Who owns the IP my employees and contractors create?
By SuLe · Updated 30 May 2026
Your company automatically owns intellectual property created by an employee in the course of their job — but a contractor or freelancer keeps the IP they make for you unless they have signed a written assignment. That single distinction, between employee and contractor, is the most common and most expensive IP mistake UK startups make.
Key facts
- Copyright in an employee's work made in the course of employment belongs to the employer automatically (CDPA 1988 s.11(2)).
- Inventions an employee makes in their normal duties belong to the employer (Patents Act 1977 s.39).
- A contractor owns what they create for you unless there is a written, signed assignment — paying the invoice is not enough.
- A copyright assignment must be in writing and signed by the person transferring it (CDPA s.90).
- Investors check assignments in every due diligence; a gap can delay or reprice a round.
Who owns IP my employees create?
The company does, automatically. Under the Copyright, Designs and Patents Act 1988 s.11(2), copyright in work an employee produces "in the course of employment" belongs to the employer without any further paperwork.
The same logic runs through patents: the Patents Act 1977 s.39 gives the employer inventions made by an employee in the ordinary course of their duties. So the code your salaried engineer writes, and the designs your in-house designer produces, are the company's by default.
You should still put an IP clause in every employment contract. It removes argument about what "in the course of employment" covers, captures side-projects that touch the business, and confirms the position for anyone reading the file later.
Who owns IP a contractor or freelancer creates?
The contractor does — not you — unless they have signed something transferring it. This is the trap: you paid a freelance developer, agency or fractional CTO, you have the finished product, but the copyright still sits with them.
Paying an invoice buys the deliverable and usually an implied licence to use it. It does not buy ownership. Without a written assignment, you cannot stop the contractor reusing the work, and you cannot honestly tell an investor the company owns its own codebase.
The fix is a written IP assignment, signed by the contractor, ideally built into the contract before work begins. If work has already happened, get a standalone assignment signed now rather than hoping the point never comes up.
What counts as "in the course of employment"?
Broadly, work an employee does as part of the job they are paid for. A back-end engineer writing your platform is squarely inside it; the same person writing an unrelated novel at the weekend is not.
The grey zones are real: work done on personal time that still relates to the business, or by someone whose role is loosely defined. A well-drafted IP clause narrows these gaps by defining the employee's duties and assigning business-related IP explicitly.
Note that the employee/contractor label for IP tracks the genuine working relationship, not just the job title — the same status question that drives employment rights and IR35. A "consultant" who is really an employee, or vice versa, can produce a surprising ownership result.
How do I make sure the company owns everything?
Assume nothing vests automatically except employees' work, and paper the rest. Every contractor, agency and advisor who touches your product, brand or content should sign an assignment; every employment contract should carry an IP clause.
| Who created it | Default owner | What you need |
|---|---|---|
| Employee, in the course of their job | The company (s.11(2), s.39) | IP clause in contract (confirms it) |
| Contractor / freelancer | The contractor | Written, signed IP assignment |
| Agency building your MVP | The agency | Assignment on payment, not just a licence |
| Founder, before incorporation | The founder personally | Written assignment into the company |
| Advisor producing materials | The advisor | Assignment in the advisor agreement |
Founder work created before the company existed is its own trap: it belongs to you personally until you transfer it in writing to the company.
Worked example
Maya founds a fintech, ClearLedger Ltd. She hires a salaried engineer, Sam, and a freelance product designer, Rae, on a £6,000 fixed-price brief for the brand and app UI.
Sam's code belongs to ClearLedger automatically under s.11(2) — his contract's IP clause simply confirms it. Rae's designs, though, belong to Rae until she signs an assignment, even after Maya pays the £6,000. When ClearLedger raises its seed round a year later, the investor's lawyers spot that the UI has no assignment on file. Maya has to track Rae down for a signature mid-diligence — a fixable but avoidable delay that a one-page assignment at the start would have prevented.
Where founders go wrong
Assuming "I paid for it, so I own it."
For contractors this is false — you own it only with a signed assignment.Relying on a verbal deal or an email.
A copyright assignment must be in writing and signed (CDPA s.90).Skipping IP clauses in employment contracts.
Ownership is automatic, but the clause prevents fights over what "in the course of employment" means.Leaving founder pre-incorporation work unassigned.
It stays personal property until formally transferred to the company.
Related questions
Does my company automatically own what my employees build?
Yes. Copyright in work an employee creates in the course of their employment belongs to the employer automatically under CDPA 1988 s.11(2), and inventions made in their normal duties belong to the employer under the Patents Act 1977 s.39. No separate assignment is needed, though a clear IP clause in the contract removes doubt.
Who owns work a freelancer or agency creates for me?
The freelancer or agency does, unless they have signed a written assignment transferring it to you. Paying an invoice buys the deliverable, not the underlying copyright. This is the single biggest IP trap for startups and it surfaces in every investor due diligence. [More: Who owns the code if an agency built my MVP?]
Does a verbal agreement or an email transfer IP?
No. A copyright assignment must be in writing and signed by the person giving it up (CDPA s.90). A verbal promise, an invoice marked "full rights", or a casual email is not enough to move ownership to your company. [More: What is an IP assignment agreement and when do I need one?]
What if the contractor won't sign an assignment now?
You can still get a licence to use the work, but you won't own it — which weakens your position at fundraising or sale. It is far cheaper to agree assignment in the contract before work starts than to chase a signature years later.
Getting IP ownership right is cheap at the start and painful to fix under diligence pressure — a missing contractor assignment can stall a round or knock down your valuation. A SuLe solicitor can review your contracts and assignments and close the gaps before an investor finds them. Book a free IP health check call and make sure your company actually owns what it's built.
Keep reading: What is an IP assignment agreement and when do I need one? · Who owns the code if an agency built my MVP? · How do I transfer pre-incorporation IP into my company? · Who owns copyright in software in the UK? · What IP protection does an early-stage startup actually need? · Employee vs contractor — what's the legal difference (and where does IR35 fit)?
Primary sources: GOV.UK — How copyright protects your work · Copyright, Designs and Patents Act 1988
