I’m often asked to provide my game dev clients for a ‘template’ to cover off their use of a contractor. This is a normal part of business, and a great way to engage a third-party entity or person to assist on the project you’re working on.
Not all contractor types will fit under the same template contract. There are a lot of similarities across the board, with the biggest one being intellectual property. Ensuring that you have the rights you need to be able to successfully release your game is the key element from the perspective of the game dev.
Intellectual property clauses will generally be consistent across all standard contractor templates. However, issuing the wrong template to the wrong person or company can create other problems. Issuing a template that isn’t fit for purpose could cause confusion, and/or cause you to pay more money than you need to – or worse, not enough when you were supposed to.
There are a few variables at play here, each with their own nuances:
- Time Based vs Deliverable Based templates (i.e. you are paying for time performed vs item produced and delivered;
- Company vs Sole Trader (i.e. a Pty Ltd company vs an individual utilising their ABN;) and
- Australian vs International based entity or person.
This amounts to 8 possible variations, all before you have started thinking about the specifics of what the contractor will be doing.
The most significant (and expensive) differences relate to the entitlements for the entity you’re contracting with. For example, if you are working with a sole trader that is based in Australia, its likely, (and in fact best practice) to pay superannuation in addition to any sums you are paying. However, this is not necessary if you have engaged an Australian company.
Similarly, if you have engaged an overseas based company or sole practitioner, you won’t need to worry about superannuation, but if you include a royalty payment in your contract (i.e. a share of net revenue based on your game’s ultimate earnings), you may have to think about withholding tax.
These are just some of the issues you need to keep in mind when thinking about who to work with.
Get in touch if you have any questions about engaging contractors or need to know more.