But why is it important to determine the right status?
Because the legal and tax obligations towards a self-employed worker and an employee are very different. It’s important to know that a worker can consider himself self-employed, or be considered as such by the person who entrusts him with a job, while still being considered an employee according to the criteria of the Act.
When verifying the situation of workers, the various legal authorities may conclude that a worker considered to be self-employed has the status of an employee instead. The employer will then have to pay the contributions that should have been paid, or may be accused before the law of failing to respect the law’s protections towards an employee. This can represent a very large sum of money, especially if the employee has been with you for several years or the offence is significant.
Here’s what differentiates a self-employed worker from an employee, according to Revenu Québec, CNESST and La loi sur les normes du travail.
Revenu Québec sets 6 criteria to determine the employment status of workers for tax purposes:
1. effective subordination in the workplace;
2. economic or financial criteria;
3. tool ownership;
4. integration of the work carried out;
5. the specific result of the work;
6. the attitude of the parties to their business relationship.
The CNESST establishes 5 criteria to determine the status of workers and whether they are considered employees or self-employed for the purposes of the Quebec health and safety plan:
1. Method of recruitment;
2. Working hours;
3. Employee benefits;
4. Replacement and assistance;
5. Possibility of financial losses or existence of fixed costs.
The Act respecting labour standards sets 3 criteria for determining whether a worker is protected by its provisions.
“employee”: a person who works for an employer and is entitled to a salary; this word also includes a worker who is party to a contract under which:
1. he binds himself to a person to perform a specific task within the framework and according to the methods and means determined by that person;
2. he undertakes to supply, for the performance of the contract, the materials, equipment, raw materials or merchandise chosen by that person, and to use them in the manner indicated by that person;
3. he retains, by way of remuneration, the amount remaining from the sum received in accordance with the contract, after deduction of the costs of carrying out this contract.
However, as is the case for the notion of worker in the Civil Code, it is an overall assessment of the criteria and their sub-criteria that determines a worker’s employment status. A job in which only one criterion is fulfilled can therefore be considered as salaried work if the Court rules that this criterion alone determines its status, even if the worker does not meet the other 2 criteria.
As you can see, defining the right status can sometimes be complex. Please do not hesitate to contact our team if you have any questions.
Sources : http://www.legisquebec.gouv.qc.ca/fr/showdoc/cs/N-1.1 https://www.revenuquebec.ca/fr/services-en-ligne/formulaires-et-publications/details-courant/in-301/ https://www.csst.qc.ca/employeurs/assurance/declaration-salaires/montants-declarer/pages/distinction-travailleur-autonome.aspx http://www.legisquebec.gouv.qc.ca/fr/showdoc/cs/N-1.1
