Presentation hiring extra handsPresentation Transcript
Hiring Extra Hands: How to Protect yourself RAYNA SHIENFIELD BARRISTER & SOLICITOR
Employees v. independent contractors Employer basics Contracts Discussion & questions WHAT’S IN STORE...
Employees v. Independent Contractors
Employer: Administrative perspective – easier to hire an independent contractor Liability - hiring an independent contractor limits employer’s liability Payroll taxes (income tax, EI, CPP, EHT) Employment Standards Act requirements ie. payments on termination Do not have as much control over the worker – this could be a good or bad thing Worker Benefits to worker – entitles worker to deduct business expenses from gross income WHY DOES IT MATTER?
BUT…it’s not that easy The choice is not actually that of the employer Can put a contract describing an individual as an independent contractor into place but that does not necessarily mean s/he is, at law, an independent contractor MORE THAN JUST A NAME
Degree of control an employer has over determining method of work, hours Whether or not worker provides tools Whether worker is subject to employer’s policies Degree of financial risk taken by the worker / worker’s opportunity for profit Economic dependence of worker on one company Status is not affected by whether worker is paid directly to worker to a personal corporation DETERMINING FACTORS
CRA: Employer needs to pay unremitted tax plus unpaid CPP and EI, plus penalties & interest Must defend a challenge in the Tax Court of Canada Workplace Safety and Insurance: Investigation Fines Payment of outstanding premiums plus interest WHAT HAPPENS IF YOU CLASSIFY INCORRECTLY?
Wrongful dismissal claims Court will disregard termination provisions in an independent contractor agreement if the worker is found to be an employee liability for minimum notice under the Employment Standards Act, plus common law notice. Braiden v. La-Z-Boy Canada Ltd. (OCA) - sales rep was designated as an independent contractor by the company, but court found the designation invalid. There was a 60 day notice provision in the contract, but because of wrong classification that was invalid and 20 months of notice was awarded WHAT HAPPENS IF YOU CLASSIFY INCORRECTLY CONT…
One of the reasons people don’t want to have employees is because of the obligations under the Employment Standards Act Only apply if worker is an employee and not an independent contractor Entitles worker to certain benefits and protections: Overtime pay Personal and parental leave Vacation pay Notice or pay in lieu of notice, severance EMPLOYMENT STANDARDS ACT OBLIGATIONS
Basically anyone Do not need to be a registered company You do need a Business Number with a payroll deductions account before employee starts work (through CRA) www.businessregistration.gc.ca WHO CAN HIRE AN EMPLOYEE?
Get employee’s social insurance number Have the employee fill out Form TD1 (Personal Tax Credits Return) Make sure you are compliant with the Ontario Employment Standards Act* There is a guide on the Ministry of Labour website for employers – print this out & read it! Lots of little things are regulated – breaks, overtime, vacation time, vacation pay MAIN THINGS TO REMEMBER *in some cases governed by Federal Canada Labour Code
Should be put into place for both employees and independent contractors Best to do BEFORE THE WORKER STARTS Important to classify the worker – BE REALISTIC If worker is an employee, can’t contract out of the Employment Standards Act minimums CONTRACTS – THE BASICS
WHAT GOES INTO A CONTRACT? Employee Independent Contractor Position Compensation Confidentiality Proprietary Rights Termination Severability Non-solicit Starting Date (and Ending Date if for a fixed term) Services Payment Confidentiality Proprietary rights Termination Severability Non-solicit Term
WHAT GOES INTO A CONTRACT? Employee Independent Contractor Vacation Hours of Work Non-compete Policies Duty of loyalty Relationship Expenses, taxes Tools Invoicing Non-assignment Indemnification
Sets expectations on things such as: Payment What / when / how the work is to be done Who is responsible for what Time off entitlements Protects parties in case of relationship breakdown: Termination provisions Solicitation of other workers Proprietary rights HOW DOES A CONTRACT PROTECT YOU?