Working as an Independent Contractor for co-op credit

girl wearing glasses sitting at computer
 

This resource was created as a starting point to help co-op students understand some key considerations and implications of working in Canada as an independent contractor. ​​​​​​ Students must be physically present in Canada for these opportunities to be considered for co-op credit.

Co-op students who are physically located in Canada are able to pursue independent contractor positions for their work terms, as long as they meet our standard or flexible work term requirements for co-op credit! 

Whether a student is properly classified as an “employee” or as a consultant/independent contractor is a legal question, and carries with it a variety of implications. Simply using the label of employee or independent contractor is not conclusive in defining worker status. The University of Waterloo (“UW”) takes no position about whether students are properly classified as a consultant or independent contractor, or whether students should or should not enter into work relationships with companies as consultants or independent contractors. In each case, it is up to the student to make their own decision and pursue the opportunity of their choice.  

This document is not intended to be nor should it be construed as legal advice. UW does not review or comment on individual student-company contracts for this purpose. If you have questions about the terms of a contract presented to you by a company, it is your responsibility to seek legal advice if appropriate and deal directly with the company regarding the terms of the contract.

If you've found an independent contractor position that you'd like to pursue for co-op credit: 

  • Please review the information on this webpage to assist you in deciding whether you would like to proceed with the arrangement. 
  • For positions found on WaterlooWorks (Full-Cycle Service, Employer-Student Direct or Contract, Part-Time and Volunteer job boards): We only post positions for co-op credit that meet our standard work term requirements. When we know that the employer plans to hire students as independent contractors, we will note this in a disclaimer. You will be responsible for conducting your own due diligence to decide whether or not you want to apply to the role.
  • For positions found outside WaterlooWorks: Please follow our Arrange Own Job process so we can determine whether the job meets our standard or flexible work term requirements for co-op credit. 

By accepting an independent contractor position, you acknowledge and hereby represent to UW the following:

  • You have read and considered the information below and you were given the opportunity to conduct your queries, and to contact your own law or tax professional.
  • You understand that the contract relationship is solely between yourself and the company providing the contract;
  • You accept that you are taking on any and all potential risks and applicable liability related to the contract that you are entering into with the company; and that
  • You will be working remotely and residing in Canada while completing the work term.
  • You understand that you will be completing a work term work for a company that may not be based in Ontario, and that you will not be physically present at the company’s place of business; hence, it is your responsibility to determine the required workplace insurance considering either the jurisdiction in which the company is based, or your province of residence. Your contract provider may be able to help you with this. You may refer to provincial links provided below.
  • UW vets work experience for credit-worthiness only, and is not a party to any employment agreement or independent contractor agreement.
  • This information is only meant to offer general guidance - Please note that we cannot consult on the information found on the resource page. If you require legal or tax advice, as an undergraduate student you should consider approaching the WUSA legal service, as a graduate student consider reaching out to GSA's legal protection program, or contact your personal law or tax professional.

Please note that your UW work term support will connect with you to acknowledge a waiver within WaterlooWorks, if you wish to have an independent contractor position considered for work term credit, whether this position is found on your own or through WaterlooWorks.

Key differences between employment and consulting relationships

As students reach out to companies to discuss work opportunities, there may be offers made by companies to retain a student as a “consultant” or “contractor” instead of an employee. 

In order to assist students in making an informed decision, we have outlined below some of the key differences between consultants/independent contractors and employees, and some common questions to consider asking before entering into any such relationship.  

Independent contractors and employees: An overview

A consultant or independent contractor is a self-employed worker who serves clients through the contractor's own business. This status is distinct from that of an employee, who provides services to an employer as part of the employer’s business.

Employment law treats independent contractors and employees very differently. Employees enjoy greater legal protections in the workplace, and employers have greater legal duties toward workers classified as employees. Independent contractors and their clients are left relatively free to negotiate the terms of a working relationship as they see fit.

In an ideal independent contractor relationship, a client company contracts with a worker for specific work to be performed for an agreed price in a defined period of time. The training or supervision of the worker is minimal or incidental, in view that the worker is free to accomplish the work in any manner and is also free to work for other clients simultaneously.

Key differences between independent contractors and employees

Some of the key differences between an employee and a consultant or independent contractor are:

  • Taxes: if you are an employee in Canada, taxes and statutory deductions will usually be deducted by the employer. However, if you are an independent contractor, you will typically be paid a gross amount and you will be responsible for paying applicable tax and statutory deductions to the government. If you are classified by a company as a consultant/independent contractor but later audited by the Canada Revenue Agency and deemed to be an employee, then you could be liable for any unpaid income tax as well as Employment Insurance and Canadian Pension Plan premiums, plus interest and penalties.   
  • Termination: if you are an employee in Canada, you are entitled to notice of termination or termination pay, unless you are working under a fixed term contract and your employment ends at the end of the term. If you are a consultant/ independent contractor, your contract can be terminated without notice or pay in lieu. 
  • Workers’ Compensation: if you are an employee in Canada, you may be entitled to workers’ compensation coverage under your employer’s plan. If you are an independent contractor, you may not be covered under your company's plan. This will likely depend on the jurisdiction in which the company is based, or your province of residence.   

Common questions to ask before entering into independent contractor or employee arrangements

The questions set out in this section are a sample of some of the common questions reviewed in determining whether a worker is properly characterized as an employee or independent contractor.

An independent contractor or employment relationship does not have to satisfy all of the considerations discussed below. Many workers have characteristics across the independent contractor–employee spectrum.

Form of Agreement
  • Is the work being performed under an employment agreement or an independent contractor or consulting agreement?
  • Courts may give some weight to the form of the agreement, and while important, the form of the agreement may not be determinative. They may consider the substance of the relationship including the rights and obligations of the parties.
Duration
  • Are the services you are asked to perform limited to a defined period of time or to a defined project?
  • What is the length of the contract and what are your hours of work? Does the company know the number of weeks or hours required for work-term credit?
  • A fixed term is more indicative of an independent contractor relationship, while an indefinite term is more indicative of an employment relationship.
Scope of Work
  • Will you be performing the same work as other employees of the company? 
  • Overlap between the duties of a worker and the company's other employees may indicate employment status.
Control
  • Will you be free to determine where, when and how you perform required work? 
  • Will the work be supervised or will you be free to work with minimal supervision?
  • Independent contractors typically have a significant degree of autonomy in performing required work. The more a company has the right to control performance of the work, the more likely the worker is an employee.
Tools and Training
  • Will you be responsible for supplying most or all of the elements required to perform the contracted work?
    • Will you be responsible for supplying tools required to perform the work?
    • Will you be required to perform the work in facilities controlled by the company?
    • Are licenses, permits or certificates needed to perform the work and are they held by the worker or the company?
  • Are you responsible for supplying your own equipment or will the company provide it for you (i.e. computer, phone, and internet)?  Can you claim these as deductible expenses when filing your taxes?
  • If the company supplies all of those required elements, the worker is more likely to be considered an employee.
Remuneration and Benefits
  • How will you be paid?
    • Are you required to invoice for your work, and if so, what information must you provide on your invoice?
    • What is the frequency of payment?
    • What is the quantum and basis of payment (hourly, per diem, etc.)?
    • If applicable, are there mechanisms for disputing an invoice and/or withholding payment/Services?
  • Were you enrolled for workplace benefits?  Typically, independent contractors are not granted the same benefits that employees receive (e.g., participation in health care benefits, pension benefits, short-term or long-term disability benefits, etc.).
  • Will you receive compensation for overtime or public holidays?  
  • Will you receive vacation? 
Taxes
  • To what government authority are taxes and other statutory remittances payable on the amounts you are earning and who is responsible for making the payments? 
    • Who is responsible for reporting/filings/remittances respecting all federal and provincial income taxes, EI, Canada or Quebec Pension Plan, workers compensation, health insurance premiums or contributions, GST/HST and local taxes as required by the applicable laws?
    • Are taxes and/or other statutory remittances payable in another jurisdiction (i.e. U.S. federal or state authorities)? 
    • Is the Company withholding from your pay and remitting on your behalf, or are you responsible for remitting? 
  • Generally speaking, independent contractors are responsible for calculating and remitting their own statutory deductions to the Canada Revenue Agency, including Canada Pension Plan contributions, Employment Insurance premiums and income tax.
​​​Immigration
  • If working for a company based outside of Canada, are you required to apply for a foreign Visa? 
Workers’ Compensation Insurance
  • Are you required to obtain your own workers’ compensation insurance coverage?
Intellectual Property
  • How is ownership of intellectual property addressed?
  • Does the agreement contemplate UW Policy 73?
Exclusivity
  • Are there terms of the contract that survive its termination that may affect your ability to work elsewhere in the future?  
  • Independent contractors are typically free to provide services to other clients. Any restriction imposed by the company on the worker's ability to serve other clients may indicate employment.

As you can see, working as a contractor is very different, and there is a lot to consider! We hope this resource has been useful and we encourage you to seek professional legal and/or accountant advice should you have any further questions. 

Publicly available resources