Employee or Independent Contractor distinction and Employment/Contractor Agreements
About 2.7 million Canadians work for Canadian registered charities. These employees are one of its most important resources of the charity sector. Also it is the biggest expense that Canadian registered charities have. Charities pay approximately $122 billion per year for all employment expenses. Often little thought is given to the legal relationship between the charity and its employees or contractors and this can be very costly.
Although you do not need to be a lawyer to understand the difference between having an employee or independent contractor, the legal distinction is often misunderstood by new charities and established charities alike. Some of the consequences of mischaracterization of an employee as an independent contractor include CRA pursuing the charity or its directors for remittances that were not deducted, CPP and EI, plus interest and penalties. Furthermore, charities should have proper written agreements or independent contractor agreements. Not having a written employment or independent contractor agreement can make termination and severance much more costly for a charity and may result in litigation or threats of litigation. Failure to execute a proper written agreement with an independent contractor often results in a charity paying for, but not owning, the intellectual property created by the independent contractor.
Here are some of the services we provide:
- we help charities implement proper hiring procedures;
- we draft template agreements for staff and contractors;
- we provide or review policies and procedures;
- we assist clients in dealing with appropriate compensation for employees of charities that comply with both Federal and Provincial requirements;
- we deliver educational programs such as "Fundamentals of Employment Law for Charities and Non-Profits";
- we deal with employee complaints and litigation;
- we address human rights code considerations; and
- we advise on termination of employees and avoiding major liabilities and litigation.