Defining the difference: employee or independent contractor. The legally-recognized choices of selling one's services today are
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AbstractLike obscenity, employment may be hard to define, but it is easy to recognize when we see it. It usually means the indefinite relationship where the worker (employee) stands by to perform responsibilities on a regular and continuous basis at the request of another person (employer). In return for the employee s dedication and fidelity to the employer s overall purpose, the law implies certain obligations on the part of the employer. These include requiring the employer to give the employee reasonable notice of termination (or full pay in lieu of that), which period furnishes an opportunity for the employee to find alternative work arrangements. This acknowledges the employee s sacrifices for the employer to keep commercial secrets confidential, to apply one s personal skills for the benefit of the employer, to refrain from working for a competitor at the same time, and to be available (usually on a full time basis). There can, of course, be part time and temporary employment. Nor does it have to be indefinite. It can be for a fixed period of time. The relationship need not be expressed in writing unless it is for a fixed period of time over one year. This type of work relationship developed as employment. Even where the parties did not use the term at the time of making the agreement, the relationship would usually constitute employment by default. In Canada, the employment relationship is a specialized form of contractual relationship. Over the centuries, certain moral expectations arose that had to do with employee incapacity due to illness (Dartmouth Ferry Commission v. Marks, 1903-04), the voluntary provision of group benefits and, especially today, the employer s obligations to share its profits with its workers, and preserve jobs during economic hardship of the employer. The modern uncertainty lies in attempts by both sides to structure an independent contract relationship for mutual advantage such as the minimization of payroll costs, income taxes, and to maximize flexibility and freedom. One can readily see the trade-off advantages to both service provider and recipient to depart from the traditional model of employment. As payroll costs and legal obligations to employees continue to increase, employers will prefer a more flexible out-sourcing structure. As taxes, payroll deductions, and employment uncertainties increase, workers will prefer the same. Even some employees would likely prefer to be able to sell their exclusive full time services to their one employer through their personal services company, but the tax legislation ignores this structure and allows taxation on the basis of employment.
Article deposited after permission was granted by the editor of LawNow magazine, 06/28/2010.