Consultancy & Freelancer Agreement

What is a Consultancy & Freelancer Agreement?

A consultancy or freelancer agreement is a contract between a client (or company) and an independent consultant, contractor or freelancer who provides services on a project basis rather than as a full-time employee. Unlike an employment contract, the relationship is governed by the terms of the agreement and the general law of contract — primarily the Indian Contract Act, 1872 — rather than the labour statutes that apply to employees.

These agreements are becoming essential as Indian companies increasingly work with consultants, gig workers, remote developers, designers, content writers and subject-matter experts. A professionally drafted engagement clarifies deliverables, payment, intellectual property and confidentiality, and — critically — structures the relationship so that the person cannot later claim to be a de facto employee entitled to employment benefits. This contractor-versus-employee distinction is watched closely by labour authorities and by courts under the new Labour Codes.

Key Clauses & What's Included

• Scope of Services and Deliverables — a precise description of tasks, milestones, output and the standard of work expected, so there is no ambiguity about what is being bought.
• Independent Contractor Status — an express clause confirming the consultant is not an employee, has no right to employment benefits, and is responsible for their own taxes and insurance, structured to withstand a status challenge.
• Fees, Invoicing and Payment Terms — the fee structure (hourly, fixed or milestone), payment milestones, late-payment interest and mode of billing, with GST treatment set out.
• Intellectual Property Assignment — clear assignment to the client of all work product, source code, designs, documents and inventions created under the engagement, including moral-rights and waivers where appropriate.
• Confidentiality — obligations covering client data, strategies and trade secrets, and non-disclosure to third parties.
• Term, Termination and Notice — the engagement period, renewal, early-termination rights and the notice required by either side.
• Non-Solicitation — reasonable restrictions on poaching the client's employees or exploiting confidential client relationships.
• Indemnities and Liability — which party bears risk for errors, data breaches or third-party claims, and any liability cap.
• Governing Law, Dispute Resolution and Force Majeure — jurisdiction, whether arbitration or courts, and relief for events beyond either party's control.

Who Needs This & When to Use

Companies engage consultants and freelancers for specialised skills that are not needed full-time, for time-bound projects, for startups managing cash flow with flexible talent, and to access expertise without the overhead of employment. This agreement is appropriate whenever you hire an individual or firm to deliver specific services without creating an employer-employee relationship.

It is equally important for the freelancer or consultant, who gets a written confirmation of scope, payment and rights. Both sides benefit from a clear document that avoids scope creep and payment disputes, and that protects the client's intellectual property and confidential information.

How We Draft It & Process

Our process starts with understanding the engagement: the services, the outputs, the fee model, whether intellectual property must transfer to you, and the degree of independence of the consultant. We ask a few targeted questions through a short questionnaire.

Using your answers, our lawyers draft a bespoke consultancy or freelancer agreement with a fixed-fee quotation issued up front and no hidden costs. We review the draft against your requirements, explain each important clause in plain-English notes, and deliver the final agreement in an editable format. If you are engaging a consultancy under a master agreement, we can align the individual engagement with a broader Master Services Agreement and Statement of Work.

FAQ

Q1. Can a freelancer later claim they are an employee?
Possibly, if the relationship looks and operates like employment. Indian courts and labour authorities consider factors such as control over hours, the provision of tools and infrastructure, exclusivity and the payment of a fixed salary. A well-drafted consultancy agreement that matches the actual working relationship — not just disclaimers — is your strongest defence, but the reality of the arrangement matters most.

Q2. Who owns the intellectual property in the work created?
Under Indian law, the creator of a work generally owns the copyright unless it is assigned. For this reason the agreement must expressly assign all work product and intellectual property to the client, and specify that deliverables are works made for hire where applicable. Without an assignment clause, a client may own only a licence to use the work.

Q3. Should we pay GST on freelancer fees?
Services provided by a freelancer or consultant are generally taxable as a supply of services under GST, with the consultant collecting and remitting GST if their turnover exceeds the registration threshold or they choose to register. Your agreement should state whether fees are inclusive or exclusive of GST, and whether you are required to deduct TDS under Section 194J (professional fees) or Section 194C (contract payments) of the Income-tax Act.