The Advantages And Disadvantages Of Hiring Or Working As An Independent Contractor.

When hiring independent contractors, the employer doesn’t have any obligation to pay benefits to the worker, such as Employment Insurance premiums, Canada Pension Plan, or Workplace Safety and Insurance premiums.

The employer is not subject to the restrictions under the Employment Standards Act in terms of notice and/or severance at the time of termination of employment. Also, the organization avoids costs associated with hiring and training the worker.

The employer also has greater flexibility in terms of responding to market forces. For instance, in the event of a downturn in business, they have the flexibility to sever that relationship in order to avoid the extra costs associated with payment, which means quicker response time in terms of changing market forces.

The advantages to the organization largely correspond to the disadvantages endured by the contracted worker.

From the worker’s point of view:

The independent contractor does not have the safety net of Employment Insurance. They don’t have Canada Pension Plan employer premiums paid on their behalf; the worker is not afforded protection under either the Employment Standards Act or the Common Law.

The worker wouldn’t have Workplace Safety and Insurance or benefits unless they go out and purchase that coverage for themselves. This is changing, however. In recent years, there is a provision under the legislation, which requires an organization to take extra steps in order to protect themselves from personal injury suffered by contractors while performing services for an organization. Under the Workplace Safety and Insurance legislation organizations may be liable for coverage unless the independent contractor has obtained a clearance certificate.

There are certainly advantages to people providing services as independent contractors. It can result in higher wages, better work flexibility, and more control over the work. Also, independent contractors can deduct expenses.

The problems arise when determining whether someone is, in fact, an independent contractor. This can be especially taxing when an inexperienced worker doesn’t have the skill set or education to get out there and provide services to other organizations. Being an independent contractor can be a more vulnerable relationship than that of employee.

For an independent contractor, any protection will come down to the true nature of the relationship. An independent contractor should be careful not to sign anything that does not reflect the agreement with the organization. If you are a long term worker providing services for an organization and they present you with an agreement to sign contesting that you’re an independent contractor, and if you’ve never had that sort of agreement before, don’t sign it. There’s a reason they’re presenting it to you now, and it’s unlikely that it’s in your best interest.

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If you, or someone you care about, is dealing with employment law issues in the Ottawa, Ontario Region, contact Law Office of Melynda Layton.

This article is taken from an interview on October 9, 2007 with Melynda Layton, Employment Lawyer at Law Office of Melynda Layton , an Ottawa, Ontario Employment Law Firm. Note that laws vary from province to province. Please consult with a lawyer in your own area to be sure of the laws and specific issues in your own jurisdiction.