With an expected GDP of approximately USD 2.56 trillion in 2025, Canada ranks as the 9th largest economy in the world as of 2024.  The country is also one of the world’s largest trading nations, with a highly globalized economy, making it one of the most sought-after destinations for business expansions. Canada’s strong GDP and steady economic growth are driven by many factors.

The country has a diverse economy that relies on the export of natural resources like oil, gas, and minerals (gold, nickel and zinc). Canada’s stable energy and extraction sectors make it one of the leading exporters of some of these commodities. In fact, the United States is Canada’s largest trading partner.

Additionally, Canada’s economy thrives due to a well-educated workforce. Here are some important facts to know. 

  • The median age in Canada is 40.8 years. 
  • Canada’s literacy rate is 99%. However, many adults have low literacy skills. 
  • Canada is home to more than 40 million people, which includes a skilled and multilingual workforce. Among them, 25% of its population are immigrants as Canada welcomes more than 500,000 new immigrants annually. 
  • Canada is known to have one of the most diverse, multilingual, and educated workforces in the world.
  • In 2024, the GDP per capita in Canada was USD 53,834. 
  • Canada’s immigration system prioritizes skilled workers to strengthen its workforce.

Considering these facts, if you want to build a team of independent contractors, Canada may be a good country to find your desired skilled workers. The low cost of living and high-quality yet affordable education expenses allow freelancers in Canada to charge more competitive rates than the same professionals earn in the US. 

According to Indeed, the average salary of a freelancer or self-employed individual in Canada is USD 24 per hour. However, in comparison, a freelancer in the US earns around USD 52 per hour on average.

Here are some more facts about Canadian contractors that you must know before hiring them. 

  • They are known for their strong work ethic, which is often clearly reflected in the high-quality work that they generate.
  • Some Canadians (almost 16%) are also fluent in both English and French, making collaboration and communication with clients as seamless as possible.

But before you hire independent contractors in Canada, ensure you understand the relevant labor laws to understand the distinction between employees and independent contractors. Read this guide to get all the help you need.

What Are Independent Contractors in Canada?

In Canada, an independent contractor is considered a self-employed worker who usually completes a specific task or is hired to perform a project for a business. Independent contractors are paid as per their work when they issue an invoice to the company.

Independent contractors are different from the employees of the company in many ways. For instance, they are not directly controlled by the employer as they are responsible for managing their work themselves. These contractors have to create and follow their schedules to meet deadlines.

Here are some common characteristics of independent contractors in Canada.

  • They don’t receive employee benefits such as paid vacation or health insurance. 
  • Independent contractors can work with multiple clients simultaneously. 
  • They control their work more than their employers. 
  • Independent contractors are responsible for paying their taxes themselves. 
  • They submit invoices to their clients for payment.

How Are Independent Contractors in Canada Different From Employees?

The Canada Labour Code does not explicitly define the distinction between employees and independent contractors. However, the Canada Revenue Agency (CRA) and provincial labor laws provide guidance on classification to ensure compliance with tax and employment regulations.

Key differentiating factors include the level of control over work, ownership of tools and equipment, financial risk, and integration within the company.

Here are some common differences between employees and independent contractors in Canada:

AspectIndependent ContractorsEmployees
Work AgreementContractors sign a service agreement detailing the scope of work and payment terms.Employees sign an employment contract specifying job responsibilities, benefits, and severance pay.
Control Over WorkContractors have full control over their work and pricing.Employers control the work and set wages or salaries.
Tools and EquipmentContractors provide their own tools and equipment.Employers supply necessary tools and equipment for employees.
Financial RiskContractors bear financial risk and are responsible for managing their own income.Employees receive a stable salary or wage, with financial security provided by the employer.
Integration with the CompanyContractors have limited integration into the company’s daily operations.Employees are fully integrated into the company’s work structure and culture.
Tax ResponsibilitiesContractors manage their own tax filings, including income tax and Canada Pension Plan (CPP) contributions.Employers withhold income tax and CPP contributions on behalf of employees.
Statutory BenefitsContractors are not entitled to statutory benefits like paid leave and health insurance.Employees receive benefits such as paid leave, insurance, and employer-sponsored pension contributions.
Risk of MisclassificationEmployers must correctly classify contractors to avoid misclassification penalties and fines.Incorrect classification of employees as contractors may result in legal consequences and financial liabilities.

Benefits of Hiring Independent Contractors in Canada

Here are some top benefits of hiring independent contractors in Canada.

They Are Cost-effective

Independent contractors are not entitled to statutory benefits such as paid leave, minimum wage or severance pay on termination. This characteristic makes them much more affordable than employees. Plus, they manage their taxes themselves, meaning that you don’t have to file the expense.

Independent Contractors are Flexible

If you hire independent contractors, you don’t have to worry about setting their schedules or supervising them all the time. This gives you the flexibility to manage them at your own convenience. Additionally, since these contractors are hired on a project basis only, you can scale your team up and down with ease. You can hire them as required to save on your labor and administrative costs.

Independent Contractors Have Specialized Skills

Contractors can bring specialized skills that are useful for specific projects. They have vast experience working with multiple clients, making them more skilled than full-time employees at times. Additionally, independent contractors in Canada can bring you important insights into the Canadian market, allowing you to strategize your global expansion smartly.

These Contractors Facilitate a Quick Onboarding Process

Unlike employees, independent contractors don’t require extensive onboarding or training programs. This helps save you time and funds that you can spend on other important tasks otherwise. When you welcome a contractor, you can simply introduce them to the project, discuss deadlines, and share briefly about your company to kick-start the relationship.

The Canada Labour Code - What Is It?

The Canada Labour Code is an Act of the Parliament of Canada that defines the rights and responsibilities of workers and employers. In addition, it is responsible for setting out the federal labor law. It regulates the employees in Canada and determines whether a worker is an employee or independent contractor. It also provides full labor standards rights to the employees in Canada. 

However, here are some things to note. The Canada Labour Code usually applies to federally regulated industries. These may include broadcasting, telecommunications, and transportation industries. Therefore, many employees are governed by the legislation governing provincial employment standards. The laws might differ from the Canada Labour Code.

Workweek Hours and Paid Leave

According to the code, the standard workweek in Canada is 40 hours. If an employer makes an employee work more than this duration, they are entitled to pay them overtime pay. 

Employees in Canada are also entitled to paid vacation time. The amount of paid leaves they receive increases on the basis of their years of service. Also, it depends on the province in which they work. 

Unlike employees, independent contractors are not entitled to any fixed workweek hours, overtime pay, or paid leave.

Minimum Wage

Employees in Canada are entitled to a minimum wage. As of April 1, 2024, the minimum wage in Canada is $17.30 per hour at the federal level. However, minimum wages are not the same and vary in different provinces.  It is expected to increase to $17.70 per hour on April 1, 2025. 

Independent contractors are not entitled to any minimum wage in Canada. They may receive an amount less than the minimum wage, depending on the nature of their work.

Social Security Contributions and Taxes

The Social Security Rate in Canada is considered a labor income tax that is applied to both employers and employees. It usually consists of the Canada Pension Plan (CPP) and Employment Insurance (EI). The latest rate for CPP contribution employees is 5.95%, while for EI, it is 1.64%. Employers also have to contribute an equal amount to the CPP and EI as their employees.

Independent contractors, on the other hand, are not obliged to make social security contributions. However, they can voluntarily make it.

The tax rate in Canada ranges from 14% to 33%, depending on the taxable income. Employers withhold taxes on the salaries of their employees, so the latter don’t have to file the taxes themselves.

However, independent contractors have to file their taxes by using the T1 General and T2125 forms. They can process this payment online, by mail, or in person.

How to Pay Independent Contractors in Canada?

You can pay your contractors through multiple channels. 

  • Bank Transfer: If you want to pay your independent contractors for an ongoing task, you can choose a bank transfer as a common method. It is simple and safe.
  • International Money Order: If you want to make a one-time payment to a contractor, you can choose to make the transaction through an international money order. However, you must know that this method can take a long time to process.
  • Credit Card: This payment method is not very common. However, you can make a payment through a credit card as the process is quick and straightforward.
  • PayPal and Xoom: Digital platforms like PayPal and Xoom can also help you make a transfer seamlessly. However, your contractor should have the ability to access these platforms as well to receive your payment.
  • Global Contractor Management Platforms: With the help of a reliable global contractor Management platform, you can make a quick payment to your workforce without putting in any extra effort. The platform manages the entire process itself.

When making payments to your independent contractors in Canada, here are a few things you should do.

  • Make sure to follow the terms of their service agreement to pay them according to the rates decided.
  • You must also have some control over the payment process to know if the contractor is paid correctly. Don’t just rely on the global payroll service for all the transactions.
  • Invoice the payment on time to avoid delays. This will help keep your workers motivated.
  • Make sure that you clear all the payments in Canadian Dollars.

How to Find Independent Contractors in Canada?

You can find independent contractors in Canada through referrals, recommendations and job boards. Platforms like Upwork and Fiverr can also help connect you with a skilled contractor who may be a perfect fit for your project. LinkedIn, Jobble and FlexJobs are some other popular platforms for looking for a competent workforce. 

If you have business contacts in Canada, you can also ask them to refer or recommend some independent contractors with credible profiles. Alternatively, you can connect with a global human resource management platform to hire and pay independent contractors. Make sure to convey the skills, attributes and experience you are looking for in your contractors to get hold of the best workforce. 

When looking for top candidates, evaluate your business needs before anything else. You should know what type of knowledge, skills, and experience your venture may need for the project. 

Make sure that you are also clear about your requirements for communication skills. For instance, if you have English-speaking clients, your contractor must have strong proficiency in the language and a friendly personality. 

Similarly, do check the global reputation of the contractor. This is important to eliminate candidates who may not have performed professionally in their previous projects.

Build a Professional Team of Independent Contractors in Canada With Remote People

Hiring a workforce in Canada can benefit you in many ways. The country has skilled, educated and experienced workers with strong communication skills to help make your business a success. Besides, independent contractors in Canada work in the American time zone, facilitating your smooth collaboration with most of your clients in the country.

Finding true gems yourself can be tricky, but with the help of Remote People, you can make the process seamless. 

Simply contact our team to hire competent, independent contractors in Canada within a few days. We only shortlist top candidates so you can work with them with ease. Besides, we charge much less than most other platforms. Contact us now to know all the details.

Frequently Asked Questions

Yes, you can if their current job and performance are the same as the rest of your employees. For instance, if you control their work and have hired them for a long time, you must check the law and classify the workers correctly. 

Independent contractors in Canada pay their taxes themselves. They have to fill out a few forms before filing the taxes online or in person. 

Yes, independent contractors work legally in Canada. However, if you have doubts, ensure to check their background. Also, find out if they are registered with the relevant tax authorities or not.