Modern Workplace: Employee or Contractor?

Modern Workplace: Employee or Contractor?

Having a job doesn’t mean the same thing it used to. Now, not every worker collects a regular pay check and automatically contributes to the Employment Insurance Program and the Canadian Pension Plan. They also don’t always receive benefits, overtime pay, statutory holiday pay, parental leave, bereavement leave and a pension – not to mention severance pay upon termination.

Employment contracts and service agreements, rather than permanent employment, are now common working arrangements. As a result, it’s becoming increasingly challenging to define an employee vs. a contractor.

The ‘employee’ status details certain rights under common law and legislation. Where independent contractors do not have the same protections as employees but do have different rights. As well, there are ‘dependent contractors,’ a category whose status is neither independent contractor nor employee.

The court considers a number of factors when determining whether an individual is considered an ‘employee,’ an ‘independent contractor,’ or a ‘dependent contractor.’ One of the main variables courts look at when considering whether an employment relationship is, a ‘dependent’ relationship is whether the contractor providing services to the company was economically dependent upon them. It’s not clear cut either, a dependent contractor relationship can still be found to exist even when the individual does some work for other companies.

Once a ‘dependent contractor’ relationship is established, more questions arise, like what is the amount of notice the individual is entitled to receive upon termination of the relationship? Courts will then have to look at a number of factors like the individuals age, the length of service, role with the company and more.

Companies and their legal advisors are becoming more concerned with misclassifying individuals – if they don’t get it right, they increase their risk of a contractor making a successful claim. This could mean wages, benefits and back pay, and pay in lieu of notice of termination that could be awarded to the contractor.

Introducing Tax Foresight

Advances in technology have made it possible and easier to better predict this classification of workers.  Tax Foresight leverages the power of machine learning and artificial intelligence to allow practitioners to rapidly resolve in advance how courts will rule in new tax situations, based on facts provided by users. It analyzes fact situations using deep learning, discovering in seconds hidden patterns in the case law.

Discover how the Worker Classifier on Tax Foresight can determine if a worker is an employee or an independent contractor to avoid misclassification.  Learn more or request a free demo of Tax Foresight today.