Workers are people who do work for others and get paid for that work. Workers may do work solely for the non-profit (typically are employees) or by working for many different clients (contractors).
The Canada Revenue Agency (CRA) applies a test to determine if a worker is an employee or a contractor. This test has five parts: the amount of control exercised by your non-profit; who owns the tools and equipment required to do the work; who bears the financial risk and stands to profit from the work; dependence of the worker on the work; and the intention of the parties about the work.
The distinction is important for the tax and benefit (CPP/EI) implications and for the availability of employment standards protections. Getting it wrong can get the non-profit in trouble . For example, if a worker is found to be an employee rather than a contractor, your non-profit may be liable for unpaid overtime or the payment of EI premiums.
Volunteers are unpaid workers. Volunteers freely give their time and labour. Freely means performing duties without any express or implied promise of being paid with money, goods or services. Directors (aka board members) of a non-profit are usually volunteers.
An employment contract is a legal document that sets out all the information relating to the expectations of the employer and the agreement of the worker to their working conditions described in the document. This information typically includes a description of the position and responsibilities, rate of pay, and hours of work. Best practice is to use written employment contracts for all positions whether for employees or contractors.
Many different laws apply to the workplace. These laws include those that cover employment standards, human rights, occupational health and safety, and government payroll deductions (income tax, CPP, and employment insurance). A non-profit’s board and executive director must know all the laws that apply to its workplace.
Employers must also register with the appropriate provincial or territorial agencies. For example, employers in BC must register with WorkSafeBC, the agency responsible for workplace safety.
Terminate means ending the employment relationship (to fire, dismiss, or let go). Employees may be dismissed with or without cause. Without cause means there is no specific reason for the termination. An employer is typically free to terminate an employee without cause so long as they provide sufficient notice, known as “Compensation for Length of Service” in employment standards law. Terminating with cause means the employee has done something seriously incompatible with the continuation of the employment relationship such as stealing or dishonesty. This conduct is referred to as culpable misconduct.
Culpable misconduct is inappropriate and deliberate behaviour that violates the employment relationship. The behaviour must be intentional and the employee at fault. For example, an employee who calls in sick when they are not, is acting intentionally.