Establishing Employee / Employer Relationships Procedure

Related Documents: Establishing Employee/Employer Relationships Policy
Owner: Human Resources
Approval Dates: April 2000, February 2004, September 2008

I. Purpose

1. To indicate procedures and methods for payment of employees, non employees and independent contractors.

II. Procedure

1. Use Chart A on the following pages to identify the type of relationship.

2. If an employee/employer relationship exists, use the appropriate appointment form. Employment income is paid to individuals as employees, and processed through Human Resources. Under the Employment Standards Act, these payments must be based on an established pay schedule for specified pay periods and employees must be paid for time worked in a specified pay period, on the associated pay date. Contact Human Resources for assistance, if required.

3. If an employee/employer relationship does not exist, and the payment is not being made to a business (business entity or unincorporated business), e.g. Guest Lecturer payment, Graduate Student Stipend Payment or Honorarium payment, payments are processed through Human Resources using the appropriate payment form. Contact Human Resources for assistance, if required.

4. If an employee/employer relationship does not exist and the payment is being made to an unincorporated business, an ICON form must be completed and signed by the department and the contractor, to verify that an employee/employer relationship does not exist. The independent contractor must have either an Ontario Business Number (unincorporated business) which may be obtained through Service Ontario, or a Federal Business Number (unincorporated business), which is obtained through the Canadian Revenue Agency.

Once an unincorporated business has completed an ICON form and been confirmed as an independent contractor, the form does not have to be completed again when products or services are provided by the same business under the same terms and conditions.

A purchase requisition must be submitted to Purchasing and Payment, Financial Services, along with the completed ICON form.

Prior to the selection of a business, competitive bids may be required before a purchase order can be issued. See the Purchasing policy, the Quotation and Tender policy, or contact Financial Services, Purchasing and Payment for details.

An Independent Contractor Agreement must be completed and signed by the contractor and the signing authority for Toronto Metropolitan University (the "University"), and appended to the University purchase order, before any work can begin. Payments to the business can only be made if the requirements of the contract are met.

When engaging a business, cheques issued by Financial Services must be paid to the order of the business name (not the individual). All payments to a business are made on the basis of an invoice.

5. Payments of employment income are paid to individuals as employees, and processed through Human Resources using the correct appointment form (can be paper or electronic, as appropriate). Under the Employment Standards Act, these payments must be based on an established pay schedule for specified pay periods and employees must be paid for time work in a specified pay period, on the associated pay date. T4 slips are issued to recipients of employment income.

6. Payments of non-employee income (not independent contractor payments), e.g. Guest Lecturer payments, Graduate Student Stipends and Honoraria payments, are processed through Human Resources using the correct payment form (can be paper or electronic, as appropriate). Payments are made to individuals and T4A slips are issued to recipients.

Chart A

Use the chart below to assist in determining whether a situation involves employee payment, non employee payment or payment to an independent contractor (business entities or unincorporated businesses).

Type of Service Provided	Employee Payment (Processed by Human Resources)	Non Employee Payment (Processed by Human Resources)	Independent Contractor (Business) Payment (Processed by Financial Services)
TEACHING Individual who carries out work as defined under the RFA and/or CUPE 1 & 2 collective agreements.	√
GUEST LECTURER* - see definition		√
NON-INSTRUCTIONAL SERVICES University employees may have a number of contracts to perform services for the University. As long as one employment contract is in effect, the individual will be considered an employee for all assignments. Multiple assignments may be established through separate employment contracts. Individuals, other than University employees, may also provide services to the University. An individual’s time is put at the disposal of the university for a fixed or indeterminate time, e.g. course coordinator. Factors to consider – does the individual get paid a regular salary (hourly, weekly); have set hours; work at the university; provided with supplies and equipment.	√ √
NON-INSTRUCTIONAL SERVICES Independent Contractor paid a fee to provide specified products or services(deliverables), e.g. consulting services, statistical analysis, conducting interviews, producing course materials or textbook. Factors to consider - is work done away from university; business pays own expenses; paid a fee; free to use the services of others. Notes: 1. Unincorporated Businesses must have a business number and an Independent contractor Agreement signed. 2. A competitive process is required for all contracts over $25,000 unless the purchase qualifies for an exemption under thePurchasing policy.			√
RESEARCH Individuals, other than University employees, engaged in independent research, or provided with a fellowship or grant from an external granting body to carry out a specified research activity. The University distributes the funds on behalf of the external granting body. Factors to consider - does not provide general assistance to a Principal Investigator; provided with a lump sum sub-grant; did not have to do research at the University in order to receive the fellowship or grant; is free to use the services of others; pays own expenses.		√
GRADUATE STUDENT STIPEND Graduate Student who undertakes research in order to fulfill degree requirements and works under the supervision of a faculty member who acts as academic supervisor. The student is provided with a stipend from the faculty member’s research funds in order to assist in furthering his/her education.		√
HONORARIUM PAYMENT Payment of nominal sums not reflective of value of work done. For example, a $50.00 payment as a thank you for volunteering to help with convocation activities. University employees are not paid honorariums. Token payments made to University employees would be considered to be gifts or awards and would be treated as employment income.		√

* If hiring a Performing Artist or non-resident of Canada, please consult your Human Resources consultant for special regulations

How to Complete the ICON Form

1. The department sends a copy of the ICON form (form) to the independent contractor (unincorporated business) that will be performing services. This form is not required when contracting with a business entity (see definition above), or with respect to goods purchased from an unincorporated business. Forms are available from Financial Services.

2. The potential independent contractor completes the form, signs it, and returns it to the department.

3. The department reviews the form for completeness (i.e. all questions on the form have been answered) and accuracy. The form is accurate when the person most familiar with the potential independent contractor reviews the form and attests to the accuracy of its content.

4. Based upon the information provided on the form (and any other relevant information available), the department determines if the individual meets the independent contractor criteria.

5. In making this determination, “yes” answers to questions 4 through 16 are indicative of independent contractor status. Thus, if all or a majority of these questions are answered “no”, it should be obvious that the individual most likely does not meet the independent contractor criteria.

6. In reviewing the answer to question 17, the department should assess whether the service being provided is one that is normally provided by independent contractors (in the context of the University).

7. In reviewing question 19, longer terms of service are strong indicators of employment status. However, the above, by itself, is not determinative.

8. If the independent contractor criteria are met:

a. The departmental University employee most familiar with the independent contractor signs the form to indicate concurrence as to the form’s accuracy (Part III signature number 1). This signature is required.

b. The departmental employee responsible for requesting the services through purchase requisition is the second signer on the form (Part III signature number 2). The second signature indicates that the form is complete and that the individual meets the independent contractor criteria. This signature is also required.

c. The department sends the form (with all required signatures) to Purchasing and Payment Services.

9. If the independent contractor criteria are not met, the department must hire the individual as an employee through Human Resources.