor partners are often 10+ pages long. Although more work to put in place, this is a good thing.  Through this process we ensure our contractors’ success and, in doing so, our own as well.

Next time you’re interviewing recruiters to decide on your preferred staffing agency, remember to ask how many supply arrangements they have. A response to that simple question will speak volumes in terms of their legitimacy, access to opportunities, rates and risk mitigation.

Tips for Writing Your Own Contract (Infographic)

When working on IT projects through a staffing agency, the recruiter will usually have a prepared contract on a standard template. Assuming you researched the employment agency before working with them to ensure they’re ethical and experienced, it’s safe to say the contract will have the best interest of all parties in mind (although it never hurts to have a contract reviewed by a legal professional before signing it).

Throughout your career as an independent contractor, you may run into situations where you have to create your own contract template for your business. Or perhaps, you’ll want to look a little closer at a contract when working with a new staffing agency. Regardless, this infographic from Ayers provides some basic steps to writing a contract, including sections that should be in it. As already noted, you should always seek advice from a lawyer; however, this can serve as a good starting point.

An infographic on successfully writing a contract

From Visually.

The Importance of Contract Duration on Your Resume

Cameron McCallum By Cameron McCallum,
Branch Manager at Eagle

The Importance of Contract Duration on Your ResumeAs an independent contractor, there are things in your career that you can control and things you can’t. The duration of individual contracts on your resume is widely interpreted by recruiters and clients to be a bell weather of your proficiency as a consultant. While there is certainly no specific science behind it, it is one of the first things evaluated when your resume is being assessed. Most recruiters are trained to look for the shorter term contracts and to dig for information on why that particular contract was so short.

3 Months (or Less): What happened?

The perception of short contracts as red flags on a person’s resume can lead to distrust and misunderstanding and while you might not have been able to control the duration of the contract, you need to ensure you manage the perceptions attached.

Does that mean you don’t accept shorter term contracts, or leave them off your resume. The whole point behind using contractors is to perform a piece of work that requires either specialized skills or skills that the client might not currently have among their employees. And these needs are not always attached to multi-year programs. Throughout a career as an independent, it is normal to have a variety of contracts with different terms and outcomes. So here are some simple ways of handling questions and concerns connected with short term contracts.

  1. Don’t hide them: I’ve stated before that trying to hide things on your resume will only lead to bigger problems. I’ve met countless numbers of contractors who have tried to do just that. And ultimately, numbers don’t add up or they forget which version of resume to use and this leads to bigger questions and ends up eroding your credibility. Instead, be prepared to explain why the project was short and what was accomplished in that timeframe. I’ve also talked about managing your references and it never hurts to have a reference who will talk to your performance on a short project.
  2. If suitable, brag about it: Short contracts can be extremely challenging! Going in and grasping what needs to be done and then finishing by delivering a solution in just a few weeks or months is an accomplishment…and actually more closely reflective of the talents of a senior consultant.
  3. Does the recruiter understand your skillset: Some skillsets and roles for which you have developed a specialty are typically performed in shorter periods of time. Preparing a business case, assisting in the preparation of an RFP, performing an audit are all examples of work that doesn’t entail long term contracts. Make sure your recruiter “gets it” and really has a grasp of what it is you do.
  4. Finally, if it was bad, admit it…but in a positive way: People get fired, let go, laid off all the time. There is definitely an impression of contractors being “elite” but even elite professionals can run into projects that aren’t a fit. Talk about the challenges you faced on the project and what went wrong… and what went right! Feeling guilty about a contract that went wrong is normal but don’t forget to look at what you delivered. And evaluating a bad contract can have positive impacts. It may indicate to you what kind of roles or environments you are better suited for or areas where you could use improvement or further training.

Managing a career in independent contracting is full of challenges and how your resume appears to a recruiter or client is just one of them. Short term contracts are normal and nothing to be ashamed of. Just be prepared to discuss them with confidence and treat them as just one more skill in your professional portfolio. And remember, if you are not sure, seek the assistance of a professional recruiter. More often than not, they will be able to offer solid advice and talk you through the challenge.

The Importance of a Solid Contract

Frances McCart By Frances McCart,
Vice-President, Business Development at Eagle

The Importance of a Solid ContractOne of the most common complaints I hear from contractors, especially those new to the world of being an independent contractor, is that contracts seem very complicated and onerous to review.  They also wonder why the contracts differ from agency to agency.  Many contractors in the past have told me they have started a contract with an agency/end client before reviewing or signing a contract!!  And worse… they have agreed to work at a client site based on an email exchange.

I often remind contractors that having a solid contract in place prior to starting any project is critical.  The contract protects both you, the independent, and the client from any potential legal issues that may later arise.  Most agencies have standard templates for contractors to review and sign off and these contracts are often drafted with client flow agreements in place.  Contracts will also vary depending on whether you’re Incorporated, a Sole Proprietor or part of a Partnership.  The contract is the basis for establishing the business relationship between the parties involved.

Key elements to a good contract agreement contain at least the following:

  • Start and end date to a contract;
  • Scope of services to be delivered;
  • Fees to be paid (ie. hourly, daily or on deliverables);
  • Payment terms (ie. monthly);
  • Payment process (ie. authorized time);
  • Confidentiality clause; and,
  • Termination clause.

Many client contract flow downs contain more robust information such as liability clauses, intellectual propriety rights, security clauses, non-compete and non-solicitation clauses.  Often these clauses can seem overzealous and off-putting, but a review by a lawyer can help alleviate and address any concerns.  At a minimum, all of these clauses should be taken seriously, and a contract that is lacking in the basics should cause the signer to beware.

Eagle has been involved in many instances where a client asked us to payroll a contractor from another agency.  As part of Eagle’s due diligence process, we review a contractor’s past contract.  We often find that some agencies have “treated” the contractor like an employee and have put them at risk of either co-employment with the agency or have failed to properly withhold proper taxes as in the case of sole proprietors.  Contractors should be wary of an agency or even an end client who “brushes” the importance of a sound contract aside.  Often, this is a tell-tale sign to potential issues to come (for example, having to chase down unpaid invoices).

On that topic, here is some advice to contractors when working with a new agency or client:

  • At the outset of the conversation, ask for a copy of the contract agreement so that you have plenty of time to review it prior to landing a new contract.
  • Take the opportunity to hire a lawyer to review the document if this is the first time dealing with the agency or the end client.  Even though a clause may look like the “standard” clause, often minor changes can make a huge difference in the intent of the clause (ie. replacing OR with AND).
  • Always keep a copy of your contract.

Above all, don’t be afraid to ask questions!  A reputable organization should have no problem clearly explaining the various clauses in their contract and the reasoning behind them.  If you have any hesitations, seek legal advice.

Freelancing 101: The 7 Legal Documents All Freelancers Need

This article originally appeared on the Freshbooks Blog on March 10th, 2015

Freelancing is often spoken of as the “Wild West” of the employment world. Freelancers “go rogue,” and they “ride off into the sunset” to enjoy their new lives of unparalleled freedom and opportunity.

But the problem with this common perception isn’t just that it’s usually wrong (just ask any working freelancer how long flying by the seat of your pants will keep you in business!). It’s also that this mentality prevents many new freelancers from seeking out the legal guidance and documentation needed to launch their businesses correctly – putting them at risk of future fines and litigation.

Whether you’re a total newbie or an experienced freelancer, making sure that you have the following documents on file – as applicable to your situation – will help keep your company safe:

Document #1 – Business license

Ironically, we’re starting an article on the legal documents all freelancers need with one that doesn’t actually apply to all businesses. But if your company is subject to permit or license requirements, it’s so important that you have them in place that we’ve decided to include these documents here anyways!

Business permits and licenses come in many different forms. In some areas, you may be required to have a general business license from your city or county to run a company. In other cases, your profession may dictate your licensing requirements – plumbers, contractors, estheticians and accountants are just a few of the freelance occupations that require a permit to demonstrate proficiency.

Whatever type of business you’re launching or wherever you live, check with the websites of your city, county or state to understand your permit and licensing requirements.

Woman looking at legal documentsDocument #2 – Business registration

You’ll also want to be sure you’ve registered your company according to your desired structure and the rules governing business registration in your area. Though there are many potential freelance business structures, most fall into the following categories:

  • Sole proprietorship. Registered on an individual basis, a sole proprietorship allows you to register a “doing business as” (DBA) name for your freelance service.
  • Partnership. If you’ll be working with a business partner, this business registration structure provides you some legal protection, but does come with additional tax reporting requirements.
  • Limited liability corporation (LLC). An LLC can be formed by a single person or multiple parties, but serves the purpose of protecting the owner’s personal property in the event of legal action without the effort involved in registering a full corporation.
  • C corporation. This common form of corporation isn’t often used by freelancers, as it requires extensive filing and taxation documentation, and can lead to double taxation of company earnings.

A small business attorney is the best person to advise you on choosing a business structure, while your city, county or state’s website will tell you how to register your new company.

Document #3 – Company bylaws or operating agreement

If you decide to structure your business as a C corporation, you’ll be required to have company bylaws on hand. If you go as an LLC, you’ll need to submit an operating agreement with your business registration (in most states). Templates for these documents are widely available online if you need help getting started.

But even if you don’t meet these filing requirements, it’s not a bad idea to outline your company’s structure, ownership and policies in some type of document. Even if it’s nothing formal, thinking through these important issues up-front can help you to identify and resolve potential complications before they become major challenges.

Document #4 – Project contract

Once your business is licensed and registered, your next priority should be the creation of a project contract. Too many freelancers operate on emailed assignments and “handshake promises,” but these mechanisms won’t protect you in court if something goes wrong with a client.

Your project contract doesn’t need to be packed with complicated legalese – it just needs to contain the following elements:

  • The scope of the project
  • Any important deadlines
  • How and when payments will be made
  • Who will retain ownership of the finished product
  • What marks the successful completion of the project (or, how will the project end if one party needs to cancel early)

Go into as much detail as possible when drafting your contract. For example, don’t just include the amount you’re billing for the project as stated, include any other charges you may assess, such as late payment fees or additional costs for project scope changes. It may seem time-consuming to put together a good project contract, but once you’ve done it the first time, you can use your new template again and again – protecting your business each time it’s used.

Document #5 – Invoice

You’ve probably already guessed that, at Freshbooks, we’re pretty big on invoices. Having an invoice increases the odds you’ll get paid compared with not issuing a formal invoice, though there are a few techniques you can use to up your chances of getting paid on time even further.

Based on our analysis of the tens of thousands of invoices paid through our system, we can confidently state that your invoice should include the following elements:

  • A polite, genuinely appreciative message. When analyzing invoices, we found that a kind message like “Please pay your invoice within fifteen days” or “Thank you for your business” increase the percentage of invoices that were paid by an average of 5%!
  • “Days” versus “net.” Minimizing confusion will keep your invoice at the top of your clients’ “to-pay” file, so state your payment expectations in days due (for example, “within 15 days”) rather than net terms (as in, “net 15”).
  • Include late payment interest charges. Ironically, we’ve found that including a late payment fee on your invoice results in your invoices being paid slower, but with a higher percentage payment rate. Use your judgment here. If you need the cash right away, skip the message, but if you can wait a while, include it to improve your odds of getting paid.

Document #6 – Non-disclosure (NDA) or confidentiality agreement

This recommendation won’t necessarily apply to all freelancers, but even if you don’t need to provide them to clients yourself, there’s a good chance you’ll encounter them and be asked to sign them as you work with customers.

Essentially, both of these agreements protect the privacy of any sensitive information that’s exchanged between your company and your customers. If, for example, a client had to provide you with their financials throughout the course of your work, you may be asked to sign a confidentiality agreement. Alternatively, if you bring on an independent contractor to help develop the game you’re building as a freelance coder, an NDA will prevent the contractor from sharing your idea with others.

Document #7 – Independent contractor agreement

Finally, if you find yourself in the position of working with independent contractors, consider putting a legally-binding agreement in place that captures the details of your arrangement in a central location. Much like your project contract, your independent contractor agreement should describe the nature of your work, how much money will be changing hands and what your expectations are in terms of deadlines, final ownership and more.

While you can find templates for many of these documents online, it’s still best to consult with a small business attorney to be sure your forms will stand up in court. Yes, doing so may be expensive, but your attorney fees will be small potatoes compared to what you’ll pay in fines and litigation fees if your company encounters any legal issues that your documents can’t resolve!

What other legal documents do you have in place to protect your business? Share your suggestions by leaving a comment below.


FreshBooks_logo[1]

FreshBooks is the #1 cloud accounting solution designed for small business owners. They help everyone from the most fragile of businesses (many of them one person, first time owners) to the most vibrant businesses, collecting billions of dollars. FreshBooks is designed for service-based businesses. They uphold a longstanding tradition of providing extraordinary customer service and building a product that helps save customers time, pursue their passion and serve their customers.

If You Absolutely Must Leave a Contract — Here’s How

Morley Surcon By Morley Surcon,
Vice-President, Western Canada at Eagle

As a professional contractor, it’s good practice to complete a contract and avoid leaving your client high and dry, at all costs. If you do find yourself in this situation, it’s Important to remember that what you do and, just as importantly, how you do it, builds your reputation for good or for ill.

Signing a ContractFirst and foremost, carefully consider the reasons for leaving a contract.  Not getting the rate increase you wanted or finding another opportunity for a few dollars an hour more may have negative consequences down the road.  Again, what you do impacts your market reputation.   The contractor market is really very small and a bad rep can seriously impair future opportunities.  It is also important to remember if you are an incorporated contractor, your relationship is a business-to-business relationship with your client/agency and your company is contractually obligated to fulfill the terms of the contract. If you are terminating a contract early for purely selfish reasons, there may be legal implications to your doing so.

Even for the most ethical contractors, though, leaving a contract is sometimes unavoidable and can be for any number of reasons — fit, insurmountable challenges, other opportunities, etc.  The key points to remember are Professionalism and Transparency, and these go hand-in-hand. Here are a few tips that will help you maintain your integrity and work toward building a positive reputation, while enhancing others perception of you as a professional:

  • Let your employer/agency know early.  Especially if there are fit or challenge issues, there may be accommodations that can be made that would turn things around for you on this assignment.
  • Consider giving more notice than is contractually required  if:
    • You have been on contract for a year or more
    • Your project is in a sensitive phase
    • The company that you are working for has lost other key people in your area/project
    • There will be a fair bit of knowledge transfer needed to ensure continuity
  • Notice should be face-to-face whenever possible, phone if absolutely necessary, but never email or text.
  • Communicate often throughout the process, asking for feedback and pro-actively managing the hand off of responsibilities.
  • If you have to terminate a contract because of an emergency or for health reasons, you may not be able to provide additional notice.  If it is truly something of this nature, people will understand and empathize with you.  Still, you must:
    • Communicate quickly with your client/agency
    • Explain the situation in as much detail as you are comfortable with. This is important as the reason will be key for your client/agency to understand  why a short/abrupt contract termination is necessary.
    • Be pro-active, making suggestions of what you can do or your client will need to do to cover off your role when you leave
    • Apologize.  Even if it is something that is completely out of your control and people will (or should) understand, you must realize that this is causing some level of hardship for your client and that this will be an inconvenience at best for them.
    • Work with your agency partner to identify potential people who might be candidates to backfill your position.  The agency will do all the leg work to ensure your recommendations are contacted, informed, vetted and are interested – leave this leg work to your agency and spend your time helping with the transition or on personal matters if they are critical.
    • If possible, make yourself available, should there be any follow up questions that come to light after you leave.  Rarely is this leveraged, but it does demonstrate your concern and commitment.

Having to end a contract early is not ideal.  But if you have been contracting long enough, there will likely be a time when you will have to do so.  By following the advice above, you will increase your chances of doing so professionally and maintaining your good reputation.  Have you ever had to leave a contract early?  How did it turn out?  Please share your experiences below.