Employee vs Subcontractor Part I

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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 - • Employee vs Subcontrac...
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 RU-vid channel. Please consult a professional before you act in reliance on the information contained in our videos.
#EmployeeCanada #SubcontractorCanada #CanadaSubcontractor #CanadaEmployee

Опубликовано:

11 дек 2018

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Комментарии : 4

@businessincanada-doitright1822 5 лет назад

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.

@JoseRubenGaleana 3 года назад

Great advice!!!

@rachelkruitbosch3156 3 года назад

Great info! What if a hired subcontractor tries to reneg on terms then upon failure of manipulating the situation they file a false wages claim?! What would be the best evidences to prove they were a subcontractor when they demanded cash payments and neglected to give receipts?

@businessincanada-doitright1822 3 года назад

Rachel, you mix multiple questions in one: when a sub insists that they were employee, there is not much evidence you can provide - the determination is made objectively on the scope of your relationship. The fact that the sub demanded cash and failed to provide invoice has nothing to do with the status of employee/sub, but rather with their responsibility under the CRA rules and tax evasion. But in itself it will not affect the status of employee/sub... I hope this clarifies..