Independent contractor agreement
lawyer Toronto.
Hiring a contractor, or signing on as one? Jonathan Kleiman drafts and reviews independent contractor agreements for Ontario businesses and contractors, for a flat fee quoted before work begins.
Review timing starts once the engagement is confirmed and the documents and your questions are in. Jonathan confirms delivery with the quote; long or complex agreements may take longer.
· Reviewed by Jonathan Kleiman, J.D.
Ontario Bar
250+ reviews
consultation
An independent contractor agreement lawyer for businesses and contractors
An independent contractor agreement is the contract between a business and a person or company that does work for it without becoming an employee. It sets the work, the fee, who owns what gets created, and how the relationship ends.
It also carries a risk most templates ignore. Calling someone a contractor doesn't make them one, and if the relationship is really employment, the business can owe vacation pay, overtime, notice of termination and back remittances. Jonathan Kleiman is a Toronto contract lawyer who drafts and reviews these agreements for either side.
- Businesses bringing on a consultant, freelancer, developer, designer, salesperson or tradesperson.
- Contractors and consultants handed a client's agreement and asked to sign it.
- Companies with a template they've used for years that hasn't been checked against current Ontario law.
- Either side when a contractor relationship is ending and the contract is about to be tested.
Most reviews come back the next business day, and a new agreement typically takes 3 to 5 business days to draft. Every engagement begins with a free 30-minute consultation.
What an independent contractor agreement should cover
A contractor agreement can be short. These are the clauses that matter and where each one tends to go wrong.
| Clause | What it does | What to watch |
|---|---|---|
| Services and deliverables | Describes the work, the deadlines and how the work is accepted | Vague scope, which is how unpaid extra work and missed expectations start |
| Fees, invoicing and expenses | Sets the rate or fixed fee, when invoices are due, and which expenses are covered | Payment tied to the client's approval with no deadline, and silence on HST and late payment |
| Relationship of the parties | States that the contractor is independent and responsible for their own taxes and remittances | Terms elsewhere in the contract that contradict it, such as fixed hours or exclusivity |
| Ownership of work product | Assigns what the contractor creates to the client, and deals with the contractor's existing tools and materials | A missing assignment, which usually leaves the contractor as owner |
| Confidentiality | Protects client information, pricing and trade secrets the contractor sees | A definition so broad it can't be enforced, or one with no end date for ordinary information |
| Non-solicitation and non-competition | Limits the contractor from taking clients or staff, or from competing | Restrictions wider than the business needs, which courts refuse to enforce |
| Term and termination | Sets how long the engagement runs and how either side can end it | No notice period, or a right for only one side to walk away |
| Liability, indemnity and insurance | Allocates responsibility for mistakes and third-party claims | Unlimited indemnities from an individual contractor with no insurance behind them |
Employee, dependent contractor or independent contractor: why the label isn't enough
The contract can say "independent contractor" on every page and the worker can still be an employee in law. Courts and the Ministry of Labour look at how the relationship actually works. The wording of the agreement is one factor, and it only helps when the facts match.
| Status | What it usually looks like | What follows |
|---|---|---|
| Employee | The business controls how, when and where the work is done, supplies the tools, and the worker has no real chance of profit or risk of loss | Employment standards apply: vacation and holiday pay, overtime, and notice or pay on termination. The employee non-compete ban applies too. |
| Dependent contractor | Runs their own business on paper but works mostly or only for one client and relies on it economically | May be owed reasonable notice when the relationship ends, even if the contract is silent |
| Independent contractor | In business for themselves: sets their own methods, uses their own tools, can take other clients, hire help, and make or lose money on the job | The contract governs, including how much notice ends it |
Section 5.1 of the Employment Standards Act, 2000 says an employer must not treat a person who is its employee as if they weren't one. The Canada Revenue Agency and the WSIB make their own decisions about a worker's status for payroll deductions and workplace insurance, using their own tests, and they aren't bound by what the contract says. Questions about deductions and remittances belong with your accountant.
A lawyer can't change the facts of the relationship. What a review can do is tell you where the arrangement sits, remove terms that point the wrong way for no good reason, and make sure the contract deals sensibly with termination if the status is ever challenged.
From first call to signed agreement: how the work is done
Contractor agreements are usually needed quickly, because the work is about to start. The process is built for that.
Send the details
Email the draft agreement, or a description of the role: what the contractor will do, for how long, and how they'll be paid.
Flat fee quote
Jonathan quotes a flat fee for the review or the draft. Nothing is billed until you've agreed to the scope and the fee.
Look at the real relationship
He asks how the work will actually be done, because that decides whether a contractor agreement is the right document at all.
Review or draft
A review comes back with the risks explained in plain language and the changes marked up. A new draft is written for the engagement, not adapted from a generic form.
Negotiate
If the other side pushes back, Jonathan can advise you on what to hold and what to give, or handle the back-and-forth himself as a separate scope.
Sign and keep it current
The final version is signed. If the role grows into something closer to employment later, the agreement should be looked at again.
The clauses that cause contractor disputes
Who owns the work
Many businesses assume that paying for work means owning it. For copyright, that's often wrong. Under section 13 of the Copyright Act the author of a work is its first owner. The exception that gives ownership to an employer applies to work made in the course of employment, and an assignment of copyright isn't valid unless it's in writing and signed by the owner. So a contractor who builds your website, writes your software or designs your logo generally owns the copyright until a signed agreement says otherwise. The contract should assign the work product to the client, usually on payment, and say what happens to tools and code the contractor brought with them.
Non-competes and non-solicitation
Ontario banned non-compete agreements for employees in 2021. The ban doesn't cover a true independent contractor, so a contractor non-compete is judged by the older rule: it has to be reasonable in length, territory and scope, and no wider than needed to protect a real business interest. Courts strike down broad ones. And if the contractor turns out to be an employee, the ban applies whatever the contract calls them. A focused non-solicitation clause and a solid confidentiality clause are often the better protection. See the page on non-compete agreements.
Ending the relationship
A true independent contractor gets the notice the contract provides, so the termination clause should say how much notice each side gives and what's paid for work in progress. Where the contract is silent, or the contractor is found to be dependent on the client, a court can require reasonable notice. Long-running arrangements with a single client are where this surprises businesses most.
Getting paid
For the contractor, the payment clause is the contract. It should state the rate, the invoicing schedule, the due date, and what happens when an invoice is late. If the client can reject work, the agreement should say on what basis and by when. When a client still doesn't pay, Jonathan also acts on unpaid invoices.
Indemnities and liability
Client templates often make the contractor responsible for every loss connected to the work, with no cap. For an individual or a small company, that can be far more than the engagement is worth. A contractor can reasonably ask for a cap tied to the fees paid and for the indemnity to be limited to their own negligence or breach.
Have a contractor agreement to sign?
Send it over first. Most reviews come back the next business day.
Business or contractor: what to look for in the draft
If you're the business
- A written assignment of everything the contractor creates for you, effective on payment.
- Terms that match how the work will really be done, so the agreement supports contractor status and doesn't undercut it.
- Confidentiality and non-solicitation clauses narrow enough to be enforced.
- A termination clause with a notice period that works even if the relationship lasts for years.
If you're the contractor
- A clear scope, so extra work is paid work.
- Payment deadlines that don't depend on the client's own customer paying first.
- The right to keep your existing tools, templates and know-how, and to show the work in a portfolio if that matters to you.
- A cap on your liability, and restrictions that don't stop you from earning a living afterward.
How Jonathan helps with a contractor agreement: scope and fees
You can hire Jonathan to review an agreement you've been given, to draft one for a single engagement, or to prepare a template your business can reuse. The fee is flat and quoted before work begins. The guide to flat-fee contract review explains how a review is scoped.
The services below can form part of your engagement. Your quote confirms which work and deliverables are covered by the agreed fee.
Services we can scope
- Free 30-minute consultation about the engagement
- Reviewing a contractor, consulting or freelance agreement and explaining the risks in plain language
- Drafting an agreement for one engagement, or a reusable template
- Work product and intellectual property assignment clauses
- Confidentiality, non-solicitation and, where they can be enforced, non-competition terms
- Termination, payment, liability and indemnity terms
- A plain assessment of where the relationship sits between employment and contracting
- Negotiating changes with the other side, scoped separately
Not included
- Tax advice on deductions, HST and remittances, which your accountant should give
- CRA rulings and WSIB determinations on a worker's status, which those bodies decide themselves
- Patent and trademark filings, which go to an intellectual property agent
- Superior Court proceedings if a dispute is larger than the Small Claims Court limit. Jonathan refers these to trusted litigation counsel.
Call 416-554-1639 or book a free consultation. For commercial service, supply and vendor terms, see the page on service agreements.
FAQs.
Common questions about independent contractor agreements in Ontario.
What is an independent contractor agreement?
It's the contract between a business and a person or company that provides services to it without becoming an employee. It sets out the work, the fee, who owns what the contractor creates, what has to stay confidential, and how either side can end the arrangement. It also records that the parties intend a contractor relationship, although that statement doesn't settle the question by itself.
Does an independent contractor agreement stop someone from being an employee?
No. The label helps, but Ontario courts and the Ministry of Labour look at how the relationship actually works: who controls the work, who supplies the tools, whether the worker can profit or lose money, and whether the worker is really in business for themselves. Section 5.1 of the Employment Standards Act, 2000 prohibits an employer from treating an employee as if they weren't one. A good agreement matches the real arrangement. It can't disguise it.
What is a dependent contractor?
It's a middle category Ontario courts recognize between employee and independent contractor. A dependent contractor runs their own business on paper but works mostly or only for one client and depends on it economically. The practical consequence is that a dependent contractor may be owed reasonable notice when the relationship is ended, even if the contract says nothing about notice.
Who owns the work a contractor creates?
Unless the contract says otherwise, usually the contractor. Under section 13 of the Copyright Act the author of a work is its first owner, and the rule that gives an employer ownership applies to employees, not independent contractors. An assignment of copyright has to be in writing and signed by the owner. A business that pays for a logo, software, a website or written content should make sure the agreement assigns it.
Can an independent contractor agreement include a non-compete?
Ontario's statutory ban on non-compete agreements applies to employees, so it doesn't reach a true independent contractor. A contractor non-compete still has to be reasonable in length, territory and scope, and courts are reluctant to enforce broad ones. If the contractor is really an employee, the ban applies no matter what the contract calls them. A non-solicitation or confidentiality clause is often the safer way to protect the business.
How much notice is needed to end an independent contractor agreement?
Start with the contract. A true independent contractor is entitled to whatever notice the agreement provides, which is why the termination clause should be clear. If the contract is silent, or the contractor is found to be a dependent contractor or an employee, a court can require reasonable notice or the statutory minimums, and that can be much more than either side expected.
Do I need a written agreement with a contractor?
No law requires one, and a verbal arrangement can be binding. But without a written agreement you have no assignment of the contractor's work, no agreed termination terms, no confidentiality obligation beyond what the law implies, and no record of what the parties intended the relationship to be. Those are the points that turn into disputes.
How much does a lawyer charge for an independent contractor agreement?
Jonathan quotes a flat fee after seeing the agreement or hearing what you need drafted, and before any work begins. The fee depends on whether he's reviewing or drafting, how long and unusual the agreement is, and whether you want him to negotiate changes. The first 30-minute consultation is free.
How quickly can a contractor agreement be reviewed?
Most contract reviews come back the next business day, once the engagement is confirmed and Jonathan has the agreement and your questions. Drafting a new contractor agreement typically takes 3 to 5 business days. Tell him if you have a signing deadline.
I'm the contractor. Should I have the client's agreement reviewed before I sign?
It's worth it when the agreement is long, the engagement is a large part of your income, or it contains an indemnity, a non-compete, an assignment of everything you create, or a right to end the contract without notice. A review tells you what the clauses mean in practice and which changes are reasonable to ask for.
Signing a contractor agreement? Have it reviewed first.
Send the draft or describe the engagement. Flat fee quoted before work begins, and most reviews come back the next business day.