Independent Contractor Agreement Use Policy
At times, services are provided to the AMS under arrangements other than regular employee appointments. Unless the provision of such services is restricted (bylaws, code of procedures, collective bargaining agreements, other established policies, etc.), the AMS may contract for these services with an independent contractor carrying on business as an individual or as a company. In this regard, the AMS provides the AMS Independent Contractor Agreement 9-09 for use while at the same time honour its statutory obligations.
The AMS Independent Contractor Agreement 9-09 is not intended to replace bona fide agreements provided by third parties, but is available for use in the absence of one.
Where an employer/employee relationship exists in respect of the performance of services, the AMS is required by law to provide statutory benefits (CPP, EI and WCB) and to follow specific source deductions and reporting procedures. In this circumstance, the AMS Independent Contractor Agreement 9-09 should NOT be used and the employee must be setup on AMS payroll.
In determining whether an employer/employee relationship exists, several factors are used. The following criteria are provided as reference only but are neither definitive nor exhaustive:
- Intent – what was the intention of the working arrangement: contract of service (employer/employee relationship), or business relationship for services (independent contractor). Usually the intent can be found in a written agreement.
- Control – the relationship is one of subordination where the payers often direct, scrutinize, and effectively control many elements of how the work is performed (employer/employee relationship), or does the worker work independently within a defined framework with little or no oversight (independent contractor).
- Tools and equipment – the payer supplies most of the tools and equipment required to perform the service and is responsible for repair, maintenance, and insurance costs (employer/employee relationship), or does the worker provide the tools and equipment required to perform the work (independent contractor).
- Subcontracting work or hiring assistants – the worker cannot hire helpers or assistants (employer/employee relationship), or the worker can hire another party to complete the work, or help complete the work, and pay the costs of doing so (independent contractor).
- Financial risk – the worker is not usually responsible for any operating expenses and is not financially liable if the obligations of the work is not fulfilled (employee/employer relationship) or the worker is hired for a specific job rather than an ongoing relationship and is financially liable if the obligations of the contract is unfulfilled (independent contractor).
- Responsibility for investment and management – the worker has no capital investment in the business and does not have a business presence (employer/employee relationship), or the worker has capital investment, employs and manages staff under its own organization, and has established a business presence (independent contractor).
- Opportunity for profit – the worker is not in a position to realize a business profit or loss (employer/employee relationship), or the worker can hire and pay a substitute to perform the work, and the worker is compensated by a flat fee and incurs expenses in performing the service (independent contractor).
Where there is uncertainty or a difference of opinion about whether an employer/employee relationship exists, the AMS Administration Office should be consulted, and if required, may seek a ruling from Canada Revenue Agency after consultation with the department involved.