Businesses need to know their legal obligations as an employer before deciding the best way to grow by hiring a new employee or engaging the services of an independent contractor.
If you are getting ready to hire, review your budget and priorities to determine the right hiring decision for your team. Remember that what is right for you now may change as your business grows and evolves.
Employees generally have an exclusive, and sometimes long-term, relationship with the employer. If it’s long-term stability that your organization requires, choosing to hire a full-time or part-time employee typically gives you the consistency, dependability and availability that you desire.
Employees can be categorized as either:
Indefinite (full-time or part-time)—established start date with no set end date (employment continues until either party chooses to end the relationship)
Fixed-term (full-time or part-time)—established start and end dates
Employees have specific entitlements under employment standards legislation that must be met by the employer
Employers are responsible for any notice and severance requirements as prescribed by employment standards legislation, at a minimum.
Based on the competitiveness of your total rewards package, employees have access to employer-paid benefits such as extended health benefits and professional development allowances.
Hiring independent contractors or consultants
An independent contractor (or consultant) is typically someone who can provide you with short-term, niche expertise to support your business needs. Whatever your requirements, there is expertise available, locally or internationally.
Independent contractors are not employees and do not have employee benefits or covered by the employment standards legislation.
Independent contractors assume the risk of having the project or assignment cancelled midstream and have control over when, how and where work is completed.
Independent contractors often work with other companies at the same time and generally use their own equipment
Independent contractors submit invoices to the company to receive payment for the work completed.
You are not responsible for paying the independent contractor’s taxes or any other payments required by the Canada Revenue Agency (CRA).
You are not obligated to pay for any notice or severance and you may terminate the agreement subject to the terms in the contract.