We have expanded Direct Contracts to support hourly jobs. As previously announced, Direct Contracts allow freelancers to invoice and manage contracts on the Upwork platform without their clients having to create an Upwork account. This was previously only available for fixed-price contracts and with this expansion, freelancers will now be able to generate contracts that require an hourly breakdown of their work on a recurring basis. Direct Contracts make it easy to manage and collect payment from non-Upwork clients. Clients won’t have to create an Upwork account or pay any additional fees. All of the contract management and payment is sent to the client via email, keeping the experience easy for them to use. And with Upwork Escrow and dispute assistance, freelancers can work confidently with their clients who are not on Upwork.
Here’s how it works for hourly:
Freelancers can create a Direct Contract through their Upwork account from the main navigation bar, by clicking on the paper airplane icon (beside the bell). Setting up a Direct Hourly Contract takes 3 easy steps. The freelancer will enter the contract details, their hourly rate and the total number of hours they’ll per week, review the contract, and send.
Once they’ve created a contract, the client will receive an email with the contract details to approve. The client will also be required to deposit funds before the contract starts. This way freelancers can be assured in knowing they have payment protection, as the funds are already secured before they begin the contract. The amount required is based on one week’s work total, which is calculated by multiplying the hourly rate and the estimated max hours.
Once the contract has been accepted and funds deposited, freelancers will see the prompt for them to begin logging hours. With Direct Hourly Contracts, there is no Time Tracker, hours are logged manually each week and must be entered by Sunday of that workweek.
Monday, following the completion of the previous work week, opens the review period for clients. Clients will be able to review and approve the logged hours until Friday. On Friday, freelancers are paid for the previous week’s work that has been approved by the client. This timeframe is the same as Upwork’s faster payout option, which allows freelancers to receive funds five days earlier than marketplace jobs. This is because we are eliminating the security hold on these payments.
You can learn more about Direct Contracts here. You can also find more details in the FAQs we provided below.
How is my payment for hourly work protected with Direct Contracts?
After you and your client agree to create a contract and set a weekly rate and time limit, we’ll estimate the weekly total and require your client to deposit that amount into Upwork’s secure escrow account. Once your client funds the deposit, we will notify you and you can confidently begin work knowing your payment is secure. Note: Payment protection does not cover additional work hours beyond the set weekly limit or expenses.
How does Upwork calculate the security deposit and weekly charge to the client?
We calculate the security deposit by simply multiplying your rate against the weekly limit that has been set by you and your client. For example, if your rate is $10/hr and your weekly limit is set to 40 hours, we will set the deposit as $400 (or $10/hr x 40 hours). The weekly charge is determined after the work week. We set the weekly charge based on how many hours were invoiced in the previous week.
Note that Escrow funds remain as a security deposit throughout the duration of the contract until the final week. After the contract ends, Escrow funds are used to pay for the hours logged in the final week, with remaining amount being refunded to the client. Escrow funds are released also on Monday at 12 noon UTC.
When does my client get charged each week?
We will charge your client for the previous week each Monday.
When do I get paid for my work?
Once your hours have been submitted for invoice, payment will be reflected in your Upwork balance the following Friday as long as your client doesn’t dispute the hours.
I usually use hourly contracts in place of the fixed price contracts because I like the protection offered with hourly contracts.
So for example, a client will hire me (my hourly rate being $90/hr) to write an email for $125. I will bill them, roughly, for about 1 hour and 25 minutes, whatever it takes to reach $125 when you're working at $90/hr. Even though the weekly limit is 40 hours, or 10 hours, I'm not going to bill them that much.
Is it possible that the freelancer can set the amount the client should fund in escrow? I imaigne this would be pretty easy to implement.
For Direct Contracts, the freelancer sets up the weekly limit before sending the contract to the client. To start, we calculate the deposit by simply multiplying your rate against the weekly limit that has been set. For example, if your rate is $10/hr and your weekly limit is set to 40 hours, we will set the deposit as $400 (or $10/hr x 40 hours). After the first week, the weekly charge depends on how many hours were invoiced in the previous week. Thanks for your feedback. I'll be sure to share it with the rest of the team.
That is the way I have been encouraging Upwork to escrow out typical standard hourly Upwork contracts..(as non-payment/lack of funds have been on the rise lately).any plans on moving that system over the the normal UpWork side?
I finally brought over a client from outside the UpWork world and used a direct contract. So far the process seems flawless. I set up an hourly contract, set max-hours for the week. What I am finding out is the hourly payment protection(of sorts) is even better then the traditional Hourly contract on the Upwork side of things.
They take your hourly rate and multiply it by the max-hours set for the contract, then escrow that amount......after that week is complete they base the next escrow on how many hours you previously worked on the project......thats brilliant.
So the question that's on my mind.
Why not bring over a similar escrow system over the Upwork contracts for hourly jobs? I don't know about you but I have seen a major uptick on clients with non-sufficient funds as of late. The hourly work protection is nice but can be flawed for certinan work situations. Not to mention, it must be rough for Upwork to cover for the hourly protection on any regularity.
Thanks for your question. The Time Tracker feature is not an option with Direct Contracts. With hourly Direct Contracts, you and the client agree to a weekly limit on hours. Before releasing payment, the client can also review the manual hours invoice so they can reach out to the freelancer with any questions and, if needed, file a dispute.
Regarding your second question. To start, we calculate the deposit by simply multiplying your rate against the weekly limit that has been set. For example, if your rate is $10/hr and your weekly limit is set to 40 hours, we will set the deposit as $400 (or $10/hr x 40 hours). After the first week, the weekly charge depends on how many hours were invoiced in the previous week.
Let us know if you have further questions.