One of the most profound results of the Covid-19 pandemic has been the effect it has had on the composition of the workplace. Working remotely has forced employers to move to a task-based measure of labour production, as opposed to one which is time-based. This is because measuring task completion is more objective than paying people for their time and hoping the work gets done. This has led to opportunities for people who are working from home and completing the tasks given by their primary employer to take on additional work, as long as they can execute it all correctly and efficiently.
Being an independent contractor rather than an employee gives you the flexibility you need to explore your potential and maintain a healthy work-life balance. Being an independent contractor rather than an employee comes with many benefits: being your own boss is definitely a plus. You can also keep things fresh and exciting by using your skills and expertise to service multiple clients at the same time.
During the pandemic (and even before) we have seen companies make minor changes to employment agreements in an attempt to convert them into independent contractor agreements. Just because you change the name from “Employment Agreement” to “Independent Contractor Agreement” does not make it so! Doing so is bad for both the company and the worker: for the worker, it results in an imbalance where there is a high amount of protection for the company and burdensome obligations on the worker. For the company it could mean severe tax consequences and a dearth of protection normally afforded by contract workers.
Here are some of the issues we have come across with people who have negotiated an independent contractor agreement with their employer:
- Work Flexibility: Being a contractor means you should be able to choose when/where/how much to work, as long as you get the work done, so that you can balance your responsibilities to the employer with responsibilities to other clients and your home life. This should be made clear in your contract to avoid disagreements.
- Reimbursements: Since you will not be an “employee”, for which the employer is responsible to pay all expenses, your expenses like internet and office equipment will be your own. These costs should be factored in to your compensation since they were likely not something that was contemplated when you were an employee. Also, agreeing on disbursable costs (such as car mileage) upfront for which you can invoice the company will help alleviate headaches later.
- Compensation: Since you will no longer be receiving a salary, you will be responsible for billing the employer for your services. Depending on the amount, it may be subject to HST.
- Limiting your liability: Although you will try your best to do your job carefully, there is always the potential that you may do something which results in a loss to the company. It is important to cap your liability. Having the company acknowledge the scope of your services and responsibilities, as well as identify services not under your purview, will also help limit your liability.
- Financial protection: When you become a contractor rather than an employee, third parties such as the government and clients may associate you as related to the company, which could expose you to liability. In order to avoid spending valuable time and money to defend against legal actions by third parties, it is important to have the company handle the defense and reimburse your costs, or “indemnify”, you against those types of claims.
- Termination: The terms of the relationship must clearly state how it can end so that you know how and when the relationship can and will be terminated.
- Force Majeure: If your services become delayed due to any events outside of both your and the company’s control such as the pandemic and governmental restrictions, you will want it clear that you are not liable for the delay, but the company is not excused from paying you your compensation per the agreed-to timelines.
The above list is by no means exhaustive. A comprehensive contract review process will ensure that your independent contractor relationship suits your needs and that you are adequately protected from liability. The experienced lawyers at Grinhaus Law Firm can help review, draft and advise you on the independent contractor agreement and negotiate with the company. If you are planning on entering into an independent contractor relationship or have already starting negotiating, call or email us right away to give you peace of mind regarding your employment relationship.
PLEASE NOTE: THIS IS NOT INTENDED TO BE LEGAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. IT IS IMPORTANT THAT YOU CONSULT WITH A LICENSED PROFESSIONAL TO ADDRESS THE NEEDS OF YOUR PARTICULAR CIRCUMSTANCES.