Freelancers across Europe face a chronic problem: late payment. A survey by the European Commission found that more than 60% of business-to-business transactions in the EU are paid late. For freelancers operating without the cash reserves of larger companies, a client paying 90 days instead of 30 can mean missed rent, unpaid taxes, and serious financial stress. The EU Late Payment Directive provides strong protections, but many freelancers either don't know about them or are afraid to enforce them for fear of losing the client relationship.
What is a Payment Terms?
A freelance contract (also called an independent contractor agreement or service contract) in the EU governs the provision of services by a self-employed individual to a client. Payment terms define when and how the freelancer will be paid — including the invoice process, payment deadline, currency, and consequences of late payment. Under EU law, these terms are subject to the Late Payment Directive (2011/7/EU), which sets maximum payment periods and automatic late payment interest.
Red flags to watch for
The Late Payment Directive caps business-to-business payment terms at 60 days unless both parties expressly agree and it's not grossly unfair. Terms of 90 or 120 days are increasingly being challenged.
Under the Directive, you're entitled to statutory interest on late payments automatically. A contract that tries to waive this right or set interest below the statutory rate may be unenforceable on that point.
Tying payment to client approval without a deadline for that approval gives the client an indefinite right to withhold payment by simply not reviewing your work.
A clause allowing the client to deduct amounts from your invoice for alleged deficiencies without prior notice or opportunity to remedy gives them unilateral power to reduce your payment.
In many EU jurisdictions, pay-when-paid clauses are unenforceable in freelance contracts. Your right to payment should not depend on the client's relationship with their own customer.
Your legal rights
The EU Late Payment Directive (2011/7/EU), transposed into national law in all EU member states, provides the following protections: payment must be made within 30 days of invoice receipt (or 60 days if expressly agreed and not grossly unfair); late payment interest accrues automatically at the ECB reference rate plus 8 percentage points; creditors are entitled to a fixed €40 compensation for recovery costs per late payment; and contractual terms that are grossly unfair to the creditor may be declared unenforceable. Individual member states may provide additional protections — for example, France's Loi Macron imposes administrative fines on companies that habitually pay late, and Germany's BGB §286 provides for damages beyond statutory interest.
Questions to ask before you sign
- 1What is the payment period from the date I submit my invoice?
- 2Is late payment interest applied automatically, and at what rate?
- 3How and when must I submit invoices — are there specific format requirements?
- 4Can payment be withheld pending client approval, and if so, what is the approval deadline?
- 5Are there any circumstances under which the client can offset or deduct from my invoice?
- 6What is the dispute resolution process if there's a disagreement about payment?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.