In the world of employment law there are "independent
contractors" and there are "employees," and each one
has pros and cons from both the employer and employee perspective.
The important thing to remember is that there are very different
implications of each one, so when you are determining which type of
relationship you are entering into you should do so with care.
Let's start by explaining the difference between an
independent contractor relationship and an employment relationship.
In an employment relationship, an employer hires an employee and
the relationship is subject to employment laws including minimum
wage and reasonable notice and severance. In an independent
contractor relationship, the independent contractor works for
themselves and is hired to perform a specific service. The
employment legislation does not apply and instead the only
governing law is that of any other contractual relationship.
So, why does this matter? Well, there are a couple of really
important differences in the way the courts will treat independent
contractors vs. employees. I have already alluded to the first one:
that the minimum requirements laid out in the employment standards
legislation do not apply to independent contractors. This means
that there is no minimum wage that needs to be paid and there is no
severance or reasonable notice that needs to be given for
termination. This sounds like a bad deal for the independent
contractor, however, in most cases an independent contractor can
work for multiple parties at the same time and should have
negotiated appropriate termination of contract provisions into the
Secondly, in an independent contractor arrangement, the party
retaining the contractor is not required to deduct and remit income
taxes or other statutory remittances such as Canada Pension Plan or
employment insurance premiums from the payments made to the
independent contractor. In this case the independent contractor
would be responsible to calculate and remit any amounts owing.
Thirdly, independent contractors will likely not receive any
benefits that an employer would otherwise offer employees and may
not be covered by the employer's insurance coverage.
In some cases the determination of whether someone is an
independent contractor or an employee is obvious. For example, if I
hire a landscaper to come on one occasion and complete some
landscaping work on my property this person is obviously an
independent contractor. However, the analysis gets much more
difficult if I own a commercial property and I hire an individual
to continuously look after upkeep of the yard and facility and they
do not have any other clients except for me.
In the next article I will discuss the factors that the courts
use in determining whether someone is truly an independent
contractor or an employee. If you are concerned about the nature of
your relationship with a person you have retained or with a person
that has retained you, I would recommend speaking with an
employment lawyer to assist in making the determination as this can
be a complicated analysis and it can have significant consequences
for both parties.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances. This article deals with the law
of British Columbia only.
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