What to include in an independent contractor agreement?

When working with independent contractors, especially across borders, a well-drafted contractor agreement isn’t just good practice; it’s essential for legal protection and long-term success.

So, what should be included in an independent contractor agreement? At a minimum, a strong agreement should:

• Clearly define the relationship between your business and the contractor
• Set expectations around deliverables, timelines, payment cycle, and communication
• Outline each party’s responsibilities and obligations
• Support compliance with relevant labor laws and tax regulations

To help growing businesses stay compliant and mitigate misclassification risks, we’ve broken down what should be included in an independent contractor agreement and why each section plays a critical role.

TLDR Checklist: What to include in an independent contractor agreement

Before breaking down each section in detail, here’s a quick, broad, and easy-to-understand checklist that lists what to include in an independent contractor agreement.

Section	Required?	Why It Matters
Names and Contact Details	✅	Identifies legal parties involved
Scope of Work (SOW)	✅	Aligns expectations and deliverables
Payment Terms	✅	Avoids confusion around compensation and timing
Tax Responsibility Clause	✅	Protects from worker misclassification
Term and Termination	✅	Sets clear start, end, and exit conditions
Confidentiality Clause	✅	Protects business data and IP
IP Ownership	✅	To clearly define ownership of IP
Non-Compete/Non-Solicit	❌	Optional, use only where enforceable
Governing Law & Dispute Terms	✅	Prepares both parties for conflict resolution
Data Protection Clause	✅	To stay compliant with global data laws
Signatures	✅	To make the agreement binding

1) Clear identification of the parties

Every independent contractor agreement should begin by clearly stating:

• The hiring entity’s legal name and address
• The contractor’s full legal name and address
• Effective date of agreement

This helps ensure that there’s no ambiguity around who is agreeing to what.

2) Scope of work 

The scope of work defines exactly what the contractor is being hired to do, including:

• A detailed description of services
• Key deliverables and milestones
• Deadlines or project timelines
• Tools or platforms used, if relevant
• Payment Terms

A vague scope invites disputes, while precise expectations prevent misalignment and make it easier to track performance.

3) Independent contractor status & tax responsibility

Needs to be explicit about:

• Compensation amount or rate (e.g., hourly, milestone-based, flat fee)
• Payment schedule (e.g., upon milestone completion)
• Currency and method of payment
• Any reimbursement or expenses covered

When hiring internationally, it’s critical to consider tax withholding obligations, foreign exchange fees, and local regulations.

4) Term and termination

This section should define:

• Contract start and end dates (if applicable)
• Whether or not the contract auto-renews
• Conditions for termination (e.g., notice period, breach of contract).

5) Confidentiality and non-disclosure

This section outlines information that protects sensitive business information, such as:

• What constitutes confidential information
• How must that information be handled
• Duration of confidentiality obligations (often beyond the contract’s end)

This step is critical if the contractor handles proprietary data or works alongside internal teams.

6) Intellectual Property (IP) rights

This portion spells out who owns what, such as:

• Who owns the work product (software, content, designs)
• Whether IP is assigned to the company or licensed on their behalf
• Any potential exceptions, such as pre-existing contractor tools or libraries

It’s worth noting that in most jurisdictions, work done by a contractor is not automatically owned by the client unless explicitly stated. 

7) Non-compete and non-solicitation (Optional but important)

Depending on your business needs and local laws, you may include:

• A non-compete clause to prevent the contractor from working with your direct competitors.
• A non-solicitation clause to prevent them from poaching other clients or employees.

Enforceability varies drastically by country. Avoid blanket restrictions in regions where they are likely to fail in court. 

8) Governance law and dispute resolution

This section establishes:

• Which country/state’s laws govern the contract
• How disputes will be resolved, such as arbitration, mediation, courts, etc.
• Jurisdiction and venue for any legal proceedings.

This clause helps prevent confusion when conflicts arise.

9) Data protection and compliance (Especially for global teams)

If contractors have access to any customer data, this section is crucial. It includes:

• Any commitments to comply with applicable data protection laws.
• Obligations for handling, storing, and transferring data.
• Security measures and breach notification responsibilities.

10) Signature and execution

Every independent contractor agreement should end with:

• Space for both parties to sign and date
• Optional: digital signature verification, depending on local requirements

Build it right from the start with Payoneer Workforce Management

If your company plans to scale, whether you’re adding five contractors or fifty, a standardized, legally sound contractor agreement is a must. It protects everyone involved, promotes timely deliverables, clarifies accountability, and ensures you’re backed by audit-ready compliance documentation.

Knowing what should be included in an independent contractor agreement is essential to getting it right from the start. That’s why Payoneer Workforce Management goes far beyond just basic contract templates. We provide support to streamline every step of the contractor management process, from onboarding to payment.

Here’s what you get:

• Comprehensive onboarding workflows
• Contractor classification support
• Payments in 70+ currencies
• Support across 160+ countries

With Payoneer Workforce Management, you can confidently scale your international workforce with our guidance on what should be included in an independent contractor agreement, while reducing complexities.

If you’re ready to take charge of your workforce, reach out today for a free demo.

Reach out today for a free demo