6 criteria to distinguish between an employee and a self-employed person
Distinguishing between professional status: employee or self-employed person?
Understanding this difference is essential, as it influences the rights, responsibilities and even tax benefits of the individuals concerned. Here are six key criteria to help you identify the appropriate professional status.
1. Total independence? Check the relationship of subordination.
One of the most significant indicators of self-employed status is the absence of a relationship of subordination. Unlike employees, self-employed workers are not subject to the direction or control of an employer in the performance of their duties. They enjoy considerable freedom as to where and when they work.
2. Risks and rewards: self-employed workers' finances.
Self-employed workers have the opportunity to make a profit, but they also bear the risk of loss. Unlike employees, who receive a fixed salary, self-employed workers must manage the operating expenses of their business, which can fluctuate greatly.
3. No safety net: life without benefits.
Another distinctive criterion is the absence of benefits. Self-employed workers generally do not benefit from health or disability insurance, paid leave, or other benefits often associated with employee status.
4. Who owns the tools of the trade?
Self-employed workers generally provide their own tools, equipment and supplies necessary to perform their work. This contrasts with employees, for whom the employer provides the necessary equipment.
5. Unique expertise: a sign of professional autonomy
Self-employed workers usually have specialized skills that are not available within the client corporation, which distinguishes them from employees who may occupy more generalist roles.
6. Job title: employee or independent contractor?
Contractual agreements clarify the worker's status as an independent contractor to avoid any confusion about the nature of the employment relationship.
The difference between being an employee and being self-employed is not just a question of terminology; it has profound implications for financial management, responsibility and job security. For corporations and workers alike, ensuring an understanding of contractual terms is not just good practice; it is a regulatory necessity.
By taking these criteria into account, professionals can ensure that labor relations are structured in a fair and legal manner, promoting a healthy and compliant professional environment.
For your business law needs, contact us: info@cgblegal.ca
Catherine Gosselin