When wording a contract there are certain things that just can’t be in a contract unless you want the CRA to deem you to be a PSB. While “employers” want to protect themselves, they have to consider the consequences to their contractors, since it is the contractor that bares all the risk for additional taxes and penalties. With this in mind below are some contract items that are key considerations that the CRA and Courts look at.
Non-compete agreements - This gives the employer “exclusivity” which means you can’t have other clients. This also shows a subservient relationship where the employer is dictating terms, which is not normal in a true business relationship.
Hours of Work – Hours of work clauses are necessary to define a relationship, however they should be as broad and flexible as possible. I recommend that wording be open ended and allow for working from home. Whether you choose to work from or are encouraged is irrelevant. You simply have to have the “ability” to set your work hours and work location. It is also good to work 6 hours one day and 10 hours another. This gives the appearance of setting your own working hours, and completing projects of your own accord.
Billing for Work – Billing for the work performed is important. Where possible you don’t want to be a 9-5, 8 hours per day “contractor”, because this gives the appearance of being an employee. It is understood that there are certain billing rates that will be in effect. This is normal in any industry. You want to avoid being reimbursed for expenses. If you have expenses they should be billed for on your invoice, and have GST added to the amount being billed for.
Equipment – At minimum you should have some of your own equipment, even if it is only a laptop computer, tablet, and cellphone.
Ability to replace yourself – While this is important the simplest way to deal with this is to remain silent in the contract. Ensure that the contract simply says that the contract is between XYZ Corp and 123 Corp. Don’t mention that “Bob” has to perform all the work, and definitely NEVER say that Bob is the corporate representative that MUST perform the work. To do so is asking for trouble.