Precarious Employment

The global landscape, along with mergers, acquisitions and insolvency, are making the notion of full-time job security an illusion. When it comes to labour, companies only have a few options available to them. They can resist increases to the pay rates for their employees. Where those companies are unionized they can risk strikes or close their doors. They can automate, replacing jobs with machines. They can send all or part of their operation off shore.

Or they can engage labour under contract in order to be more responsive to economic change.

However, our government does not appear to be engaged on this issue. On one hand they are leaving workers at the lower pay rates to their own devices while targeting knowledge-based workers who offer their services under contract through a corporation.

We must require that out government get ahead of this change and adopt rules of engagement that protect our workers from unscrupulous employers while deterring them from going offshore to meet labour needs.

In this global workplace, we need to accept the reality of change. In the meantime, small steps can be taken by government to mitigate abuse and turn contract work into something much less “precarious.”

Audits of IT Contractors

:: Issue Background

The CRA conducted an audit project between September 2009 and October 2010 and looked at the Personal Services Business (PSB) issue across all industries and across the country. The results of the project are as follows:

·         234 small businesses were audited nationally
·         96 were found to be PSB’s
·         Of the 96, 44 were in the IT section
·         All of the 96 were reassessed relating to the Small Business Deduction and expenses
Representatives from the NACCB met with the Canada Revenue Agency on December 1, 2010 to discuss the recent audits of IT contractors and to provide information on common business models within the IT Services sector.  For more information on how the NACCB is representing its members on this important issue, please visit the members only area.

Workplace Safety & Insurance Board

:: Issue Background

There are a number of problems that have arisen as a result of audits conducted by the Workplace Safety & Insurance Board (WSIB) on businesses that are members of the NACCB. These problems include:

1. Lack of clarity on whether incorporated subcontractors should be considered workers, or independent operators for the sake of workers’ compensation coverage.

2. An extremely complex, subjective, and administratively cumbersome methodology for evaluating whether incorporated subcontractors are to be considered workers or independent operators by the WSIB.

3. Retroactive determination by the WSIB that such incorporated subcontractors should be considered workers, resulting in large, retroactive increases in WSIB premiums that cannot be accounted for, nor charged back to clients, but must simply be absorbed by our association members who have been subject to such audits.

4. Potential tax implications for our incorporated subcontractors should the WSIB’s position remain unchanged that they should be considered to be workers of our association members. Obviously this will be of grave concern to our incorporated subcontractors, but also to our association members due to the potential impact on our costs and as a result, the pricing of our services.

5. A very lengthy, costly and time consuming appeal process should individual members of our association decide to appeal, or challenge the decisions about the status of incorporated subcontractors made by the WSIB in these audits.

6. Potential challenges of the WSIB’s position on coverage for incorporated subcontractors should there be, for example, a fatal accident involving one of them. A surviving spouse (and/or his/her children), could make a very serious, and legitimate challenge of the WSIB’s position that these incorporated subcontractors are workers, a position which appears to contravene the Workplace Safety & Insurance Act.  Such a challenge would be made with a view to having the seriously injured, or deceased spouse declared an independent operator in order to open up the way to pursue legal action against whatever association member retained the injured contractor, the association member’s client, or one or more workers of the association member’s client.

:: NACCB Role

NACCB representatives met with WSIB officials, sent correspondence and generally worked within the business community to raise public awareness of this issue and help formulate a response. As a result of the NACCB consultation process, WSIB did make a number of concessions in the guidelines for WSIB decision-makers.  To date 11 NACCB members have appealed and won rulings of independent contractor status.

The NACCB drafted a White Paper which was submitted to the Workplace Safety and Insurance Board of Ontario – Coverage Review Consultations. This paper described:

– the current status of workers’ compensation coverage for incorporated subcontractors retained in our industry, i.e., the business activity of supplying computer programmers, system analysts, data base architects, and other individuals of similar levels of expertise in computer software and system development.

– The nature of the relationship between these incorporated subcontractors and the businesses that retain their services also is reviewed.

– The current WSIB methodology for evaluating worker versus independent operator status is also examined.

– A number of proposals for consideration.

Copies of this paper are available to NACCB members in the Members Only area.




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