Lately I have been coming across companies with Contract Workers, which isn’t a problem, except that their employee benefit program isn’t set up properly. So this week I will outline what makes a worker a contract worker versus an employee. Next week I will talk about what Employee Benefits a Contract Worker is eligible for. Of course remembering, the ultimate situation would be for a Contract Employee to have their own employee benefit program.
According to Revenue Canada, one of the guidelines that they look at for an Employee and a Contract Worker; Revenue Canada asks the worker and the payer what their intent was when they entered into the working arrangement. They need to know how they defined their working relationship and why they defined it as such.
Indicators showing that the worker is an employee
- The relationship is one of subordination. The payer will often direct, scrutinize, and effectively control many elements of how and when the work is carried out.
- The payer controls the worker with respect to both the results of the work and the method used to do the work.
- The payer chooses and controls the method and amount of pay. Salary negotiations may still take place in an employer-employee relationship.
- The payer decides what jobs the worker will do.
- The payer chooses to listen to the worker’s suggestions but has the final word.
- The worker requires permission to work for other payers while working for this payer.
- Where the schedule is irregular, priority on the worker’s time is an indication of control over the worker.
- The worker receives training or direction from the payer on how to do the work. The overall work environment between the worker and the payer is one of subordination.
Indicators showing that the worker is a self-employed individual
- A self-employed individual usually works independently.
- The worker does not have anyone overseeing his or her activities.
- The worker is usually free to work when and for whom he or she chooses and may provide his or her services to different payers at the same time.
- The worker can accept or refuse work from the payer.
- The working relationship between the payer and the worker does not present a degree of continuity, loyalty, security, subordination, or integration, all of which are generally associated with an employer-employee relationship.
There are other factors that Revenue Canada looks at and I recommend that you access professional advise if you are questioning whether you have an Employee or a Contract Worker.
Contact Glendinning Insurance Services, your Resource Specialist to review your options regarding Contract Workers.