As reported last week, and again this week, by local publications, Premier Stephen McNeil is standing by Deputy Minister Bernie Miller’s contract for professional services and maintaining it is a good deal for Nova Scotia. HR pros is not privy to the contract for services, and makes no judgement, but wants to remind business owners that the Canada Revenue Agency (CRA) is significantly cracking down on contracts for services that are in fact not contracts but are in fact employment relationships.
If the CRA deem a contract to in fact be an employment relationship (1) the employer is responsible to pay 100% of the employer payroll taxes for the period of “employment”; (2) the employer is responsible to pay 100% of the employee’s payroll taxes for the period of employment; and, (3) face a $25,000 fine for every non-contract rather deemed employment relationship.
And, then there is the legal jeopardy. If a contractor or consultant is deemed to in fact be an employee, by the CRA or a court, and the employee is terminated, the employer could find that the termination clause of the contract for services is null and void and that the employer is instead required to provide notice, or pay in lieu of notice, when ending the relationship.
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