MEMO To: Jean-Paul, Facilities Supervisor Date: September 19, 2023 Re: Regarding Monica’s Contract In the last Finance meeting, there were some concerns regarding Monica's status whether it should be a 'contract for service' or a 'contract of service'. As per my analysis, the status for Monica should be considered under the 'Contract for Service' category. The determination of whether a worker is an employee or an independent contractor requires a thorough review of the below factors. 1. Working relationship - Industrial Injection Molding Solutions has an annual contract with Moncia. Monica is hired to supply services to the company, it is strictly a business-to-business contract. 2. Control - although there are weekly reviews with Monica regarding the work to be completed, she is not restricted to hours of work and can determine her working hours. Also, her business services are not limited to the company, she can onboard other Clients and can provide services to different businesses at the same time. 3. Tools and equipment - Monica uses the tools available with her and is responsible for their maintenance costs. However, she might utilise the company’s equipment, if available, to complete the job. 4. Subcontracting work or hiring assistants - Monica hires part-time assistants to help complete the work as deemed fit by her. She is responsible for their recruitment and dismissal. The company has no obligation to these assistants. 5. Financial risk - Monica would be liable for any financial liabilities if the project is not completed as stated in the contract. 6. Responsibility for investment and management held by the worker - Monica does not receive any benefits from the company like insurance or vacation pay. She raises an invoice and is paid a monthly fee as agreed in the contract. 7. The worker’s opportunity for profit - Monica is compensated by a flat fee and will compensate any assistants hired by her on her own. If further analysis is required, I have attached the Canada Revenue Agency (CRA) Request for a CPP/EI Ruling – Employee or Self-Employed? – CPT1 form. The company can fill out this form and send it with supporting documentation to the CRA for a ruling on the individual's status. I have also cited a few references below that have helped me reach my conclusion. Please feel free to reach out to me if you would like to discuss this further or for any questions. References: Book - Payroll and It’s Compliance Legislation Chapter 1, Pages 27 – 31 Website - https://www.canada.ca/en/employment-social-development/programs/lawsregulations/labour/interpretations-policies/employer-employee.html Website - https://www.lexagle.com/blog-en-sg/the-difference-between-a-contract-of-service-and-acontract-for-services#toc-3 Video - https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-videogallery/transcript-employer-employee-relationship.html
