Being a small business employer, you may wish to save money with your hires. A common method used in the workplace is to hire “independent contractors”. Hiring “independent contractors” instead of hiring employees is thought to save statutory deductions and remittances for things like Income Tax, Employment Insurance, Canada Pension Plan, and Workers Compensation that are required for employees under the law of employment.

However, the common law tests for determining who is an independent contractor and who is an employee tend to favour the finding of employment in all but the clearest cases. As well, the relationship between any worker and the employer is dynamic and can change over time through behavior, oral statements, and written documents. It is very possible that someone hired as an “independent contractor” can change over time into “employee”.

You may find yourself with an “independent contractor” who always was or has become an employee. Come time to substantially change or terminate the relationship, you may find that the “independent contractor” begins asserting employment rights and claims to be an employee, in a bid to obtain payment of notice in a wrongful termination of employment claim. Of course, if the “independent contractor” turns out to be an employee all along, the failure to deduct and remit the necessary statutory remittances will become a liability for your business.

There are ways to deal with this. In order to conform to the law of employment, and to avoid termination of employees that become wrongful dismissals that expose your business to harm, steps can be taken that reduce or eliminate the risk of an “independent contractor” claiming a wrongful termination as an employee.

For more information regarding independent contractors for your business, contact us today