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The Ontario Government Mandate That Will Affect Independent Contractors across Canada

David O'Brien By David O’Brien,
Vice-President, Government Services at Eagle

NACCBAs you may already know, I currently sit as the President of the Ottawa Chapter of the National Association of Computer Consulting Businesses (NACCB). The industry association represents over 70 IT Services firms in Canada , encompassing over 22,000 contractors, 2000 employees and more than $2.5 billion in revenues. One of the NACCB’s fundamental objectives is to represent the industry in public policy formulation.

We have recently been very involved in Ontario’s latest foray in to regulation in the contingent labour industry. The Ontario Government is headed towards more regulation and, unfortunately, it would very much appear this has the making of “good politics over good policy “.

The spotlight shone on the staffing industry in a bad way originally several years ago when the Toronto Star featured stories of individuals exploited by unethical and shady agencies. These companies deserved to be exposed for the bad organizations they were and suffer the consequences. No doubt, that kind of media exposure is deservedly detrimental to a company and contributes to it either correcting its practices or it will go out of business. Staffing Agencies are licensed in Ontario so there is a mechanism to correct or ultimately shut down such companies.

This was the same time the Ontario Government passed Bill 139 to regulate temporary employees and independent contractors in Ontario. Bill 18 followed in 2014 and largely established joint and several liability for both the agency and  client  for wages, overtime pay , public holiday pay, etc. Ultimately, this represented new risk for clients.

This leads us to today where last Winter, the Wynne Government of Ontario appointed two Special Advisors, lawyers with deep backgrounds in Labour Law, to lead a study in The Changing Workplace and Employment Review. The mandate, among many other things, will include reviewing the current and future world of temporary labour, including independent contractors.

Information SymbolTo date there have been multiple presentations which need to be considered before the Advisers will release their preliminary Report. The vast majority of which have been from Trade Unions and employee groups, union-related organizations like the Workers Action Centre (WAC)

Here are some of the recommendations being discussed among others:

  • 6 month limit on use of a variable temp or contractor before they would automatically become an employee;
  • Contingent labour to make up no more that 20% of workforce as well as the  total number of hours worked by assignment employees not to exceed 20% of all hours worked by employees;
  • Temporary workers must receive all benefits of employees;
  • Clients of agencies to be jointly liable for all rights under ESA;
  • Establish a reverse onus on employee status. In other words, all workers are presumed to be employees unless able to demonstrate otherwise, virtually ending or at least jeopardizing independent contractor status.

There are several other issues and proposals, many of which would substantially alter the temporary labour market. There are  a number of measures that add new risk to customers in joint liability to the extent that many of the measures, given experience in Europe and other countries, will see any organization that uses a contingent labour force as part of their workforce strategy to consider other options most notably offshoring.

Although this is an Ontario initiative it is easy to assume other provinces are looking very closely at what transpires in Canada’s most populous province. It is critical that employers and industry get engaged with this Review to offer the valid and compelling reasons that will allow business to survive and thrive in the ever changing 21st century work environment.

13 thoughts on “The Ontario Government Mandate That Will Affect Independent Contractors across Canada

    1. Thanks Linda, ACSESS and NACCB are monitoring developments very closely , we will continue to communicate out any updates

  1. Thank you for this information. Very important, especially in cities like Calgary where contractors are used as standard practice to give employers the ability to adjust their workforce according to demand.

    1. Precisely , organizations including many in Public Sector require that flexibility as a critical component of their overall workforce strategy .

  2. Thank you for the information. I’ve been on both sides (contractor and FTE), and am currently a Director in an organization, so appreciate both points of view. This is distressing news that seems to neglect the needs of both sides – the hiring companies and the independent contractors.

    In today’s business world where loyalty to employees goes as far as last quarter’s earnings report, many individuals prefer mastering their trade and being “independent” of the politics and performance of the organizations they serve. Many think being a contractor is about making more money, and while that is possible, many commodity-based contract positions don’t make the killing people think they do. Those people choose contracting because they just want to do what they’re good at while avoiding the negative aspects of being part of an organization.

    Likewise, companies prefer contractors for exactly the same reasons. They want the flexibility of hiring masters of their trade when needed without the liability of having to find work for those people when the need is gone. This allows a company to focus on growing its core competencies, while still engaging talented individuals for non-core work assignments.

    The contractor is responsible for staying relevant and offering value. The employer is willing to pay a premium for the value and flexibility this arrangement provides. Sounds like a win-win.

    What’s being proposed sounds like both employers and independent contractors will be left wanting more. So, why is the government interfering in the world of business relationships in the first place? What problem are they trying to solve? Or, is this the pet project of a bureaucrat that had too much budget to spend and needed a make-work initiative. And isn’t the report being produced the work of an independent consultant? Hmmm… Can we say hypocrisy?

    1. All excellent points Jim. And I would add (to the bureaucrats that don’t like that a contractor is able to keep some of a year’s earnings within their business) that contractors go through good times and bad times just like any business. The ability to defer earnings allows that contractor to draw an income during lean years. Denying this would be like telling large companies that they cannot retain earnings. Hopefully there will be sufficient research done on impacts to both contracting companies and contractors prior to making sweeping changes.

    2. It’s tough to say what issue they are “fixing”, in an already very difficult business environment in Ontario it’s a mystery to me as to how these kinds of things being considered can help . Governments love to legislate around work and the definition of work is and will be fluid going forward and in my opinion very tough to envision legislation having a grasp on that today.I don’t discount the “politics” around the momentum on this, payback for past and future political support for large unions?

  3. This looks to be the start of the end of incorporated contracting. What we are seeing is largely driven by the desire to maximize taxation. The 2 year limit came first and now it will become 6 months.

  4. I think it is a good thing that the Ontario government is looking at the contracting business. There are many employers that are taking advantage of some very vulnerable people through the contracting process. I have worked both sides of the fence and actually prefer to have steady employment, something that is very, very hard to find now. As a contractor in IT, not only is the expectation that you be a “jack of all trades” you must be a “master of all trades” and that you will know everything there is to know about some employer’s unique IT systems, are intimately knowledgeable about all the business rules that went into developing that system or can learn it in seconds flat. If not, “you’re fired”! Yes contracting can provided some flexibility and can pay well, but I found contracts were too short and I couldn’t predict how much money I would make from one year to the next. I also had to have lots of “start up” cash to be able to move to various locations across the country for work – money for accommodations, airfare, transportation, etc. This sum could be substantial. Living out of a suitcase can be fun for a while but over time, I had no life. My family Trying to win contracts is highly competitive. So now I am in a “permanent” position and I would not go back to contracting unless forced to.

  5. Hello.. I am not sure this applies to my situation here, or if this is only a discussion on the impact of the proposed changes by the Ontario government.

    As an IT contractor, working for an Ontario hiring agency, and providing IT support services for DND Canada, I would welcome the obvious benefits these changes would bring to me and others in my position.
    I think that the intent is to address the greater good for people like myself who do not want to remain in contractor limbo, with no benefits or job security.

    Thx.

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