Dear PMSL:
I work for a fairly new company, and due to the recent drop in business, my Company has been taking on “Freelancers” or “Contract Workers” when there is a project to handle or when there is (what turns out to be a temporary) upsurge in business, instead of taking on permanent staff that we can’t afford unless business increases on a permanent basis.

I am usually put in charge of these Freelancers when it comes to the Human Resources side, and I need to know how to deal with them as employees, as I’ve never dealt with this category of employee before. What do I do about vacation, NIS, sick leave etc.?

PMSL's Response:
It is very important that you put in writing clearly the terms of the employment contract for Freelancers so that there will not be any misunderstanding of expectations about hours of work, what is to be accomplished during a normal work period, who they are to report to and what you pay for and what is up to the Freelancers to pay for.

Income tax, for example, must be deducted and paid in by the employer if the work done by the Freelancers is work done under the direction of someone in the company. They handle their own taxes if they are carrying out a project that they are solely in charge of. In that case, they are responsible for their own NIS, Health Surcharge etc, but otherwise, any employee that is employed for more than ten hours a week by any one employer (including domestic employees) must be covered by the employer for NIS.

Freelancers are not usually given vacation leave unless they are employed for more than a year on a continuous basis, and the same goes for sick leave. This must be spelled out in the letter of appointment. Methods and periodicity of payment also should be clearly spelled out. Are they to be daily rated, weekly paid? Hourly rated weekly paid? Weekly rated, bi-monthly paid? Do you pay them for public holidays at the hourly rate? If they are ill during the Freelancing period how long do you hold their jobs open for them? Standards of dress and behaviour must be specified, as must the grounds under which they can be terminated without notice. Normally, they would be given two weeks’ notice of termination when the job comes to an end, unless circumstances beyond the employer’s control come up such as: fire destroying the premises, the client on whose project they are working cancels the project, or they are dismissed for cause.