Independent Contractor vs. Employee


One of the most common issues that arises in employment law is whether an individual is an independent contractor or an employee.

An employee has many more rights than an independent contractor. For example:

1. As an employee, you can be awarded significant damages under the Ontario Human Rights Code.

2. You have the right to be paid, among other things,  vacation pay, statutory holidays and overtime pay under the Employment Standards Act.

3. You have many rights under the Occupational Health & Safety Act, and the Workplace Insurance and Safety Act.

4. You generally have the right to receive notice of termination unless you have agreed to accept a lessor amount.

5. You generally have the right to collect employment insurance benefits.

On the other hand, as an independent contractor you can claim deductions that you can’t take as an employee such as home office expenses and vehicle expenses.

Since an independent contractor generally pays less taxes than a employee and employers are not required to deduct and remit payroll taxes for contractors the Canadian Revenue Agency (CRA) carefully review contractor agreements.

If you look like a duck, walk like a duck, and talk like a duck then the CRA could conclude that you are a duck; that is, an employee.

So, make sure that you are a true independent contractor before signing an agreement that says you are one.

If you have any questions about this practice area and wish to contact MacLeod Law Firm, click here


The MacLeod Law Firm has been practicing labour and employment law for over 20 years. Through our offices in Toronto and Barrie we would be happy to help.

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