T4 Slip Review - Are They Employees?

Construction contractors are often confused when it comes to dealing with people who provide labour and sub-contract work. Because of the nature of the business, the confusion lies in whether the service provider is employed or self-employed.

A contractor may have individuals providing services who consider themselves to be self-employed or who don't want to be treated as employees, even if they are! Alternatively, a contractor may consider those providing labour as sub-contractors (or self-employed) when they are and should be treated as employees.

Over the years, the courts have developed criteria to be used in evaluating whether an individual is an employee or is self-employed. The following questions are a starting point to determine this status:

• Has the individual entered into a contract of service (an employee) or contract for service (self-employed)?
• What level of control does the payer have over the worker?
• Does the worker provide his or her own tools and equipment?
• Can the worker subcontract the work or hire assistants?
• Is there a degree of financial risk taken by the worker? Does the worker have the potential for profit or loss?
• What is the degree of the worker's responsibility for investment and management?
• What does the written contract state?

Educational Resources: Excerpted from Advanced Bookkeeping for a Selection of Business Profiles, one of the courses that comprise the Bookkeeping Services Specialist program.