Independent Contractor Agreement to Advance your Business

Contact Neufeld Legal PC for your incorporation legal work at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

Engaging contractors to advance your corporate enterprise  should not be undertaken with a legally-binding contract. With a well drafted Independent Contractor Agreement your corporate business is far better positioned to manage its commercial arrangements with contractors (whether self-employed individuals or corporate entities) for the provision of services. The commercial arrangement with an independent contractor is intended to be a "contract for services," as opposed to an employment contract, such that a primary purpose of the Independent Contractor Agreement is to clearly define the working relationship, thereby establishing the individual as an independent contractor and not an employee.

An Independent Contractor Agreement will typically include the following elements:

• Independent Contractor Status: A crucial clause explicitly stating that the contractor is not an employee and is responsible for their own taxes (including income, social security, etc.), insurance, and business expenses.

• Scope of Work (and Deliverables): A detailed description of the specific services, tasks, and deliverables the contractor is expected to provide, along with quality standards and acceptance criteria.

• Compensation and Payment Terms: The agreed-upon rate (hourly, project fee, or retainer), the payment schedule, the method of payment, and terms for invoicing and expense reimbursement.

• Term and Termination: The duration of the agreement, and the conditions and notice required for either party to terminate the contract.

• Intellectual Property Rights: A clause specifying who will own the rights to any work product, materials, or inventions created by the contractor during the project (typically the client).

• Confidentiality and Non-Disclosure: Provisions that restrict the contractor from sharing the client's confidential or proprietary business information. Indemnification: A clause that ensures the contractor takes responsibility for any liability or losses that may arise from their work.

• Governing Law and Dispute Resolution: Specifies which jurisdiction's laws will govern the agreement and how disputes will be resolved (e.g., mediation, arbitration, or litigation).

An Independent Contractor Agreement is intended to provide legal protection, clarity, and certainty for the corporate business, in relation to its engagement of the contractor, including:

• Avoids Worker Misclassification: This is the most significant benefit. The agreement serves as evidence to the Canada Revenue Agency (and other government authorities) that both parties intended to create an independent contractor relationship, which is vital to avoid severe penalties, back taxes, and fines that result from misclassifying an employee as an independent contractor.

• Defines Expectations and Prevents Scope Creep: By setting a clear Scope of Work, the corporate business ensures it gets the specific services it paid for and prevents the contractor from performing unauthorized or additional work (scope creep) without a formal change order.

• Protects Intellectual Property and Confidentiality: Clauses for intellectual property and confidentiality are essential for the business to legally own the work product and safeguard its trade secrets, client lists, and other sensitive information.

• Limits Liability: The agreement helps limit the corporate business' liability by confirming the contractor is responsible for their own taxes, insurance, and the way they perform the work.

So if you are looking to incorporate a new corporation or deal with the corporate legalities impacting your company, there tends to be considerable legal work to undertake. For an experienced corporate business lawyer to work with you in completing that legal work, contact our law firm at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or via email at Chris@NeufeldLegal.com.