One of the most common issues that arises in employment law is whether an individual is an employee or an independent contractor.
An employee has many more rights than an independent contractor. For example:
1. An employee can be awarded significant damages under the Ontario Human Rights Code.
2. An employee has the right to paid vacation, public holidays, and overtime under the Ontario Employment Standards Act.
3. An employee has many rights under the Occupational Health & Safety Act.
4. An employee is entitled to reasonable notice of termination unless he or she has agreed to a lessor notice period.
5. An employee has the right to collect employment insurance benefits.
Contractors generally pay less taxes than employees, and employers deduct and remit no payroll taxes for contractors. Accordingly, the Canadian Revenue Agency (CRA) is vigilant about reviewing contractor agreements to make sure that the government is not foregoing taxes.
Even if an employer and a contractor agree in writing that the contractor is not an employee the courts, administrative tribunals and the CRA will in some cases conclude the person is an employee.
To determine whether a person is an employee or a contractor the CRA, courts and administrative tribunals look at the substance of the relationship. One of the main factors that is considered is how much control the employer exercises over the individual. The more control the more likely a contractor relationship will be found.
For more information on this topic, please see Employees Vs. Independent Contractors
If you have any questions about whether one of your contractors may in fact be an employee at law and wish to contact us, click here
If you want to know what to expect from us if you contact us, click here