A compliant independent contractor agreement for hiring in Canada

Answering all your questions about independent contractor agreements in Canada

You probably have questions. We’re here to answer them. Below, you’ll learn all the extra stuff you should probably know before putting together an independent contractor agreement for Canada.

Why do I need an independent contractor agreement in Canada?

Independent contractor agreements are necessary for working with contractors, as they lay the foundation for your business relationship. Agreements usually outline the scope of work to be completed, relevant deadlines, and compensation for the contractor. Written agreements provide you and the contractor with clarity about the goals and expectations for the work, helping ensure your contract runs smoothly.

The greatest benefit of having a written agreement with a contractor is accountability. Independent contractor agreements serve as a legally binding record of the terms you and the contractor initially agreed on, protecting you both in case one party violates the terms of the agreement. Independent contractor agreements can also help protect your business from misclassification liability.

Canadian law outlines a myriad of assessments to determine if an independent contractor is correctly classified, but in general, a contractor must have sole discretion over their schedule, their materials, and how they complete their work. A compliant agreement can help establish the nature of your relationship with a contractor and prove that the terms of your partnership are compliant with the guidelines for contractors.

In short—you need a written agreement if you’re working with contractors. In Canada, and everywhere else you hire.

What do contractor agreements in Canada typically need to have?

Every contractor agreement in Canada (and, the rest of the world) can be broken up into two parts:

• Contract-specific variables: This includes things like scope of work, rate, and deadline. They’re the project-specific variables that you’ll include with each contract, and are totally dependent on what type of work you’re hiring a contractor to do.
• ‍Everything else: Besides things like scope and deadline, every independent contractor agreement in Canada should follow a similar structure. If you want to grab your own contract with a compliant structure for Canada, sign up to Thera

What makes contractors different from employees in Canada?

Hiring contractors usually saves time, money, and stress compared to hiring a new employee. It is important to understand the differences between the two beyond the hiring stage, though, in order to make the best decision for your business.

Here are a few important things that make contractors different from employees in Canada:

• Contractors can set their own schedules
• Contractors can work with their own software and tools 
• Contractors can work for other clients 
• Contractors can subcontract their work out to others
• Contractors cannot directly receive benefits, like health insurance*

The key word to remember when working with contractors is autonomy. Contractors are free to complete their work when, where, and how they want, allowing them the flexibility to pursue other contracts that align with their availability and interests. As the proprietor, you take on less risk than hiring an employee, as you’re only committed to working with a contractor for the duration of the contract. This allows you the flexibility to seek out the best possible candidates for your projects, and Thera can help with a contract for each new business relationship you pursue.

*With Thera, you can get your contractors access to sign up for premium global health insurance, from SafetyWing, at a 50% discount.

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