Contracting for Services Procedure

1. Procedure

In order to comply with statutory deduction requirements by Canada Revenue Agency (CRA), it is necessary to determine when an invoice for services rendered is allowable or when services are paid through payroll. This means that a determination must be made as to the nature of the employment relationship: employer/employee or contract for services.

Where an individual performs work for the College under the following terms, they are considered an employee of the College:

• The individual agrees to provide personal services to perform the work;
• The College defines the work to be done (i.e. course outlines, job descriptions, project outlines);
• The College provides the materials/tools required in completing the work (except for Distance delivery), i.e. photocopying, secretarial services, overhead transparencies, office space;
• The College determines the time and place to perform the work (i.e. courses advertised that specify time and/or place);
• The College determines the rate of pay according to College policy /Continuing Education Guidelines and/or the applicable Collective Agreement;
• The College maintains ongoing control of the individual in the performance of the work being done and can, on an ongoing basis, direct the individual doing the work; can discipline and discharge the individual.

When an individual is considered an employee of the College, he or she must be paid through the College payroll system and statutory deductions (i.e. Income Tax, Employment Insurance, Employer Health Tax, Canada Pension) will be withheld as required by the law.

Note: Canada Revenue Agency (CRA) has determined that if a person’s business earns a substantial portion of its gross revenue from a single source (e.g. Loyalist College), it is considered to be an employee/employer relationship.

When an individual performs work for the College under the following terms, they are considered to be in a contract for services relationship:

• The individual determines/defines the work to be done via an estimate, proposal or tender;
• The College purchases the delivery of a complete course or seminar from a business;
• The design of the course or seminar and any materials required, such as, outline, lecture notes, transparencies and/or handouts are provided by and remain the property of the business OR the College purchases a complete non-instructional service from a business. This service results in a finished product provided to the College. The College determines the task to be performed and to what standard, but it does not determine how the task is performed and does not provide direct supervision, equipment, supplies or materials;
• A time frame is negotiated for completing the work as opposed to defining specific tasks performed on specific dates;
• The individual performing the work is chosen by the contracting firm;
• The individual performing the work is hired, supervised, disciplined and discharged by the contracting firm.

When an individual is considered to be in a contract for services relationship with the College, the Procurement Policy will apply and the service provider will be paid through an invoice submitted to the College.

The attached guidelines are designed to assist the hiring manager in their decision. Once completed, signatures of manager/director, supplier and Financial Services are required. In situations where the employment relationship is questionable, or the supplier is in disagreement with the decision, the individual in question will be compensated as though an employer/employee relationship exists, unless Canada Revenue Agency (CRA) rules otherwise through completed Canada Revenue Agency form CPT1, available from the CRA website.

2. Related Documents and Links

• Appendix A: BMO Spend Dynamics – Alternative Statement Printing
• Appendix B: Guideline to Establishing Employer/Employee Relationship
• ADMIN 107 Conflict of Interest
• FIN 200 Procurement Policy