The question about whether someone is an employee or a subcontractor is a frequent topic of discussion, and I have spoken about this before. However, a recent federal court case has introduced a new problem. The court case involved a person who was characterized as a subcontractor and worked for the company for a long time. When the company decided that they no longer needed the services of the subcontractor, he sued them, asking for a severance payment. The court looked at the situation and determined that the subcontractor was entitled to the severance payment. The reason, of course, was that although they called him a subcontractor he was in fact an employee. How do you decide?
If you tell someone when to come to work and when to go home and they use your tools and equipment on your premises, chances are that they are an employee. A subcontractor works for a number of different customers, they generally work when they feel like working and they use their own tools. If you have employees that you are calling subcontractors and you think that the only risk you are facing is having to pay their CPP and EI, if you get caught, here is another risk, the risk of having to pay severance.