Browsing the blog archives for November, 2009.

Ontario Just Killed Contracting

Canadian Politics, Economic Reality

The surprise changes made to the Ontario Employment Standards Act has effectively killed the contracting option for unemployed professional or white collar staff.

Under the new changes to this law, there is no such thing as a “contractor” unless an individual works for his or her own independent consulting company.  Anyone reselling the services of another is deemed to be an employment agency and the contractor is deemed to be an employee of that agency.

This means that the “agency” must provide the “employee” with severance even if they have not been on assignment when the “employment” ends and holiday pay even if the contractor does not work on a statutory holiday!! The “agency” cannot protect themselves by charging a finders fee in the event that the client ultimately hires the contractor.  So who in their right mind would ever contract out work to an Ontario resident?

In the past, The Lanigan Group and a great many other small consulting businesses would subcontract out overflow work that they could not handle with their staff.  Often this work would go to subcontractors who more often than not were temporarily unemployed professionals.  These assignments would often help bridge that professional until they could find a full time job.  In fact, according to the Canadian Federation of Independent Business, fully 22% of all “self-employed” persons in Ontario pursued contract work because they were in-between full time jobs.

However, the Ontario government, in their zeal to “protect” temporary employees, has now made it prohibitive for small consulting businesses to continue that practice.  Now overflow work will either be directed outside of Ontario to contractors, or to another incorporated consulting company.

Over 60% of small businesses in Ontario are sole proprietors who are unincorporated.  In fact there are 21% more unincorporated sole proprietors than paid employees in Ontario.  As a result of this new law, NONE of them have any hope of obtaining contract assignments unless they are fortunate enough to find their own contracts.

It’s difficult to see how these changes to the law help reduce the high unemployment rate in the tech sector in Ontario.  Perhaps if the Ontario government had actually taken the time to consult with industry before killing the practice of technology contracting, the economy might actually have recovered next year for those in the tech sector.

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