A contractor is an independent individual who runs their own business. They are engaged to perform a specific job, and they have the freedom to determine how they will complete it. Once the job is finished, the contractor sends an invoice for the hours worked or the completed task and receives payment accordingly. Unlike regular employees, contractors are not entitled to paid vacation or sick days, but they also have the autonomy to decide how they perform their work without being subjected to direct supervision.
Additional expenses, such as cell phone bills or parking fees, may be considered eligible reimbursements if both parties agree and the contractor includes them in their invoice.
Example: James is a contractor because we hired him to film a panel and produce a recap video. He has the flexibility to decide how he approaches the task and then sends us an invoice accordingly. He can provide a fixed cost for the job or charge based on the number of hours he worked to complete it.
If we love James' work but don't want to hire him as an employee. Instead, we can offer him a Retainer. With this arrangement, he will receive a fixed amount each month for the work he does as an independent contractor. While he can invoice us for additional expenses like a cell phone bill, vacation pay and sick days won't be provided. However, James will be eligible for bonuses and can choose his own working hours. As long as he completes the assigned tasks, the retainer will be paid in full.
An employee plays a crucial role in the business, entitled to overtime pay, public holidays, and paid vacation. They receive an annual salary, which is distributed in equal monthly instalments. For instance, Leo currently functions as a contractor, but based on the following regulations, she should be classified as an employee.
- The work Leo performs is integral to the business's operations.
- We have the authority to determine her tasks, payment amount, work location, and working hours.
- Leo is not allowed to subcontract her work to others.
- The business retains the right to suspend, dismiss, or apply other disciplinary actions to Leo.