Are you planning to hire people to help you grow your business? Congratulations! This is an important step for every business. It is important to understand the legal implications.
So now that you know some of the different legal implications, how can you make sure that you hire someone in the proper category?
Businesses may be tempted to hire contractors so that they have fewer upfront costs (see remittances above) and also so that they do not have to make a more permanent commitment to one person and skill set. This is all good, you just have to exercise some caution.
The Legal Test
If you are not careful, Canada Revenue Agency could decide that your new hire is an employee rather than a self-employed contractor. This is a situation that you REALLY want to avoid as it could result in owing back remittances.
Thanks to a case involving the dancers from the Royal Winnipeg Ballet, we now have a clear legal test to help with this.
First step - determine the subjective intent of each party to the relationship. This can be determined either by the written contractual relationship the parties have entered into or by the actual behaviour of each party, such as invoices for services rendered, registration for GST purposes and income tax filings. It is clearest if you have a written contract.
Second step - determine whether an objective reality matches the intent of the parties in step 1. The facts need to match your intent when you balance the facts in the four categories below.
In this step, we need to apply our own facts against a four-part legal test:
Here are some of my best tips for hiring an independent contractor:
So you have gotten this far and are thinking - ok so now where do I find the appropriate legal contract templates? Don't worry, I've got you.
The Legal Hiring Template Package in my online store has all of the templates and video lessons that you need to implement this newfound knowledge. And it will give you peace of mind as you hire new people that you are covering all the bases and make the expectations clear upfront.
Have questions or comments? Reach out to me at [email protected]
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