Last updated December 18, 2020
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.
Good news - we are now allowing co-op students who are physically located in Canada to pursue independent contractor positions for their work terms, as long as they meet our standard 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 ("Co-op" or "Other" job boards): We only post positions for co-op credit that meet our standard work term requirements, and 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 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, you should consider approaching the WUSA legal service, or your personal law or tax professional.
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||
|Scope of Work||
|Tools and Training||
|Remuneration and Benefits||
|Workers’ Compensation Insurance||
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
- Canada: Canada Revenue Agency: Employee or self-employed?
- British Columbia: Employee or independent contractor factsheet
- Alberta: Employee or contractor? Know the difference
- Saskatchewan: Independent contractors
- Manitoba: Independent contractors factsheet
- Ontario: Your guide to the Employment Standards Act: Employee status
- Quebec: Employee or self-employed person?
- New Brunswick: Coverage under the Employment Standards Act
- Nova Scotia: Employee vs. Independent Contractor
- Prince Edward Island: Guide to employment standards
- Newfoundland and Labrador: Labour relations at work
- Yukon: Employment standards
- Northwest Territories: Employment standards
- Nunavut: Labour Standards Compliance Office