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Independent Contractors

Employees vs Independent Contractors

In certain professions like doctors, lawyers, accountants, dentists and more, the professionals are self-employed. Thus, even though they are associated with some organisation or a business, it is not an employee-employer relationship. They are associated with the business as an independent contractor. An independent contractor in Ottawa provides services to meet the long term and short term operations and business requirements. The employment rules applicable to an individual depends on whether they are engaged as an independent contractor or as an employee. Each of these relationships has its pros and cons, so you need to understand what is the best for your business?
It has been seen that professionals often get confused between the rules governing employees and independent contractors. Here are the basic points of difference between an employee and independent contractor –
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  • An independent contractor does not work regularly for a specific employer. They work only as and when required. An employee on the other hands for regularly for a pre-decided number of hours with an employer.
  • An independent contractor can work more than one job or work with more than one employer. They have no employment status. Employees cannot work for multiple employers at the same time.
  • In case of independent contractor, the contractor decides the charges and other business expenses that will occur. They submit invoices to an organization after completion of work for payment. They are not on the payroll of the company. Employees are on company payroll, and their remuneration is decided by the employer. The payout pattern is also decided by them. Employers need to abide by the statutory obligations regarding remittances and salary deductions.
  • Independent contractors do not come under employment insurance premiums unless they have voluntarily taken up the insurance. Employees enjoy a wide range of benefits including employment insurance.
  • Employers have a right to hire or fire an employee. If an employee is terminated they are eligible to receive a severance package. If an independent contractor loses his contract, he is not eligible to any remuneration or severance package.
  • In a business relationship, the independent contractor decides how and when the work will be performed. In case of employees, the leadership and complete co-ordination is done by senior employees in the organization.
  • If your financial involvement is likely to incur profit or loss, then you are an independent contractor. In this case, you will cover the operating costs or expenses at your own end. In case of employees, there is no financial profit or loss involved in their relationship with the company.

If you are an independent contractor, you need to consult a lawyer in Ottawa to have a carefully crafted agreement.

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