Oct. 30, 2017 "I’m an independent contractor that feels like an employee": Today I found this article in the Globe and Mail:
THE QUESTION
I accepted a project-management position as an independent contractor but they tell me when and how to do my job, even down to what shoes to wear. It's really a full-time employee position. I have been challenging them on this, and they are now threatening to terminate the contract.
THE FIRST ANSWER
Daniel Lublin
Partner, Whitten & Lublin Employment & Labour Lawyers, Toronto
Mischaracterizing employees as contractors is the biggest façade in workplace law. Many contractors are such in name only. Workers and their employers have agreed to portray themselves in this fashion in a mutual attempt to avoid payroll taxes, government remittances and other statutory liabilities.
However, when the relationship breaks down, the individuals sometimes contend that they were legally employed, in an effort to gain a right to severance. Many have a case.
However, when the relationship breaks down, the individuals sometimes contend that they were legally employed, in an effort to gain a right to severance. Many have a case.
A true independent contractor has actual autonomy over how and when to perform the job and essentially is operating in a business of their own. These workers are not owed any severance pay. On the other end of the spectrum is an employee, with all concomitant rights to termination pay.
There is also a recognized middle ground, referred to as a dependent contractor.
Dependent contractors have key features that resemble employment in important ways.
They usually work for only one employer, for long periods of time, and they are told how and when to perform the job, to name only a few factors. Dependent contractors also often perform the same or a similar job that other employees of the organization perform, the only difference being that they invoice for services and pay their own taxes. Canadian courts have ruled that dependent contractors have severance rights – and often the same rights to severance as actual employees.
Dependent contractors have key features that resemble employment in important ways.
They usually work for only one employer, for long periods of time, and they are told how and when to perform the job, to name only a few factors. Dependent contractors also often perform the same or a similar job that other employees of the organization perform, the only difference being that they invoice for services and pay their own taxes. Canadian courts have ruled that dependent contractors have severance rights – and often the same rights to severance as actual employees.
In your situation, if you are laid off, fired, constructively dismissed or otherwise forced to leave, you can make a claim to your provincial ministry of labour to try to obtain statutory termination or severance pay, or for larger cases, you can sue your former "employer" in court.
THE SECOND ANSWER
Kyle Couch
President &CEO, Spectrum Organizational Development Inc., Toronto
There is a world of difference between being hired on as an independent contractor or as a consultant. While your other clients may value your ability to provide insight and perspective, your current employer is simply seeking out your functional capability.
Many progressive organizations are taking a contract approach for the majority of their work force – allowing the companies to be far more nimble in their ability to change the makeup of their in-house skill sets as their business needs change.
This approach ensures tremendous upside for the company, but it may make things more challenging for the workers themselves who must rely on their ability to remain current in their skills as free agents as they move from contract to contract.
Your role in this new gig economy is to understand which part of a business's life cycle you fit into, and market yourself appropriately. This way, you can guarantee yourself continuous stable employment. As a project manager, you should have noticed the lack of project charter, and realized you were being handed a job description.
sensfan
"There is a world of difference between being hired on as an independent contractor or as a consultant." Is there a typo here? Aren't "independent contractor" and "consultant" synonymous?
OffTheClock
2 days ago
Scope of Contractor's work is clearly defined when the contract is signed, whereas a Consultant's promised deliverable is a not so easy to define magic bullet.
Tol de Rol
2 days ago
Could the Globe please use proper English? I'm an independent contractor WHO feels like an employee. Who for people, that for objects. Thank you.
Allen Ginsing
2 days ago
The GM hires people for their radical ideology of feminism. That should explain a lot.
8 Reactions
Dr. Howland Owl
2 days ago
In reply to:
Could the Globe please use proper English? I'm an independent contractor WHO feels like an employee. Who for people, that for objects. Thank you.
— Tol de Rol
That’s OK as a rule of thumb but it’s not a real rule. Besides, we've been using ”that” as a relative pronoun to refer to people for centuries. Grammar Girl reports finding its use in Chaucer. Give it up, man.
Tol de Rol
2 days ago
If you want to talk like Donald Trump, go ahead. Listen to American politicians: Trump uses that, Obama uses who. One is edumacated, the other not.
Tol de Rol
2 days ago
In reply to:
That’s OK as a rule of thumb but it’s not a real rule. Besides, we've been using ”that” as a relative pronoun to refer to people for centuries. Grammar Girl reports finding its use in Chaucer. Give...
— Dr. Howland Owl
And yes, I'm quite aware of how far it goes back in England. So it's a curious story. The Americans use it because they imported it 250 years ago and it never evolved. In the case of this word, they speak 18th century English. In English, however, as written speech evolved, the distinction was introduced, and it's a nice nuance and provides a nicer tone to the language. (Who enjoys hearing an American say "My girlfriend that works in a store"?) So, curiously, Canada was more tied to the evolution of British English, and "who" took hold here more generally than in the US, where it is used largely by an educated elite. But now, as our language is under ever more intense assault by American English, people like the teenaged headline writer here aren't even aware of the distinction or the difference between spoken and written English, or the need to match the tone of the Globe. Sad!
1 Reactions
Ned Ludlum
2 days ago
This is interesting to me personally since I teach at Ontario colleges (which are currently on strike --- I'm on lay-off due to the fact that I teach too many hours to be in the union).
To make ends meet in one year I often teach at multiple colleges (depending upon the semester) and I've been billing trough my consulting firm whenever possible. I and others have recently been told that all future work will have to be through a T4 because of rule changes by the CRA.
To make ends meet in one year I often teach at multiple colleges (depending upon the semester) and I've been billing trough my consulting firm whenever possible. I and others have recently been told that all future work will have to be through a T4 because of rule changes by the CRA.
I don't know i that is true or not. The management at the colleges love to play games with the rules.
OffTheClock
2 days ago
Sounds like your consulting work will be taxed at source and you'll have to prove employment expenses and apply for a refund. It's not a crime to claim something you believe to be employment related, so cast the net far and wide and go all out on employment expenses. Also, be sure standard payroll deductions, such as EI, etc. have not been applied to your Consulting income.
OffTheClock
1 day ago
In reply to:
This is interesting to me personally since I teach at Ontario colleges (which are currently on strike --- I'm on lay-off due to the fact that I teach too many hours to be in the union). To make...
— Ned Ludlum
If you're commuting between colleges during a single 24 hour period then you should submit expenses-against-income for car mileage and/or transit costs and meal expenses between jobs to the CRA. I don't know if it'll be approved, but worth the try. Also, to freshen up between jobs get a membership at a decent community centre with a good deli, sauna, hot-tub and gym, and claim it as an expense: It's a legitimate expense because it can only improve your performance (aka taxable earning capacity) and personal self-esteem at the second job where your energy reserves are potentially lower than they were at the first job.
a word
1 day ago
In reply to:
This is interesting to me personally since I teach at Ontario colleges (which are currently on strike --- I'm on lay-off due to the fact that I teach too many hours to be in the union). To make...
— Ned Ludlum
Since you are in Ontario, treating employees as “contractors” will be illegal (legislation currently in second reading), so that is likely why T4s will likely be issued but you will be entitled to the same things as the employees. In fact, you will be an employee, with all that thst entails.
JPP221
2 days ago
While employers should behave appropriately, this case goes to the other extreme. If you don’t want to be a contractor, don’t accept a job that clearly says as much, right at the outset, and then complain about it after the fact.
NadezhdaKrupskaya
2 days ago
Most people who accept jobs under such terms do so because they need to eat and have a roof over their heads. Many also have families to support.
1 Reactions
a word
1 day ago
Many people hired on contract would prefer to be an employee, but companies have made the choice to go this route (although it seems to contradict their goals of attracting and retaining talent). The idea that contract work is a first choice for everyone in order to avoid taxes is misleading.
Surprising that neither response mentioned that Ontario is currently in the process of making treating people on contract as employees, without providing the same benefits, illegal. It is part of the legislation to raise the minimum wage.
We see the political consequences in the U.S. of believing there will be no pushback from workers no matter how desperate their lives become if corporations solely on shareholders and profit at the expense of people.
Albert74
2 days ago
So the second answer indicates the independent contractor was being handed a job description which means to me they are an employee with all the protections of the Min of Labour including severance in the event of dismissal.
1 Reactions
AlexB2
2 days ago
One of the main problems of employment contracting is that employers do not pay the contractor for the business risk they take on by being contractors. If they did there would be less incentive for them to do so.
To a certain extent this is a management fad and false economy. However, as long as the bean counters control things there is not likely to be much change.
In the example it is unclear to me the scope of the project management work. If the job involves full time hours then I think the worker has a point. However, management is not likely to change its position.
If he/she is only working part time hours then they should find another contract position to complement this one. That may give them more leaverage.
Alceste
2 days ago
Readers might be interested in the 2009 Ontario Court of Appeal decision of McKee v. Reid's Heritage Homes: a person hired as a contractor was actually an employee and entitled to severance of 18 months pay in lieu of notice.
You can find the full decision here:
It's 64 paragraphs.
Nov. 6, 2017 "Do I have to accept a new- and reduced- pay structure?": Today I found this article in the Globe and Mail:
Nov. 6, 2017 "Do I have to accept a new- and reduced- pay structure?": Today I found this article in the Globe and Mail:
THE QUESTION
My employer is trying to coerce me into signing an agreement on a new pay structure, which is a reduction of $50,000 from my current pay – a commission-based plan with earnings of $250,000.
Am I forced to take this new plan or am I entitled to my current pay structure, which shows no expiry by contract? I have been avoiding signing the new agreement, but don't want to be terminated over resistance to it, which they seem to be threatening to do.
Am I forced to take this new plan or am I entitled to my current pay structure, which shows no expiry by contract? I have been avoiding signing the new agreement, but don't want to be terminated over resistance to it, which they seem to be threatening to do.
THE FIRST ANSWER
Eileen Dooley
Vice-president, VF Career Management, Calgary office
Find out why the employer is wanting to implement a new pay structure, as chances are it is not just you who is affected.
Times change, and along with that go the jobs people do, and the compensation packages they receive.
There could be legitimate reasons for needing to change the pay structure, such as reworking the main revenue streams or calculating how much sales are expected going into the new year(s). The point is that many factors could be at play here, with your employer wanting to keep you, but needing to revisit the terms.
In addition, if they want to negotiate, so can you. Perhaps work in a compensation review in 12 months or an increase in commission after a certain point of sales. Either way, there could be a win-win here if both sides understand where each other is coming from, and where they want to get to.
THE SECOND ANSWER
Bruce Sandy
Principal, Pathfinder Coaching and Consulting, Vancouver
I understand your concern. No one wants to feel coerced by their employer into a new compensation agreement. Be curious with your employer about what is the reason that they want to change your compensation – e.g. because of a downturn in the sector or the economy or because of performance-based reasons.
Are they doing this with all your peers (e.g. throughout the company) or are they singling you out for this compensation change?
Are they doing this with all your peers (e.g. throughout the company) or are they singling you out for this compensation change?
If this is happening with all your colleagues and you want to stay with your employer, then you will have to be prepared to negotiate regarding compensation levels, including bonuses and timing.
But if you are being singled out, then you will want to see if they are open to negotiating and talking about how to improve your performance. If they are not, then you will want to seek advice from an employment lawyer, polish up your résumé, start networking and looking for other employment opportunities.
But if you are being singled out, then you will want to see if they are open to negotiating and talking about how to improve your performance. If they are not, then you will want to seek advice from an employment lawyer, polish up your résumé, start networking and looking for other employment opportunities.
Do not leave or quit until you find another opportunity and/or your employer offers you a package. An employment lawyer will advise you about this and how long you can operate under your current contract.
Lamont Cranston
20 hours ago
As soon as I saw "commission" in there, I see territories, etc.
Companies do this all the time, especially as they go from being new in a market, to becoming more stable...If for no other reason, there is the potential internal embarrassment of a high performing sales rep making more than the President (in straight salary, stock options, etc., are another thing)..
Generally you can waste a lot of time trying to "fight it", but you likely will not win.
Two courses - learn to live under the new structure (since all commission structures are designed by humans, you will find other ways to make up your income)
Or
Move to another company that better fits your income desires - with a caveat
Some people who think they are 'sales stars" move to companies with more open commission structures - only to find that probably better to be on a larger, winning team, that the "rain maker" on a smaller one.
2 Reactions
AdamsBob
10 hours ago
Commission structures can be negotiated by both parties. I've done it before. After a few years, I finally got it : profit margin is the big decision maker. It does take some time and skill, but that's what separates the men from the boys. Unless you have an as shole boss, profit makes you money.
highandry
20 hours ago
The advice in this article is bad. The question needs to be answered by a lawyer, not some HR coach. Basically, one first needs to look at the employment contract to see what language is used about wages. Next look to relevant employment law statues. Last look to the common law to see how the statues have been interpreted. This person probably at least requires a certain period of notice for a pay decrease, otherwise a court may find this to be constructive dismissal.
4 Reactions
AlexB2
2 hours ago
This commission based sales person seems to be doing very well with an income of $250K. He/she must be a top performer. In consequence the company may be very reluctant to let them go but be facing issues not mentioned in the story but described by other posters.
All things considered, if this person likes their job they should think hard about the offer. The $50K they will lose is subject to a 50% marginal tax rate so the loss in income is half. Giving on this issue may lead to new opportunities with the employer.
If on the other hand if they work in an industry where sales people are highly mobile and their normal income levels are in this range they should consider other employment options.
As with so many issues presented in this column context is everything and there is not enough said about it here.
Douge4
17 hours ago
If your pay structure is documented by contract and your annual earning (base and commission) have been consistently at $250k, then, yes, this is a problem and could be considered constructive dismissal. Generally speaking, a downward pay adjustment of more than 10% (Ontario) would fall into the contructive dismissal realm. In this case, they would at least need to provide notice (1-8 weeks). If you choose not to take the cut and they dismiss you, a strong severance could be expected. The law doesn't care too much about your company's internal structure and whether you are making too much; it cares about what is in your contract. See a good employment lawyer. The only caveat to this is whether you are having performance issues and whether they have been communicating those issue to you.
2 Reactions
On-Line Reader
1 day ago
If you are being "downwardly compensated" and the company otherwise doesn't seem to be under any fiscal stress, you have to wonder if the HR department hasn't been reviewing things and discovering they are being too generous with you.
Or if you are the only one being asked to take this new pay structure, are you being 'unofficially' demoted?
Either way, it might be money well-spent to talk to a lawyer to find out what your legal standing is.
And dust off your resume. Absent any solid reason to do this, the company may not be all that great a place to work in going forward.
4 Reactions
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