employee vs independent contractor

October 11, 2021

A contractor is someone who is in business for themselves, they are asked to perform a job, it is up to them to decide how they will perform this job. Once they perform a job they send an invoice for the hours or the job done and get their invoice paid. Because it is up to them to decide how they work, they are not eligible for paid vacation or sick days, but they also can't be disciplined on how they should be doing their job. Something like the cell phone bill and parking are extra expenses that a contractor can invoice the company for if both parties agree those are eligible reimbursements. An example: James is a contractor because we ask him to perform a job, e.g. film a panel and produce a recap video. He does the job the way he wants and then invoices us. He can say here is how much he charges per job, or he can say it took here 30 hours to do this, he charges x$/hour so here is how much it costs.

An employee is essential for the business. They are eligible to have overtime pay, public holidays, and vacation with pay. An employee is paid an annual Salary in equal instalments each month. Leo for example is technically an employee because her job follows regulations below even though right now we pay her as a contractor.

  • the work the individual performs is an important part of the business.
  • we decide: what she is to do, how much she will be paid, where and when the work is performed
  • the individual cannot subcontract their work to someone else.
  • the business has the right to suspend, dismiss or otherwise discipline the individual

Alternatively, we can offer Melina a Retainer which would simplify all of this. We can say we will give you x amount a month for you to perform work for us as an independent contractor. You can invoice us for extra reimbursements (e.g. a cell phone bill) but we will not offer you vacation pay or sick days. you are however eligible for bonuses and you determine your hours of work. As long as the job we ask you to do is done, the retainer is payable in full effect.

Written By Dana M