An independent contractor agreement matters—but it can’t turn an employee into a contractor just by saying so.
A good Ontario contractor agreement clearly explains the work you will perform, how you will be paid, who controls the work, who owns what you create and what happens when the relationship ends.
Before signing an independent contractor agreement, pay particular attention to your contractor status, control over your work, payment terms, exclusivity and termination clause. Those provisions can significantly affect your rights if a dispute arises or the relationship ends.
On This Page:
- 1. What Is an Independent Contractor Agreement?
- 2. What Should the Agreement Include?
- 3. Contractor Status and Misclassification
- 4. Termination Clauses and Severance
- 5. Can You Use a Template?
- 6. Frequently Asked Questions
What Is an Independent Contractor Agreement in Ontario?
An independent contractor agreement is a contract between a business and a self-employed person or company providing services.
Unlike an employment contract, the agreement is intended to create a business-to-business relationship rather than an employer-employee relationship.
The agreement should clearly establish:
- What services will be provided
- How and when the contractor will be paid
- How independently the contractor performs the work
- Who pays expenses and supplies equipment
- Who owns work created under the agreement
- How either side can end the relationship
The contract should reflect how the relationship will actually work. Calling someone independent while treating them like an employee creates a worker-classification problem rather than solving one.
Ontario prohibits employers from misclassifying employees as independent contractors, and worker status is determined by the actual relationship—not simply the title chosen by the parties.
What Should an Independent Contractor Agreement Include?
There is no single contract that works for every contractor relationship. But a clear Ontario independent contractor agreement should address the following key terms.
1. Services and scope of work
The agreement should explain what you are being hired to do.
That can include:
- The services being provided
- Specific projects or deliverables
- Deadlines
- Performance expectations
The clearer the scope, the less room there is for disagreement later about what work was included in the contract.
2. Payment and expenses
The agreement should clearly state:
- How much you will be paid
- Whether payment is hourly, project-based or tied to milestones
- When invoices are due
- Who pays expenses
- Whether taxes such as HST apply
A genuine self-employed worker normally operates their own business and is responsible for their own tax obligations. Employment status still depends on the real relationship, not simply who handles deductions on paper.
3. Control over how the work is performed
This is one of the most important provisions in the agreement.
Independent contractors normally have greater control over how they perform the services they were hired to provide.
An agreement that lets the company dictate your hours, methods, location and day-to-day activities can look much more like employment than independent contracting.
Courts assessing worker status look at factors including control, ownership of tools, opportunity for profit and risk of loss, with the central question being whether the worker is actually operating a business of their own.
4. Exclusivity and other clients
Check whether the agreement allows you to provide services to other clients.
The more economically dependent you become on one company, the more important your legal status becomes. A contractor who earns most or all of their income from one company over a long period can become a dependent contractor with reasonable-notice rights when the relationship ends.
5. Tools, equipment and expenses
The agreement should identify who supplies the tools, equipment, software or other resources needed for the work and who carries the related costs.
Providing your own equipment and assuming genuine business expenses can support independent-contractor status, while relying entirely on company tools and systems can point in the opposite direction.
6. Confidentiality and intellectual property
If the contractor will have access to confidential business information, the agreement should clearly explain what information must remain confidential and what happens to it when the engagement ends.
The contract should also address who owns work created during the engagement, including designs, software, written material and other intellectual property.
Under Canada’s Copyright Act, the author of a work is generally its first copyright owner. Employment has a separate statutory ownership rule, which makes clear written ownership terms particularly important for contractor-created work.
7. Term and termination
Don’t skip the termination clause. It can become the most important part of the agreement when the relationship ends.
The contract should explain:
- When the agreement begins
- Whether it ends on a fixed date or continues indefinitely
- How either side can terminate it
- How much notice is required
- What outstanding payments remain due
A vague or missing termination provision can create a significant dispute over how much notice is owed.
Does an Independent Contractor Agreement Decide Your Legal Status?
No. The words “independent contractor” at the top of the agreement do not decide whether you are legally an independent contractor.
Ontario looks at the real working relationship.
You can be a misclassified employee if the company:
- Controls when and how you work
- Provides the tools you need
- Treats you like its other employees
- Leaves you with little opportunity to make your own business profit
- Does not expose you to a genuine risk of financial loss
Ontario’s Employment Standards Act specifically prohibits employers from treating an employee as though they were not an employee.
If you are really an employee, the contractor agreement does not erase applicable rights to minimum wage, overtime, vacation, protected leaves and termination compensation.
See our guide to independent contractor rights in Ontario for the full employee-versus-contractor analysis.
Can an Independent Contractor Agreement Eliminate Severance?
For a true independent contractor, the agreement can define what notice is required when the relationship ends.
But the contractor label does not automatically eliminate termination compensation if your real legal status is different.
If you’re actually an employee
A misclassified employee can have the same termination and severance rights as other non-unionized employees.
Depending on factors such as age, position, length of service and the availability of similar work, full severance can reach 24 months’ pay.
If you’re a dependent contractor
A dependent contractor can be entitled to reasonable notice when a long-standing, economically dependent relationship ends, even though the person is not an employee.
Ontario’s Court of Appeal has recognized reasonable-notice rights for contractors whose relationship became substantially exclusive and economically dependent.
If you’re a true independent contractor
Your termination rights will depend primarily on the agreement itself and ordinary contract law.
Can You Use an Independent Contractor Agreement Template?
A template can be a starting point, but it should not be treated as a one-size-fits-all contract.
A generic form will not know:
- How much control the company will actually exercise
- Whether you can work for competitors or other clients
- What intellectual property you will create
- What notice should be required if the relationship ends
- Whether the arrangement risks creating employee or dependent-contractor status
The most important part of a contractor agreement is not how professional the template looks. It is whether the contract accurately reflects the relationship you’re entering.
Should you have a contractor agreement reviewed before signing?
A legal review is particularly useful when:
- Most or all of your income will come from one company
- The agreement restricts you from working for others
- The company can terminate the contract with little or no notice
- You are leaving employment to become a contractor
- The agreement contains non-solicitation or other post-contract restrictions
- You are unsure whether the role is truly independent
Independent Contractor Agreement Ontario: Frequently Asked Questions
Do independent contractors need a written agreement in Ontario?
There is no general rule requiring every independent contractor relationship to have a written agreement. But you should have one. A written contract makes the parties’ expectations about services, payment, ownership and termination much clearer.
What is the most important clause in an independent contractor agreement?
There isn’t one clause that matters in every dispute, but control and termination are two of the most important. Control affects whether the relationship actually looks independent, while the termination clause determines what happens when the work ends.
Does signing an independent contractor agreement mean I’m self-employed?
No. Employment status depends on the real working relationship. Ontario and the CRA both look beyond the contract label when determining whether a worker is an employee or self-employed.
Can an independent contractor agreement restrict me from working for competitors?
A contractor agreement can contain restrictions on competitive or solicitation activity, but don’t assume every restriction is enforceable simply because you signed it. The wording and legal status of the relationship matter.
Can an independent contractor get severance in Ontario?
Yes, if the worker is actually a misclassified employee or a dependent contractor with reasonable-notice rights. A true independent contractor instead relies primarily on the termination rights in the contract.
What if I’ve already signed the agreement?
Signing the agreement does not prevent your legal status from being reviewed later. If the actual working relationship does not match the contract, the contractor label is not conclusive.
Review an Independent Contractor Agreement Before You Sign
An independent contractor agreement can affect how you’re paid, how much control you have over your work and what happens if the relationship ends.
Don’t focus only on the rate you’re being offered. The contractor-status and termination provisions can become much more important later.
The Ontario employment lawyers at Samfiru Tumarkin LLP can review the agreement, explain what its terms mean and determine whether the proposed relationship actually reflects independent contracting.
If you’re already working under a contractor agreement and the company has ended the relationship, we can also assess whether you’re a true independent contractor, a dependent contractor or a misclassified employee—and whether compensation is owed.
Contractors and workers in the GTA can speak with our Toronto independent contractor lawyers. You can also have a proposed agreement reviewed by an Ontario employment contract lawyer.
The process doesn’t need to be overwhelming. Understand what you’re agreeing to before the relationship begins or before you give up rights when it ends.