Learn about other laws that apply to employees
Question & Answer
Why is an employer saying I have to be an independent contractor?Along with the (ESA), an employer may want to avoid other laws that they would have to follow if you’re an employee.
Employment Insurance
Employers have to make Employment Insurance (EI) payments for their employees. They do not have to make these payments for independent contractors.
If you’re an employee who loses your job, you may be able to get EI benefits.
If you’re an independent contractor, you can’t get regular EI benefits when you’re out of work. To get other EI benefits, like sickness or parental benefits, you have to make all of the EI payments yourself while you’re working.
Canada Pension Plan
If you’re an employee, you pay half the amount that has to be paid for you to the Canada Pension Plan (CPP). Your employer pays the other half. These payments have to be made so you can get:
- CPP benefits when you retire
- CPP disability benefits, if you qualify for them
If you’re an independent contractor, you have to pay the full amount of CPP payments yourself.
Workers’ compensation
An employer has to make payments to the Workplace Safety and Insurance Board (WSIB) for its employees. WSIB pays for injuries or diseases that are related to your work if you’re an employee.
Canada Revenue Agency
If you’re an employee, your employer has to subtract income tax from your pay and send it to Canada Revenue Agency.
If you’re an independent contractor, you have to tell Canada Revenue Agency how much money you made and pay all of the income tax that you owe.
