The purpose of this memo is to explain, whether Denise is an employee of Life Insurance Company or a private contractor in accordance to employer/ employee relationship rules and regulations in Canada. Canadian law provides a protocol on how to determine, whether an individual is an employee or an independent contractor. However, the difference between the two is not always clear and the fact that Denise has a contract with the company does not necessarily mean that she is not an employee. The importance of understanding such a difference is that, it protects the company from liabilities, such as penalties imposed by law. The contract may be of service (employee) or the contract for services (contractor). Conclusion on whether Denise is an employee depends on control exercised on him, ownership of tools and equipments at the working place, chance of making profits, business integration and chances of risks. This also helps the health and safety officer to know who is an employee, and apply part II and part III of the Canadian labor code.
The control on what and how the work is to be done can help us know whether Denise is an employee of the Life Insurance Company or not. “…A principal has the right to direct what the agent has to do; but a master has not only that right, but also the right to say how it should be done,” as set Regina v. Walker (1858), he also helps to clarify the relationship between an employee and the employer. Denis knows what is expected of him, but the employer does not exercise any control over how this should be done. Lack of control means that Denis may as well contract out the task to another contractor, as long as the new contractor will be able to meet the standards expected. Similarly, there are no restrictions that she should not provide similar services to another company.
On the basis of payment, there are evident that Denise is an employee. Employees are paid their salary after a fixed period of time, either hours, days, weeks or even months. For the case of Denise, she receives her payment every month (Geoffrey, 2000). This is contrary to a case of independent contractor, who gets his payment in lump sum. However, there is no specified daily working hours, which give her independence similar to one possessed by an independent contractor. Similarly, the employer does not contribute to the employee benefit plans on behalf of Dennis. There is no indication of any control over time that Denis devotes to the company. Furthermore, he is not provided with any routine or schedule describing the sequence, in which the work should be done. He has been given the conditions on what is expected of her; to shovel snow, mow lawns, and maintain fences. There are no regulations given on how this should be done as long as the place is neat, in good repair, and easily accessible for employees and customers. This kind of independence is only possible in the case of the independent contractor.
In case of an employee, furnishings and other equipments necessary at the work place are provided by the company. For Denise case, she uses her own tools and snow plow, but the lawn mower and snow blower are owned by the company (Innis, 1980). The evidence of independent contractor arises, where an individual uses her own equipments or there is a substantial contribution of her equipments in the equipments used in the working place. This is an indication of the worker being in a business just like any other self-employed contractor. The fact that Denis uses her own snow plow and other small tools means that his contribution in the equipment used for the purpose that he is employed, is substantial. Apart from providing labor, Denise has also invested her personal property in the company. This means that, if they get lost or destroyed, then she incurs the losses. The possibility of loss and use personal property provides evidence of not being an employee.
Integration of an employer’s activities with those of the employer, from the perspective of the employee, can be used to show whether one is an employee or otherwise. An individual`s work is done as an integral part of the business in case of contract of service and while for contract for service, though done on behalf of the company; it is just an accessory to it, but not integrated into it. Snow shoveling, lawns mowing and fence maintenance do not form integral part of the activities of any Insurance company. If the worker is acting on behalf of his employer and he is able to integrate his activities to those of the employer, then he could be an employee. If however, he acts on behalf of himself and can only integrate the activities of the employer to those of his, this indicates an independent contractor. The level of Denise’s activities integration gotten by answering a few questions: does she have a fixed hour schedule to conduct her activities? Is she under the direction of the employer, or is it a must for her to comply with the company general policy? Is she accorded the rights and privileges created for the purpose of the employee by the company? Denis does not have a fixed hour schedule and there is no agreements made on privileges as would be the case of employees.
Another indication of an individual being an employee is the chances of making profits. An employee earns certain predetermined amount, which is independent of profits made by the company unless provided with bonuses. A contractor’s income depends on the cost incurred in provision of service and the price charged. Denis earns a fixed amount of income, which is independent of how the company would be willing to buy her services and the cost that she incurs. This test, therefore, indicates that she is an employee. However, her contact at the site is with the manager of Accounts Payable, whose general role is to ensure that contracts are performed as per the terms and conditions, indicates evidence for an independent contract.
From the above test and information available about Denise and her activities, she is not likely to be an employee to the company. There is little control, she makes use of her properties similar in addition to those of the company, she doesn’t enjoy the privileges that other employees enjoy, the employer does not contribute employee development plan as the law requires. She also has a lot of freedom as long as she provides the services as required.