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Self-employed worker

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A self-employed worker is an individual hired by a company to perform a specific service. According to the Canadian Revenue Agency, the intent of the employer when going into the relationship and the degree of control the employer has over the person are important factors in distinguishing between an employer-employee or a business relationship. Factors differ if the work relationship is in Quebec.

For entrepreneurs, the main advantage of hiring self-employed workers is that, unlike for regular employees, they are not responsible for deducting Canada Pension Plan contributions (Quebec Pension Plan in Quebec), Employment Insurance premiums and income tax from the remuneration. The legal responsibilities of the employer are also different when hiring self-employed workers. For example, they do not have to provide vacation, sick leave and overtime pay to self-employed workers.

There are a number of other factors that distinguish self-employed workers from typical employees.

  • They have the right to work for other companies.
  • They are responsible for paying provincial and/or federal sales taxes, but also have the right to claim certain deductions as business expenses.
  • They typically use their own tools, space and equipment.
  • They are not subject to detailed instructions, supervisions and discipline.
  • Their employment is not subject to the same employment legislations.

The Canada Revenue Agency has a useful guide to help determine whether a worker is an employee or a self-employed worker for tax purposes. You can read it here.

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