The covering agreement for self-employed persons

As a self-employed person, you are always busy acquiring new assignments, maintaining relationships and keeping your administrative affairs in order. One of the ways companies and organisations like to work with self-employed people is through a covering agreement. But what does a covering agreement actually entail? How does it differ from a ‘normal’ agreement and what do you need to pay attention to as a self-employed person?

Here you can read about the most important aspects of the master agreement for self-employed persons, so that you can make the best choices when dealing with such an agreement.

What is a covering agreement?

A covering agreement is a framework contract in which a client and one or more contractors lay down general conditions and agreements that apply for a certain period or a number of possible assignments. The precise details, such as the scope, rates or delivery deadlines, are often specified in separate partial orders (also called ‘further orders’) within this master agreement.

The major difference with an ordinary contract is that a covering agreement does not directly describe one specific assignment. Instead, it is like a framework of agreements that apply to current (and possibly future) assignments. Consider a large organisation that wants to use your services regularly over the next two years, but does not yet know exactly which projects will be on the agenda. With a covering agreement, that organisation can already select you as preferred supplier, under the conditions you set in advance.

Advantages for freelancers

The advantages of a covering agreement include an ongoing working relationship and better cooperation. With a master agreement, you increase the chance of recurring assignments. This can ensure a more stable income stream and less time spent on acquisition. And because you have a permanent place within a client's ‘mantle’, you get to know the organisation well. You can be more responsive to what they need.

And once the general conditions and rates are aligned, you don't have to go through as much contractual red tape for each partial assignment. That saves time and energy.

There are also disadvantages to a covering agreement

One of the disadvantages is the fixed rates. The covering agreement usually lists the rates you receive for your services. If the market changes or you want to increase your rates, this can be more difficult than if you conclude separate contracts.

Some covering agreements contain exclusivity clauses. For example, that you are not allowed to work for competitors of the client, or that you have to cancel other assignments if the company needs you. It is also possible that you end up getting much less work via the framework agreement than you had hoped. The client is not always obliged to guarantee you a minimum number of hours.

How do you qualify for a covering agreement?

Organisations that work with master agreements often issue a kind of tender to determine which freelancers or agencies will be included in the ‘master agreement’. In such a tender, you have to demonstrate that you meet certain requirements and selection criteria. These include specialisms, references, rates, availability and administrative requirements. Once you are admitted to the mantle, you often join a pool of selected contractors. When a new subcontract appears, the selected contractors can then submit a proposal or the work is distributed among them directly.

The content of a covering agreement

An important element that always appears is the duration. Often, a covering agreement runs for one to four years. Check whether there are options for extension and whether you can cancel without charge in the interim if you are not satisfied with the cooperation. It also contains the general terms and conditions. These state what obligations you have, for example around availability, confidentiality, intellectual property and insurance.

Of course, the rates and payment conditions should not be missing. Pay particular attention to whether the rate is fixed for the entire term or whether indexations are possible. How quickly does the client pay your invoices? Is there a penalty clause for late payment? And is there a mini tender system or are assignments awarded immediately? What are the ground rules if you are not available?

Points of attention and pitfalls

As a self-employed person, you do not want to end up in the situation of being employed without realising it. If not properly set up, a master agreement can give the impression that you are an employee. So make sure you keep your own business operations even within the covering agreement: for example, you determine your own working methods, you are not bound to fixed working hours and you invest your own money in your company. Also check the Tax Administration's rules on (bogus) self-employment. You can read more about it on this page.

Some companies want you to work exclusively for them in a certain period or region. This can be problematic for you as a self-employed person, as it limits your ability to take on other assignments. Make proper agreements about what exactly this exclusivity entails, for which period it applies and what you get in return. For instance, do you get a minimum number of hours or a guarantee of turnover?

Rate negotiations and liability

Your rate is part of your earning model. Don't be immediately seduced by the name of a big client. Stay businesslike and realistic during negotiations and make sure your rate will still be appropriate in two years' time. Some covering agreements allow for indexation in case of inflation or cost price increases. Arrange this in advance, as adjusting your rate as you go along is often more difficult.

Agreements on liability, insurance and guarantees are just as important. Make sure you know up to what amount you are liable and what professional liability insurance is required. Contractors doing high-risk work (e.g. in engineering, construction or IT) are more at risk. If necessary, have a lawyer look into it.

How do you get the most out of your covering agreement?

Once you are in a cloak, you obviously want to actually win contracts. So be proactive. Keep an eye on the client's platforms or internal systems where new assignments are announced. Submit a proposal or bid in good time.

Network within the organisation. Keep in touch with the procurement department, project leaders and other stakeholders. Regularly show what added value you can offer.

Research the client

Dive into the organisation's corporate structure, financial health and reputation. Once you are in the mantle, you don't want any surprises. So be sure to invest in a legal check. A master agreement is often more complex than a standard agreement. Therefore, consider hiring a lawyer or a consultant specialised in self-employed contracts.

Make sure you make a thorough consideration before signing. Read the terms carefully, have a professional look over them if necessary and do not forget to guard your own independent position.