An independent contractor is a self-employed individual who provides a service to a client (individual or business) in exchange for a fee (fixed, monthly, hourly…etc.). Independent contractors are not employees and will not be placed on the payroll of a business. Instead, the independent contractor will invoice his client for the service that was rendered.

An employee is an individual who is employed for wages or salary to perform a specific service. In general, the employer will have control over how the specific service is performed by the employee. For more information on employees, please visit on employment contract page.

It is imperative to accurately differentiate between an employee and an independent contractor. Mainly, four points can be considered:

1. Control: If the employer has the right to hire, fire, determine wage, salary and the time, place and way the work will be conducted, then you are most likely dealing with an employer-employee relationship. On the other hand, if the worker can decide how the work will be performed and where and when it will be done, then you are most likely dealing with an independent contractor.
2. Ownership of Tools: A contractor will supply his own tools. On the other hand, the employee will be supplied with tools at his work.
3. Chance of Profit and Risk of Loss: Does the individual have a chance of making a personal profit? Will they personally lose money if they damage their equipment? Does the individual cover its own operating costs? If the answers to these questions are yes, than you are most likely dealing with an independent contractor.
4. Integration: In most cases, the independent contractor will have more than one client and will be servicing several businesses.

For more information on employees, please visit our employment agreement page.

Generally, you are dealing with an independent contractor if the independent contractor:

1. Has control over the timing and performance of his work
2. Has more than one client
3. Does not work full-time for one business
4. Has his own office or work space
5. Does not obtain a wage, salary or benefits
6. Does not report to the organization
7. Has his own equipment and tools that he uses to perform his work
8. Has a chance of making a profit
9. Has a risk of loss in the event of damage to equipment

For more information on employees, please visit our employment agreement page.

No, since independent contractors are self-employed they are not protected by employment laws. Independent contractors will also not have the right to employee benefits as they are not considered employees by law.

With that being said, a recent decision from the Superior Court of Quebec granted notice of termination to an independent contractor, thus opening the door for further discussion on this topic.

An independent contractor agreement will mainly include the following clauses:

1. Relationship: The agreement will include a clause that specifically states that this agreement does not create an employer-employee relationship between the parties.
2. Duties & Term: The agreement will detail the services that are to be rendered by the contractor and the terms of the service, if any. For example, if there are any deadlines, they should be included in the agreement.
3. Payment: The agreement will outline how the independent contractor will be paid. Will he paid with a flat rate fee, by the hour, weekly, monthly?
4. Expenses: The agreement will state who is responsible to pay the expenses, if any, to complete the service.
5. Termination: The agreement will outline how the contract can be terminated or will be terminated and under what terms.
6. Protections: The agreement should include a non-disclosure, confidentiality and/or non-compete clause in the event the independent contractor is dealing with confidential proprietary information.

An independent contractor can be paid by through a fixed-fee, monthly, weekly or hourly.

Being incorporated can help further prove an independent contractor – client relationship as opposed to an employee-employer relationship. However, in any case, whether the independent contractor is incorporated or not, an independent contracting agreement is essential to show the relationship and its terms.

If you are looking to incorporate, please visit our business incorporation page for more details.

Yes, a handshake deal does not suffice here. Having a written independent contractor agreement can be pivotal for to clearly establish the business relationship between the independent contractor and the business. The written agreement can also provide the contractor and the business with sufficient protections during and after the business relationship.

For more information on why independent contractor agreements are so important, please read our blog post on the topic, here.