Employee vs Subcontractor Part I

Subcontracting your workforce might be an efficient and simple way to start your business operations but might become the source of extreme liabilities and financial exposures if not done correctly. In many instances, former subcontractors are being determined as employees of a company, resulting in thousands of dollars of unpaid liabilities for a company (vacation pay, statutory holiday, termination notice, severance pay and employer contributions).
In order to deal with this situation, business owners must understand the difference between employee and subcontractor and know which tests are being used to determine whether a person was the employee of the company.
There are four tests, a combination of which assists in determining the real nature of relations:

Control (who supervises the work, controls when, where and how the work is to be done and more)
Risk of Profit and Loss (who gets the direct benefits of the business success)
Ownership of tools
Integration (whether a worker is integrated as a part of your organization or acts independently -position title, uniform, business cards, etc.)

Each test as well as the presence of an agreement are not determinative, the combination of factors should be reviewed in order to determine the actual nature of the relations.

In the Part II we will discuss the implication of the determination and the costs that a business can incur as a result of improper structure of the relations.

Part II is here - https://www.youtube.com/watch?v=izrQ7fxZQio&t=144s


All information provided in this video is for informational and reference purpose only. Nothing contained herein shall be considered as a legal advice or instructions to be acted upon. CBES – Canadian Business and Enterprise Services does not offer legal advice online or on its YouTube channel. Please consult a professional before you act in reliance on the information contained in our videos.

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