Independent Contractors
Understand the difference between an employee and contractor, and find the right way to engage and pay a worker.
Overview
On occasion, it may be necessary to engage a resource for services that cannot be provided by university employees or are not suitable to be provided by university employees. Services can be provided by third-party vendors (a company, either on the preferred vendor list, or engaged through an established procurement process), or an individual providing services as an independent contractor (IC). Services and contractors engaged through third-party vendors are not included in this guideline. For third-party arrangements please contact Supply Chain Management.
If you are contemplating an independent contractor arrangement, begin by completing the independent contractor assessment. Supply Chain Management will not initiate the supplier process or pay invoices without this assessment.
If the assessment determines that the worker should be an employee, and you would like assistance determining what kind of employee classification, launch the employee types assessment or contact hr@ucalgary.ca.
If the assessment determines that the services can be provided by an independent contractor, contact Supply Chain Management to set up and pay a supplier.
If you are contemplating engaging a contractor to perform work that falls within the scope of the AUPE bargaining unit visit this page.
If you are contemplating contracting a third party for teaching or other services normally performed by members of the academic staff, please contact your HR Partner.
Related links
Key considerations for engaging Independent Contractors
Contract Requirements
A formal contract outlining the terms of service is required. All contracts are templated and owned by Legal Services, provided by Supply Chain Management – you may not write your own. A termination clause will be built into the contract.
Business Structure
Independent Contractors must provide services through a personal corporation, have a GST/HST number, issue an invoice for services performed, and carry liability insurance and WCB.
Compensation
Compensation should be structured to allow for profit and risk of loss for the IC (eg payment based on deliverables). Out of pocket or additional expenses are approved prior to the expenditure and follow the procurement handbook.
Flexibility
ICs should be provided flexibility and discretion on how services are performed (eg hours of work, work location).
Engagement Terms
Contractors should be engaged for specific tasks or projects, not full-time and permanent engagements.
Autonomy
Independent contractors are not subject to supervision or discipline, nor do they receive any employee benefits, business cards, uniforms or offices. While they may not subject to UCalgary policies, the contract should be structured to include key policies and procedures.
Equipment and Materials
Generally, independent contractors supply their own equipment and materials. In some circumstances, UCalgary may require they use a UC-managed device and an IT email or account, especially when access to level 3 data is required.
Integration
Independent contractors are not integrated into the workforce. They cannot have signing authority or managerial responsibility with the University. Be mindful of the purpose of the event when including ICs in team and social events.
Honoraria
An honorarium is intended to be a small token of appreciation for a service provided without a set fee. If a fee schedule is agreed-upon between the individual and UCalgary, it constitutes a contractual arrangement and should be considered as either an employee or an independent contractor relationship.
Former Employees
There are special considerations for engaging former employees as independent contractors. At least one year since their previous employment in a similar area must have passed, and they cannot be engaged to do the same work they were doing as an employee. Former employees who were terminated from the University with cause shall not be engaged as ICs.
Compliance and monitoring
The University will regularly review and monitor compliance with this guideline to ensure proper classification and adherence to CRA guidelines.
Frequently Asked Questions
Find quick answers to common questions about engaging workers at the university. This section gives you clear guidance on when to hire an employee, when a contractor may be appropriate, and what steps to follow in the process. It’s meant to help you move forward with confidence and point you to the right tools, resources and contacts when you need more detail.
Information about types of employees is available on the People and Culture Engage the right resource.
- You require a specialized skill for a short-term project
- You have exhausted all efforts to find an employee for a limited engagement (eg failed searches)
- You have a need for a service that isn’t within the regular workforce, nor will it become part of the regular workforce
- You have an urgent operational need to backfill an employee for emergency purposes while a search is conducted
On rare occasion, it may be appropriate or necessary to engage an independent contractor for services that are normally provided by support staff or academic staff. If you are considering this, please consult your HR Partner before taking any actions.
To provide an honorarium to a non-employee follow the Accounts Payable process for paying under $2500. Note that from the perspective of the Canada Revenue Agency (CRA), payments for services made to an individual are either employment income or business income. The CRA does however support the notion of small payments that are not subject to the usual tax rules. In general, follow these principles regarding payment of honorarium:
- They are nominal - $500 or less in a calendar year;
- They are made to an individual for voluntary services for which fees are not legally or traditionally required;
- They are not reflective of the value of the work done;
- They are made on a one-time or non-routine basis to an individual as a “thank you”.
“Managed Device” is a user device that is centrally managed and administered by the Information Technologies (IT) department over the network to ensure that it follows the configuration standards required to maintain security, reliability and accessibility of Business Information Assets Standard. Generally, if an IC will be utilizing level 3 data they should be using a managed device. Contact it@ucalgary.ca for more information.
The assessment tool provides an outcome of “employee” or “contractor” based on the factors used by Canada Revenue Agency. In rare circumstances of significant business need or risk, it may be possible for the Senior Leader for the area to make an exception. To initiate an exception in these circumstances please discuss with your Senior Leader.
You should rehire the former employee on a temporary employment basis, especially if they are going to be doing similar work to what they did before they retired. You cannot bring a former employee back to do their own job under an independent contractor arrangement. If you need assistance on determining the appropriate employee type launch the employee type assessment tool.
If you wish to engage a former employee from another department, who has been gone for greater than one year, there is potential to engage as an independent contractor, pending the result of the assessment tool.
Contact Supply Chain Management for more information.