What is the difference between work for hire and licensing your code?
Work for hire transfers ownership: the client becomes the author and you keep nothing. A licence grants permission to use while you keep the copyright. The practical difference is that after a licence you can still reuse, resell, and re-license the same work, and after a work for hire arrangement you cannot use your own code without permission.
Two words that get used interchangeably in contracts and mean opposite things. Getting them confused costs freelancers a great deal of money, quietly, over years.
The difference in one line
Work for hire transfers the asset. A licence rents it.
work for hire licence
───────────── ───────
copyright client you
can you reuse it no yes
can they modify it yes per the terms
can you license it
to someone else no yes
paid once potentially repeatedly What work for hire actually is
In the US, work made for hire is a statutory category, not a phrase you can apply to anything by writing it down. It covers work by employees in the course of employment, and specially commissioned work falling within a short list of categories, agreed in writing.
Commissioned software is not obviously on that list. This is why careful agreements do not rely on the clause alone: they say the work is made for hire, and that if for any reason it is not, the contractor assigns all rights instead. That second half is what usually does the work.
If your contract contains only the first half, the position may be less certain than either side assumes. That is not a licence to act as though you own it. It is a reason to get advice before relying on it.
In the UK the term has no equivalent statutory meaning. Ownership moves by written assignment, and an employer owns what employees create in the course of employment by default.
What a licence actually is
Permission, bounded by its terms. You keep the copyright. The client gets a defined right to do defined things.
The terms are the entire substance:
Exclusive or non-exclusive. Non-exclusive means you can license the same work again, to anyone. This is the difference that matters most and it is the one clients rarely think to ask about.
Perpetual or time-limited. Most software licences are perpetual, because a business cannot have its systems stop working when a term lapses.
Modification. Can they change it, or only run it? For software they will need to change it.
Sublicensing and transfer. Can they pass the rights to a subsidiary, or to an acquirer when the business is sold? Worth deciding deliberately.
A licence with no stated limits sits very close to an assignment in practice, whatever it is called.
┌─ WORTH CHECKING ─────────────────────────────────────────────────────┐ │ │ │ Private, finished, owned by you, and doing nothing. │ │ │ │ [ See what your repos are worth ] │ │ │ └──────────────────────────────────────────────────────────────────────┘
Why this is worth more than it sounds
Consider two freelancers who built the same system for the same fee.
One signed a work for hire and assignment clause. The code is gone. They cannot reuse the patterns in a literal sense, cannot build a product on it, cannot license it later, and technically cannot lift a utility function out of it for the next client without permission.
The other signed a broad perpetual licence. The client has everything they needed: run it, modify it, keep it forever. The freelancer still owns the copyright. The same code can underpin a product, be reused across engagements, and be licensed again later.
Same work, same fee, entirely different asset position ten years on. The second developer has an archive. The first has invoices.
What to do about contracts you have already signed
Nothing retroactively, but the audit is still worth an hour. Sort your past engagements into assigned, licensed, and nothing signed. That one exercise tells you which repositories are yours, and it does not need doing twice.
Look especially for a licence back. Plenty of assignment clauses grant the contractor a right to continue using general skills, tools, and know-how, and occasionally more than that. Read its scope carefully. It is often narrower than it looks, and occasionally broader.
What to do next time
Ask what the client actually wants to do with the software. The answer is almost always: run it, change it, not lose access if you disappear. A broad, perpetual, transferable licence delivers all three.
They usually ask for ownership because their lawyer’s template asks for ownership, not because anyone identified a need. It is a negotiable term and very few clients walk over it.
If they do genuinely need ownership, that is fine. Price it as the sale of an asset, because that is what it is.
What to read next
- Who owns the code you wrote for a client, the practical audit
- IP clauses in software contracts, the exact wording to look for
- Can you license private repositories, what ownership makes possible
Common questions
- Is work for hire the same as assignment?
- No, though they reach a similar destination. Work for hire treats the client as the original author from the outset. Assignment accepts that you were the author and transfers the copyright afterwards. The distinction matters because the US work made for hire category is narrow and commissioned software often falls outside it, while assignment is broadly reliable.
- Can I charge more for work for hire?
- You should. You are selling an asset outright rather than renting it, and you are giving up every future use of it including your own. Pricing the two identically is the most common mistake in freelance software work.
- What does a licence let the client do?
- Whatever its terms say. Scope is everything: exclusive or not, perpetual or time-limited, whether they can modify, sublicense, or transfer it on a sale of the business. A licence with no stated limits is close to an assignment in practice.
- Which should I offer a client?
- Most clients need to use, modify, and keep running the software, and a broad perpetual licence gives them all of that. They ask for ownership out of caution rather than need. It is worth asking what they actually intend to do with it.
- Does work for hire affect licensing code to AI labs?
- Completely. Code delivered under work for hire or assignment is not yours to license and must not be submitted. That is the single most common disqualification.