Unsure whether a worker is an employee or a contractor (self-employed individual)? This is important to determine, as employment status directly affects a person’s entitlement to Employment Insurance (EI) benefits. It can also have an impact on how a worker is treated under other legislation such as the Canada Pension Plan, the Employment Insurance Act, and the Income Tax Act. The facts of the relationship as a whole will determine employment status.

If the worker is an employee (employer-employee relationship), the payer is considered an employer. Employers are responsible for deducting Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax from remuneration or other amounts they pay to their employees. They have to remit these deductions along with their share of CPP contributions and EI premiums.

An employer who fails to deduct the required CPP contributions and EI premiums has to pay both the employer’s share and the employee’s share of any contributions and premiums owing, plus penalties and interest.

For more information, go to www.cra.gc.ca/payroll.