a. How to Properly Document the Relationship
A proper record of the relationship between an independent contractor and contractor will involve the drafting of a written agreement which reflects the nature of the relationship. This clearly worded agreement should reflect the general criteria provided by case law described above, including:
• representations by the contracting parties, including a representation by the independent contractor as a business partner with a specific VAT-number and as being responsible for the payment of taxes and VAT originating from the agreed work;
• a detailed description of the work and the result to be delivered, typically focusing on the result and not on the day-to-day work to be carried out by the independent contractor;
• estimated time of delivery and legal consequences if the agreed deadline is not met;
• when the payment of the purchase price becomes due; the purchase price should not become due until the work has been delivered, as a regular and continued payment or payment based on hours spent could potentially result in an interpretation that the work was in fact carried out by an employee;
• the contractor’s responsibility to provide the working tools.
In other words, it should be structured in such a way as to include as many independent factors as possible, and avoid elements specific to a subordinate relationship. The written agreement is important in establishing the nature of the relationship.
b. Day-to-Day Management of the Relationship
In their day-to-day dealings with one another, the parties must ensure that the independent contractor is not a subordinate to the employer and that the management of their relationship is consistent with the contract. Accordingly, exercising close control over the work performed and giving detailed daily instructions must be avoided. Only general directives should be transmitted from the principal to the individual. The principal should give the independent contractor as much independence as possible.