Employee Hiring, Freelance Agreement or Consultant Contract?

Victor Holmark

Apr 9, 2024

Regardless of the form of collaboration, it is important that the agreement document is signed and this happens securely with ePact digital NemID Signatures.

Today's labor market has been and is in rapid change over recent years, and many companies want flexibility in the resources used to solve specific tasks.

There can be many pitfalls that must be observed, whether it's an employee, a freelancer, or an independent consultant.

Who is who?

An employee is often defined as a person who receives wages for personal work in an employment relationship. A freelancer, on the other hand, is an independent consultant who performs a specific and defined task at their own expense and risk, and who is not employed by the company.

However, it is important to remember that in Danish law there is no definition of when one is an employee.

Different contract types

The protection that employment legislation gives an employee usually cannot be deviated from by agreement. The parties therefore cannot decide for themselves whether there is a real employment relationship or work performed by a freelancer who is not employed by the company. It is the specific circumstances in connection with the performance of the work that are decisive.

The employer must carefully consider before entering into an agreement whether the freelancer will legally be assessed as a freelancer and not an employee. Therefore, it is important to prepare a work contract that precisely describes the terms that apply to the employment relationship.

The following conditions indicate that it is an employment relationship:

• Obligation to perform agreed work
• The company provides instructions on how the work is to be performed
• The company performs control of the work performance
• The person performs work in the employer's name
• It is an ongoing work service
• The company sets the working hours
• Vacation is agreed
• The company pays the remuneration monthly, like a monthly salary
• A notice period has been agreed
• The company bears all costs for carrying out the work
• The work is performed from the company's address

The following conditions indicate that it is a freelancer:

• The person organizes their own work
• The person does not receive instructions from the company
• The remuneration is only paid when the service is delivered/performed
• The person provides their own assistance, raw materials, operating resources, and premises
• The person is free to perform work for other clients
• The person has a real independent economic risk with the work
• The person advertises their work
• The person can be liable for damages when performing the work
• The person is VAT registered

A specific assessment must always be made based on all terms in the employment contract. It is therefore important that you as an employer look at the overall picture and not just the individual conditions.

Seek advice in case of doubt

The distinction between freelancers and employees can be difficult. It is not defined in either legislation or collective agreements but is a very specific assessment.

If there are several documents to be signed, in addition to the cooperation agreement, there may be a confidentiality document, a bonus agreement, and many more types of agreements where it is important that the documents are signed in a specific order.

Features:

Upload contract, fill in with name and email addresses of those who need to sign and press send.

Simple to select the signature sequence on documents and people. For example, that it is the employee, freelancer, or consultant who signs first, and finally the employer.

Signing documents in a specific order can of course also be handled by ePact. When documents are uploaded to the case – simple Drag and Drop, it can be determined in which order the documents should be signed and by whom!

It is possible to include any attachments, even if they do not require a signature, to get a complete case with all relevant documents.

ePact Dashboard provides a quick overview of who has signed and who is missing, and automatic reminders can be sent to those who are missing.