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Whether you’re on the hunt for an FMS, or looking to understand what features you might be missing, here’s an introductory guide to the essentials:
A freelancer management system (FMS) ensures that all processes and interactions with a freelancer within the system – sourcing, legal worker classification, contracts and payments – adhere to relevant legal and regulatory requirements, while providing a user-centric experience.
In line with the modern demand for workforce flexibility, an FMS acts as a seamless extension of the full-time workforce without adding extra manual work from the business, and should approach compliance as an integral part of its operational workflows.
Here are the essential features required for an FMS:
1. Compliant onboarding and worker verification
Robust onboarding procedures for freelancers, including identity verification, background checks, and documentation of necessary certifications or qualifications. Compliance checks would be built into the onboarding process to ensure that only eligible freelancers are engaged.
2. Contract management with built-in classification and compliance
Create standardized contract templates or create custom contracts that incorporate relevant compliance clauses and their own provisions. These contracts address legal requirements such as intellectual property rights, confidentiality, and tax obligations. The system also provides an in-platform worker classification tool, that contracts comply with local labor laws, employment regulations, and industry-specific standards. Built-in worker classification and legal status determination drastically reduces the time it takes to get workers started, and removes legal risk from the client.
3. Transparent payment processes
Adhere to legal requirements and industry best practices, including accurate tracking of hours worked or project milestones completed, clear documentation of payment terms, and compliance with tax withholding and reporting obligations. Freelancers get 24/7 access to detailed payment records to ensure transparency and accountability in their own private dashboard.
4. Risk assessment and mitigation
Features to monitor ongoing risk assessment and mitigation to proactively identify and address compliance issues, such as monitoring changes in relevant laws and regulations, conducting periodic compliance audits, and implementing corrective actions when necessary. The system provides alerts and notifications for potential compliance risks, allowing businesses to take timely action to mitigate them.
5. Sourcing and compliance reporting and documentation
Access sourcing provider fee analytics and compliance reports, and maintain comprehensive documentation of all freelancer engagements, contracts, payments, and communications. This documentation serves as a record of compliance efforts and can be used to demonstrate compliance during audits or legal proceedings. The system would also facilitate easy access to relevant compliance information for internal stakeholders, auditors, or regulatory authorities- and optimize operating cost efficiencies.
6. Integration with compliance tools and services
The FMS would integrate with third-party compliance tools and services to enhance its compliance capabilities. This might include integration with legal databases, tax compliance software, or regulatory monitoring services to ensure that the system remains up-to-date with the latest legal requirements and best practices.
Compliance-Centric Freelance Management
Many companies are prioritizing freelancer management systems that prioritizes compliance in its operational workflows, and aims to provide businesses and talent with the tools and processes they need to engage freelancers in a compliant, transparent, and legally sound manner – all with a stellar user experience.
By integrating compliance seamlessly into its workflows, the FMS helps businesses mitigate risks, ensure regulatory compliance, and build trust with freelancers and other stakeholders.