Technically none. They are not an employee of your company so they should purchase their own Employee Benefit Program. However, over the years the Insurance Companies have allowed contract employees to join their Employee Benefit Programs. If a contract employee chooses to participate they should reimburse their Employer 100% of the cost of their portion of the Employee Benefit Program. I am not an accountant so I will not speak to how Revenue Canada looks at this. The question remains, “What Employee Benefits Should a Contract Employee Get?”
They can participate in all benefits, except Long Term Disability. The employee benefit contract is with the Employer and the Insurance Company. If the Employer owns more than one company they can join them together under one benefit plan. However, there must be at least a 33% ownership and some insurance companies want a 50% ownership. Insurance Companies won’t allow companies to join together for the sole purpose of acquiring Employee Benefits. Except, if you are Law Firm, Paramedical Practitioners, etc. In these circumstances you would not include Long Term Disability Benefits because each of their incomes are derived from their own businesses.
Why can’t a contract employee participate in the Long Term Disability benefits? Because the Basic Monthly Earnings in the Long Term Disability portion of your insurance contract usually looks at T4, commission, bonus and current income from the employer. A contract employee’s income is derived from their own company, whether that is a sole proprietorship or a corporation.
If you have contract employees on your Long Term Disability benefits, please advise them to get their own and take them off your Employee Benefit Program. It is too late at claim time to find out the contract employee has no coverage.
If you would like to review your Employee Benefit Contract, please contact me.
Glendinning Insurance Services, Your Resource Specialist.