Private Contractor vs. Employee (Is this standard practice in a contract)

[gjrevans]

I am a Canadian Resident (Ontario) and small business owner and I am trying to figure out whether the following clause is a standard practice clause or whether this is out of the ordinary.

To provide some background, I am entering into a business relationship as an independent contractor to develop a mobile application for another small business. I have been warned that sometimes in business relationships such as this, the CRA will find individuals such as myself to actually be considered an employee of the company I have been contracted to work for instead of a private contractor or entity. When this happens the company contracting me for the period of time would then be hit with the obvious charges for not withholding taxes etc. The clause I am questioning essentially states that if I am determined to be an employee and not a private contract (which is not the case, but for argument sake we assume it happens), the firm I am being contracted by would not be held responsible for the fees but would instead pass them onto me and my company. I have communicated my confusion over this clause to the firm I am looking to engage with, however they have assured me that their legal team has been using this clause in standard practice for many years not and this it is in no way out of the ordinary.

The clause (where I am the "contractor" and obviously the person contracting me is the "company): "The contractor hereby acknowledges that in the event that any of its partners is determined to be an employee of the company pursuant to the common law or any provincial or canadian statute, including the Ontario Employment Standards Act, then it shall indemnify the Company from all damages, actions, demands or claims which may relate to or arising from the partner having been determined to be an employee of the company pursuant to the common law and/or any provincial or Canadian statute. Further, the contractor hereby agrees to indemnify and hold harmless the company from all damages, penalties and/or claims made by the Canada Revenue Agency against the company because of the Parties' mutual agreement to treat the Contractor (and its partners) as an independent contractor if it is determined that the partner is an employee."

Please help!

 

[TheGeekess]

US LAW Only.

 

[gjrevans]

I am really sorry. I am super new to this and quite inexperienced. Do you have any suggestions for where I might find help on this topic?

 

[TheGeekess]

https://www.google.com/search?q=canadian+contract+law

 

[Zigner]

Private contractor and employee of the foundationis always of about the real estate properties.

Somebody is hitting the bottle early...

 

[Phoenix2000]

Be careful, if it doesn't feel right, don't do it...

I am a Canadian Resident (Ontario) and small business owner and I am trying to figure out whether the following clause is a standard practice clause or whether this is out of the ordinary.

To provide some background, I am entering into a business relationship as an independent contractor to develop a mobile application for another small business. I have been warned that sometimes in business relationships such as this, the CRA will find individuals such as myself to actually be considered an employee of the company I have been contracted to work for instead of a private contractor or entity. When this happens the company contracting me for the period of time would then be hit with the obvious charges for not withholding taxes etc. The clause I am questioning essentially states that if I am determined to be an employee and not a private contract (which is not the case, but for argument sake we assume it happens), the firm I am being contracted by would not be held responsible for the fees but would instead pass them onto me and my company. I have communicated my confusion over this clause to the firm I am looking to engage with, however they have assured me that their legal team has been using this clause in standard practice for many years not and this it is in no way out of the ordinary.

The clause (where I am the "contractor" and obviously the person contracting me is the "company): "The contractor hereby acknowledges that in the event that any of its partners is determined to be an employee of the company pursuant to the common law or any provincial or canadian statute, including the Ontario Employment Standards Act, then it shall indemnify the Company from all damages, actions, demands or claims which may relate to or arising from the partner having been determined to be an employee of the company pursuant to the common law and/or any provincial or Canadian statute. Further, the contractor hereby agrees to indemnify and hold harmless the company from all damages, penalties and/or claims made by the Canada Revenue Agency against the company because of the Parties' mutual agreement to treat the Contractor (and its partners) as an independent contractor if it is determined that the partner is an employee."

Please help!

I am not a legal professional, but have been an independent computer contractor for 12 years. My honest opinion is there is a shift happening in the employee/employer relationship where all employees are about to get shafted. About 12 years ago, give or take, there was a massive shift within the employment agencies (headhunters). All of a sudden there were many contracts you were not able to take unless you were an independent contractor, which is the reason I switched from employee to independent contractor. I am sure many other people did the same, basic common sense dictates if you loose too many opportunities due to non-independent contractor status, what are you going to do? Although I was forced into it, I eventually liked the lifestyle. I choose my own hours, where I worked, what equipment I worked on and when I was on contract, I would bust my hump, make lots of money and then take a month or more off. What I have seen recently is employers want the best of both types of workers. Furthermore, a search within Google about the differences between "Independent contractor" vs employee will reveal this shift. Pages from several years ago are very specific about control of the worker being the main determining factor but more recent pages, this is less evident, so obviously the laws have changed, silently, in the employer's favor. The following is my understanding of the difference...

Employee
permanent fixture requiring notice and severance upon termination
gets paid holidays, vacation and sick days
gets health, workman's comp and retirement benefits
employer determines when, where, how and on what equipment is worked on
can collect EI between jobs

Independent Contractor
disposable, short term worker, not requiring severance on termination
does not get paid holidays, vacation or sick days
does not get health, workman's comp or retirement benefits
contractor determines when, where, how and on what equipment work is done
can not automatically collect EI between jobs, unless contractor pays premiums

Based on this new clause, this is our new condition
disposable, short term worker, not requiring severance on termination
does not get paid holidays, vacation or sick days
does not get health, workman's comp or retirement benefits
employer determines when, where, how and on what equipment is worked on
can not automatically collect EI between jobs, unless contractor pays premiums

The shift is the control which was always the deciding factor between employee and independent contractor. Now basically we are employees without any employee benefits. This favors the companies, as usual, is slimy and it sucks. I am in this situation currently, where first year of my contract was great, I worked as I pleased. My manager claims my work exceeded his expectations, so there is no reason for the shift in policy. All I know is before the ink on the contract renewal dried, he was on my ass to conform to company policy regarding what I did, when and where I did it, using their computers vs my superior in spec laptop.

You have to judge you own situation and walk your own route. Me I am actively looking and will be leaving as soon as something else suitable comes up. I am thinking about the younger generation. I am thinking about my Son. I will not condone the actions of a company that will lead to a future where all employees are employees without benefits.