Independent Contractor Agreement

An independent contractor agreement is entered into with a person who will provide services to the corporation, but who is not an employee. Generally, the person operates their own business.

It is important to note that even where there is an independent contractor agreement, a government body, such as the CRA or the Ministry of Labor, can still determine that there was an employment relationship. This is based on the circumstances surrounding the relationship, the most important factor is the extent to which the corporation controls the activities of the contractor.

The following are the main considerations when preparing an independent contractor agreement:

• the term of the agreement which may be a specific period of time or until the completion of a project
• description of the services
• the contractor's compensation and entitlement to be reimbursed for expenses
• who will own the intellectual property created by the contractor (which is generally the corporation, but there may be some exceptions)
• restrictive covenants such as confidentiality provisions, non-solicitation provisions and non-compete provisions

A general independent contractor agreement can be used for a variety of service types, such as an administrative worker, web developer, marketing agency, consultant, etc. However, when the circumstances are such that the agreement needs to include extensive provisions regarding the manner in which the service will be carried out, the parties are better served by a more specific agreement.