Being a freelancer might mean freedom and a certain cachet of coolness, but as part of the work force moves towards a gig economy in which work becomes more temporary and flexible, the reality is that freelancers are becoming a class of workers that are without safety nets and are heavily exposed to the risk of late or non-payments.
Freelance workers lost an average £5,394 a year in 2017 through unpaid work, according to research by the Association of Independent Professionals and the Self Employed (IPSE). While late payments cost the UK economy £2.5 billion each year, according to the National Federation of Self-Employed and Small Businesses.
"Late payments are one of the worst things about being a freelancer," Iona Bain, founder of the Young Money Blog, told The Financial Times. "The financial impact of missing payments disrupts your cash flow and there is also a big mental impact that comes with feeling completely out of control."
But freelancers in certain areas are protected by law.
In the UK, freelancers are covered by the Late Payment Act of 1998 in which they can claim interest on late payments. But the freelancer has to go to court, where he or she must be able to prove a contract was in place and that the work was delivered.
There is also a union for freelance and independent workers in the UK called Community Union. Community claims clients pay up 99% of the time when they hear from the union.
A petition calling for timely payment for freelance journalists started in February now has over 1,000 signatories. Separately, The Freelancer Club, a members’ club for creative freelancers, is calling for policy change including contracts for work worth £250 or more, a standardised procedure for freelancers to lodge complaints with local governments, legal assistance and the right for freelancers to sue in court for double the unpaid amount.
In New York, the US Freelancers Union, which works with an alliance of businesses such as WeWork, Kickstarter and the Brooklyn Chamber of Commerce, defends the economic security of freelancers.
In the Philippines, Senator Paolo Aquino IV has proposed a measure seeking greater protection and incentives for freelancers in the country. Pressing the government to give freelance workers greater protection, particularly from late or non-payment for services rendered, the bill will give freelancers the power to demand from their employer rightful payment as per their signed contract.
Under the bill, a freelance worker may file a complaint to the government against an employer that refuses to pay him or her for services rendered. Should the complaint be found valid, the government can fine the employer up to PHP 250,000.
While some sites may give advice like setting up an invoice software and having savings set aside to pay for monthly expenses before taking the freelancing leap, at Riabu we think there are better ways to make sure you get paid on time.
Find out how by signing up for our Udemy course on getting paid on time. Are you a freelancer and do you have late payment stories to share? Let us know below, or at our Facebook page.