What Should Be Included in an Independent Contractor Agreement?

Steps to build the agreement

Before drafting clauses, confirm the actual working relationship matches contractor status. No clause in the agreement can override how the work is really performed: the Canada Revenue Agency (CRA), Ontario’s Employment Standards Act (ESA), and Alberta’s Employment Standards Code all look at substance over labels when a dispute or audit arises. The steps below build an agreement around that reality rather than around wishful drafting.

1. State the relationship and intent clearly. The CRA’s guide on worker status says it asks “what their intent was when they entered into the working arrangement,” so the agreement should include a recital naming the relationship as an independent contractor arrangement, not employment. In Ontario, this recital matters less on its own: the ESA guide confirms “it is the relationship between the individual and the business (or person) that matters, not the label.” Treat the intent clause as a starting point, not a shield.

2. Define scope of work without retaining day-to-day control. The CRA treats “control” as “the ability, authority, or right of a payer to exercise control over a worker” and lists it as a key factor pointing toward employment. The agreement should describe deliverables, milestones, and outcomes rather than dictate hours, methods, or supervision. Ontario’s ESA guide reflects the same idea from the other end: a genuine contractor is defined as “someone who is in business for themselves,” which is inconsistent with a business directing how the work gets done day to day.

3. Set payment terms and address GST/HST. The agreement’s invoicing clause should state whether the contractor is GST/HST-registered. Federally, a contractor must begin charging GST/HST once registered, but stays a small supplier, with no obligation to register or charge, “if you did not exceed the $30,000 threshold in four consecutive calendar quarters.” Spell out invoice frequency, payment timing, and who is responsible for remitting the tax once registration applies.

4. Assign intellectual property explicitly. Unlike an employee’s work, which vests automatically in the employer, a contractor is, “in the absence of any agreement to the contrary,” the first owner of the copyright in what they create under the federal Copyright Act. If the business needs to own the deliverables, the agreement needs a clause that says so in plain terms; silence defaults ownership to the contractor.

5. Add a no-benefits, no-statutory-deductions clause. Because a genuine contractor is “in business for themselves” rather than an employee, the agreement should confirm the contractor is responsible for their own taxes, and is not entitled to the deductions or protections tied to employee status. This lines up with Alberta’s statutory definition, where an employee is “an individual employed to do work who receives or is entitled to wages,” a category the agreement is trying to place the contractor outside of.

6. Include a termination clause suited to contractor status. Ontario’s ESA guide lists, as an indicator of genuine contractor status, that “the business can end the individual’s contract for services, but cannot discipline the individual.” A termination clause built around ending the engagement or the contract for services, rather than one that mirrors a disciplinary process, is more consistent with a true contractor relationship.

7. Understand the misclassification risk before signing. Ontario’s ESA guide is direct that “employers are not allowed to treat employees covered by the Act as if they are not employees,” and enforcement follows misclassification regardless of what the agreement says. Alberta’s employment standards protections apply only to actual employees, confirmed by the province’s statement that its rules do not apply to workers who are “self-employed or working as independent” contractors. In both provinces, a well-drafted agreement supports a genuine contractor relationship; it does not create one where the facts point the other way.

Where a CRA ruling fits in

If a dispute over status arises federally (for example, over CPP or EI obligations), either the worker or the payer can ask the CRA to rule on it, and there is a filing window: a request can be made “by June 29 of the year following” the year in question. An agreement can note this avenue exists, but it cannot pre-decide the outcome; the CRA applies its own multi-factor test regardless of what the contract says.

What this means for drafting across Ontario and Alberta

Where the rules are federal, such as GST/HST registration and copyright ownership, the same clauses apply whether the contractor is based in Ontario, Alberta, or elsewhere in Canada.