CONTRACTORS & EMPLOYEES: What Are The Differences?
If you work for any amount of pay, you are essentially selling your labour to another person or group of people. Since this is a very old practice, modern labour laws have roots in some of the most ancient texts. Being remunerated fairly has become a basic human right, though some still try to circumvent this via legal loopholes and blindspots. Review Heritage Law’s breakdown below and bring us any of your questions or concerns!
In Alberta, the following are broad definitions of who is considered an independent contractor:
- You claim business expenses as income tax credit;
- You pay your own health benefits, Employment Insurance, Canada Pension Plan and other costs normally deducted from a paycheck or salary;
- There are no restrictions on who you can work for;
- You must supply your own liability insurance and you are financially responsible for any accidents on the job.
As a guideline, most of these are true if your income is reported to the government as ‘self-employed.’ Every situation is unique, so always be clear on where you stand– especially if you are incurring a legal or financial risk.
This next list is a summary of common features of employees in Alberta:
- Your work expenses are rarely eligible for income tax credit, if at all;
- You do not have to fund your own professional development, health costs, pension payments, workers’ compensation premiums or other similar costs;
- Your working relationship is long-term, exclusive or both;
- There are protections in place provided by common law, federal regulation and Alberta’s Employment Standards Code.
As we stated above, every working relationship has its own dynamic and nuances– often put into place with a signed document. There are still exceptions, as well as unfair or exploitative contracts that can be overturned with legal action.
Labour law contains many subtleties and complexities, so it is best navigated with an experienced legal professional. Whether you are an employee or an independent contractor, we can help here at Heritage. Contact or visit us today!