Independent Contractor Agreements

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The gig economy has, in many ways, turned the traditional notion of an employment relationship on its head. Whereas in the past, most employees were hired on a permanent basis, many employers now prefer to hire independent contractors to support a particular project on a short-term basis or a smaller role on an ongoing basis.

Though independent contractors have always been a vital part of the economy, they are now common in more industries than ever before. The first thing to come to mind when you think of an independent contractor might be someone who works in the trades who you hire to renovate part of your house or a specialist hired to consult on a big project. However, independent contractors work in a wide variety of fields.

For the independent contractors, their ‘freelance’ status can give them flexibility to choose projects they find particularly fulfilling, profitable and condusive to their lifestyle. For businesses, companies and organizations, hiring workers on a contract-basis can be a cost-effective practice. You can hire a specialist to address a workplace need beyond your current workers’ capacity at a lower cost than hiring another permanent employee. No need for termination pay or benefits. No need to offer sick days or vacation time.

Independent contractors can be highly economical for businesses of all sizes that need professional work done on a temporary or project basis – if their contract agreement is properly drafted.

While there are many benefits of hiring an independent contractor, there are several risks you may face if your independent contractor agreement is not properly written.

A contractor is not your employee. Therefore, an independent contractor agreement is not an employment agreement. Giving your contractor an employment agreement would make them your employee and therefore entitled to benefits such as vacation pay, sick days, termination notice and various other employee rights set out in the Employment Standards Act (ESA).

Employers should have a comprehensive, well-drafted and enforceable agreement to present to an independent contractor that details the terms of the working arrangement.

An independent contractor agreement should set clear expectations regarding the work that the contractor is to complete and the compensation you will provide in turn.

A proper independent contractor agreement will define the relationship between and expectation of both you and your contractor. Details that should be contained in an agreement include, but are not limited to:

  • The work to be completed
  • Delivery timelines and deadlines
  • Termination procedures
  • How and when payment(s) will be made
  • Intellectual property assignment
  • Dispute resolution
  • Non-disclosure of confidential business information
  • How expenses associated with the project will be handled.

If you, your business or organization require the services of an independent contractor, you can trust the professionals at KCY at LAW to prepare a clear, comprehensive, fair and enforceable independent contractor agreement. Call us to book your consultation at 905-639-0999 or fill out our online form here.

Amending Contracts

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Times change and so do circumstances. There are many legitimate reasons an employer may want or need to amend the terms of an employee’s contract. Perhaps there is an economic downturn and you need to make cuts to benefits in order to avoid terminating the employment of any of your staff. Or maybe you want an employee to take on new tasks to compensate for an employee on parental leave. Whatever the reason – changing business needs, means of production, or economy – employers have a right to alter existing employee contracts.

But you must be cautious.

Amending Contracts Requires Consideration

A unilateral change to an employee’s contract that significantly reduces compensation, status or substantially alters another fundamental aspect of the employee’s job – work location, hours, duties – that doesn’t give the employee reasonable consideration and notice will constitute a constructive dismissal and result in you paying damages for wrongful dismissal.

In order to make a significant change to an employee’s contract you must receive the employee’s written consent to the changes. Furthermore, these changes provide the employee with an exchange of valuable consideration.

In this legal context, consideration means that there is an exchange of mutual benefit to both the you and your employee. Consideration may be a promotion, better benefits or more vacation time as a sort of exchange for other alterations to their employment contract. Consideration is key when presenting an employee with changes to their employment contract.

Furthermore, an employer must give an employee reasonable notice of the proposed changes to their employment contract. The length of this notice is generally the same as a without cause dismissal and can therefore be as long as months or even years. Therefore, if an employee has been with your business for three years, they would be entitled to three weeks’ notice to consider the changes to their contract and accept the offer.

This notice period gives the employee the opportunity to negotiate the terms of the change to their employment contract, or to find new work if they believe the new employment terms and conditions would be untenable.

If your employee chooses to reject your proposed changes to their employment contract, you have two options:

  1. You may terminate the employee without cause by providing appropriate notice or pay in lieu thereof and then offer re-employment to the same employee on the new terms.
  2. You may accept that there is no agreement to your proposed changes and continue the employment relationship with its existing terms.

Decisions should be made by employers on a case by case basis to determine if unilateral changes, termination or keeping employment the same is the best solution under the circumstances.

To avoid the financial and reputation costs of a constructive dismissal suit, always consult with an employment lawyer before making changes to your employees’ employment contract. KCY at LAW can help you implement fair and enforceable changes to employment contracts. To book your consultation, call 905-639-0999

Pay Transparency

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On March 6 of this year, the Ontario government introduced Bill 203, the Pay Transparency Act. The bill is part of a growing push to narrow the persistent gender wage gap. The gap, which is as high as 30 per cent in some sectors, has barely budged in the last decade. If passed into law, the bill will hopefully help to create a more equitable employment landscape for all Ontario workers.

Pay Transparency for Ontario Workers

In its present form, the Act demands greater transparency from businesses and organizations about their employees’ compensation.

It’s often frustrating for job-seekers to come across a job posting without information about the position’s compensation. It can feel futile to go through all the effort and stress of a resume, cover letter and an interview only to learn that the hourly rate or salary for the position to which you are applying is well below your expectations. On the other hand, being asked to state your salary expectations can feel like rolling the dice. Balancing your desire for fair compensation for your time and talents and conversely not wanting to seem exorbitantly demanding and entitled is a tight rope to walk.

Bill 203 seeks to remedy this by requiring that public job postings state the position’s salary or salary range. Furthermore, Bill 203 would prevent employers from asking job candidates about their compensation at past jobs. This way, being underpaid or overpaid in the past, won’t influence your future compensation.

Another significant barrier to pay equity is not knowing how much your colleagues are making. In many workplaces, it is either forbidden or taboo to ask coworkers what they’re taking home at the end of the month. This makes it easy for employers to pay employees different amounts for the same job. The Pay Transparency Act would prohibit employers from punishing or in any way making a reprisal against employees for discussing or disclosing compensation between one another.

Tracking Pay Transparency

The Act would also require that some employers file ‘pay transparency reports’ tracking compensation gaps in gender and other diversity characteristics. It is not yet clear which employers would be required to submit these reports but it is reasonable to assume that such audits would only be required of larger companies and those in sectors where the wage gap is known to be the most egregious. Failure to comply with the act would lead to an investigation by, and penalties from, compliance officers.

The Act raises a lot of questions for employers, especially regarding the frequency of transparency reports, how compliance will be assessed and what penalties from compliance officers would look like. Much is and will remain up in the air as this Bill makes its way through the legislative process. If passed, the Act will come into effect on January 1 2019.

KCY at LAW Can Help

If you are concerned about how the Pay Transparency Act would affect your business or organization, or if you would like to develop workplace policies to improve gender and pay equity in your workplace, call the employment law experts at KCY at LAW to book your consultation today! 905-639-0999