As Canada’s most connected event and association management company we are pleased to publish guest blogs by our partners. This post is written by Todd Andres and Nicole Smith, lawyers with Pitblado Law in Winnipeg, Manitoba.
Associations often contract out work for a variety of services including event management, accounting, graphic design or other specific services. Employees may also approach their association with a request to become an ‘independent’ contractor as there may be certain tax advantages for them.
Understanding the difference between an employee and an independent contractor is critical if an association wishes to engage or employ individuals to perform services. For the employer’s part, only employees are entitled to reasonable notice, relief for constructive dismissal and are able to access Employment Insurance (“EI”) benefits. Independent contractors must make their own arrangements to pay into EI should they wish to access benefits, they must submit their own statutory deductions to the government and they may deduct business expenses related to the services they provide when filing income tax.
In determining whether a service provider is an employee or an independent contractor, courts have determined that each relationship must be considered on its facts and depending on the many factors considered by courts, the relationship will fall somewhere along the spectrum between employee and independent contractor. Specifically, the courts will look at:
(a) whether or not the service provider is limited exclusively to the service of the association ;
(b) whether or not the service provider is subject to the control of the principal, for example, as to the product sold, when, where and how it is sold;
(c) whether or not the service provider owns or has invested in the “tools” relating to his service (such as laptops, presentation materials, vehicle, cellular telephones, etc);
(d) whether or not the service provider has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission;
(e) whether or not the activity of the service provider is part of the business organization. Is the service provider truly a separate entity or part of the larger association. In other wordswhose business is it?
The inquiry into the employment relationship must consider the overall nature of the relationship between the persons performing the services and the person or organization for which the worker’s services are performed. It should be noted that the court’s inquiry does not end with how the relationship is described in a written document or with what the parties’ original intention might have been.
Accordingly, associations should be cautious when engaging independent contractors to ensure they meet the criteria and have the appropriate contract prepared.
Todd Andres and Nicole Smith are associates at Pitblado Law both practicing in the areas of labour and employment law. Nicole Smith also practices immigration law. If you have questions regarding the contents of this blog or labour and employment law generally, please contact either Todd at firstname.lastname@example.org or Nicole at email@example.com.
This blog post is for informational purposes only and does not constitute legal advice or other professional advice. If you require legal advice, you should retain competent legal counsel to advise you.