Direct Contracts are a new offering that allow you to manage contracts in the Upwork platform with your clients who don’t have an Upwork account. Enjoy the benefits of escrow services, simple contract management, faster payments, and dispute assistance should a problem arise.
How Direct Contracts Work
With Direct Contracts, you can create and send fixed-price contract proposals to your clients that don’t have Upwork accounts. Just like your other fixed-price contracts on Upwork, your client deposits project funds in escrow before the contract starts. When you’ve completed the work, you’ll request payment from your client. Once they’ve accepted your request, the funds are released to you.
As a freelancer, you’ll pay a processing fee of 3.4% of the total contract amount but you won’t pay any freelancer service fees to Upwork. Your client won’t have to create an Upwork account or pay any additional fees, keeping the experience easy to use for them.
Please note that all transactions are in USD.
How are Direct Contracts different from other Upwork contracts?
- Can only be used with clients who do not have an Upwork account
- No freelancer service fees are deducted, just a 3.4% processing fee on the contract amount
- Only fixed-price contracts are supported at this time
- You create the contract terms and send proposals to your client
- Once your work is approved the funds are released to you immediately (no 5-day security period)
- Your client won’t need to create an account or pay any fees
Manage your Direct Contracts
Choose the Direct Contracts icon in your navigation bar.
From here, you can create and send contract offers, request payments, and cancel contracts, as well as view all your Direct Contract details.
You can choose to add milestones to your Direct Contract to divide your job into a series of phases, due dates, or deliverables based on your needs. Milestones are individually funded, and provide a way to work through a large project in smaller steps.
When setting your contract amount, choose the "Milestones" option to customize the phases of your job.
Your client will need to place funds in escrow with Upwork Escrow before the contract can start. Once you request payment to your client they will have 14 days to accept or reject the request. If they don’t take action after 14 days, the funds are automatically released to you.
Important note: Both clients and freelancers have the option to cancel the contract at any point before funds are released. In either case, the funds are returned to the client in their original form of payment within seven business days.
If, within those seven business days, a freelancer initiates a dispute, the contract is put on hold. Funds will be held in escrow until the dispute has been resolved.
Freelancers are charged a 3.4% payment processing fee. For example, if your earnings are $100 you’ll be charged a payment processing fee of $3.40 USD. You are not charged a freelancer service fee, only the 3.4%. Clients also are not charged any fees. Please note that all transactions are in USD.
Since your client and you will only be using Upwork for payments, any Direct Contracts will not impact your Upwork reputation metrics (for example your Job Success Score or Top Rated status). These contracts also will not be included in your other Upwork profile stats, such as total earnings, number of jobs, etc.
This option is only for fixed-price contracts.
Direct Contracts are supported by escrow services and dispute assistance.
If a client has canceled a contract without payment or has failed to release a milestone payment despite the delivery of work, initiate a dispute directly from the contract list page. Click "..." then "Get Help" and "Contact Us."
Freelancers can also take these steps to file a dispute.
Direct Contracts can be edited by you until your client accepts the contract and funds the project. If a change in terms or scope is needed after that, please reach out to your client to discuss. You can then cancel the existing contract and create a new one.
Go to My Jobs > Direct Contact to find the contract. Click on the (...) and you’ll see an option to “Cancel Contract” and include a personalized note.
Go to My Jobs > Direct Contracts to find the contract. Click on the (...) and you’ll see an option to “Request Payment” and include a personalized note. You must request payment for the full amount, not a partial amount.
In most cases U.S. freelancers—including those who earned more than $600—will not receive a Form 1099-MISC from Upwork or their clients. However, there are three important exceptions:
- If you’re an U.S. freelancer enrolled in Upwork Payroll you’ll receive a W-2
- If you are a U.S. freelancer who receives over $20,000 and have more than 200 transactions you’ll receive a 1099-K
- You live in a U.S. state that requires a 1099-K if you reach a certain earning threshold. In these cases, we will send you the 1099-K, if required.
In addition, your client may decide to issue you a tax form if they believe they are required to do so. We recommend that all freelancers use their Earnings by Client report to accurately document your earnings. Learn more here.
On the freelancer/agency side:
- Must be a fixed-price contract
- If terms of the contract need to be changed you must cancel and create a new contract with updated terms
On the client side:
- Must be a fixed-price contract
- Billing method must be PayPal or credit card
- If terms of the contract need to be changed, the freelancer must cancel and create a new contract with updated terms
- Clients cannot initiate a contract -- the freelancer must
There is no ability/need for a client to create an Upwork account with Direct Contracts. Clients can access the contract via email from Upwork. If a client decides to create an Upwork client account, new contracts with that freelancer will be subject to freelancer service fees and client payment processing fees.
Please avoid sending your client the contract details page URL. Your client does not have an Upwork account, so they need a specially generated link to be able to access the contract information. We will send them the link to your contract via email, so let them know to be on the lookout for an email from Upwork.com.
Currently, Direct Contracts are only available to freelancers and their clients in certain countries. If you attempt to sign up and you or your client are not eligible due to the country you live in, you’ll see this message: “We’re sorry to inform you that Direct Contracts are currently not available in your country.” We hope to expand Direct Contracts to more countries in the future.
If your client cancels a contract with you, any money deposited into escrow will be returned to them. If you need to dispute a canceled contract, you can contact our customer support team to initiate the dispute by clicking on the “Get help” menu in your contract details page.
Yes, you can issue a full or partial refund.
Sharing feedback is not an option with Direct Contracts.
Existing contracts on Upwork cannot be changed to a Direct Contracts contract.