In recent years at Queen's, there has been a shift away from the traditional employer-employee relationship in favour of contracting for certain non-core services from independent contractors (i.e. services that are not directly related to teaching or research).
When departments or PI's enter into agreements with individuals who are acting independently, it is very important that the nature of this relationship be documented.
An important reason to document the relationship is to ensure that the University complies with the Income Tax Act. This act stipulates that if an employer-employee relationship exists, then source deductions (such as CPP, EI, and income tax) and employer paid amounts (such as EHT and WCB) be calculated, deducted, reported, and paid. Penalties of at least 25% of the payment could be incurred if Queen's does not make the appropriate deductions.
The documentation should include at a minimum:
Payments to staff members (irrespective of the department where those duties are performed) to compensate for the performance of duties should never be treated as eligible for Independent Contractor treatment (i.e. payments to a secretary who normally works for department X that performs typing services for department Y should always be processed using the payroll system by department Y).
When the work has been completed, the independent contractor should issue an invoice. The invoice should include the following information:
In cases where it is clear that no employee-employer relationship exists, use the FIN-FRM-003 - Cheque Requisition form to initiate the payment. Attach the invoice supplied by the contractor.
In all other cases, use the SALARY REQUISITION form, which will be processed through the payroll system.
For more information, contact the Financial Services Support Centre.