What an Ontario independent contractor agreement is for
Ontario businesses use contractors for everything from software development and marketing to bookkeeping, consulting and skilled trades. The relationship saves both sides payroll costs and gives the contractor freedom, but Ontario law looks hard at it. The Employment Standards Act makes it illegal to treat an employee as a contractor, and puts the burden on the business to prove the worker is not an employee. Courts have also created a middle category, the dependent contractor, who works mainly for one client and is owed reasonable notice when the work ends. And under the Copyright Act, a client does not own a contractor's work unless the contractor assigns it in writing.
This agreement is built for those realities. It describes the services and records the features of a genuine contractor relationship: independent control, the contractor's own tools, freedom to work for others, the right to use helpers, and real financial risk. It sets an agreed notice period, fees, invoicing and HST, status terms, confidentiality and privacy, a copyright assignment and moral rights waiver, a narrow non-solicitation clause, insurance and WSIB requirements, warranties and a liability cap. Schedules hold the statement of work, the fee milestones and a status checklist.
When to use it
Use it when an Ontario business engages a self-employed person or their corporation for a defined project or an ongoing service: developers, designers, writers, consultants, bookkeepers, marketers, trainers, engineers and tradespeople. It works whether the contractor invoices as a sole proprietor or through a holding corporation.
Don't use it to relabel someone who works set hours under your supervision, alongside your staff, using your equipment, with no other clients; that is employment, and the right document is an employment contract. For platform-based gig work, the Digital Platform Workers' Rights Act, 2022 adds its own requirements.
What's inside
The full list of sections and fields in this template, in the order they appear.
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Parties and services
- Client
- Contractor or contractor's corporation
- Principal
- Services and deliverables
- Independent control
- Other clients
- Helpers and substitutes
-
Term and termination
- Term
- Notice for convenience or pay in lieu
- Termination for cause
- Full satisfaction
- Wind-down
-
Fees and taxes
- Rate or fixed fee
- Invoicing with HST
- Expenses borne by Contractor
- Risk of loss
- Income tax CPP and HST responsibility
- T4A
-
Equipment and status
- Own tools and workspace
- Client site rules
- No employment or agency
- No benefits
- Reclassification
-
Confidentiality and IP
- Confidential information
- Privacy and PHIPA
- Copyright assignment
- Moral rights waiver
- Contractor Materials licence
- Third-party and AI-generated material
-
Non-solicitation, insurance and WSIB
- Customer and employee non-solicitation
- Liability and E&O insurance
- WSIB account and clearance
- Construction coverage
-
Warranties, liability and general
- Professional standard
- Correction of deliverables
- Mutual indemnities
- Liability cap
- Notices
- Disputes
- Governing law
-
Schedules A to C
- Statement of work
- Fees and milestones
- Contractor status checklist
Preview pages
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Page 1 -
Page 2 -
Page 3
How to complete the agreement
- Identify the parties. If the contractor is a corporation, name the principal who will do the work.
- Write the statement of work. Describe services, deliverables, deadlines, acceptance and required licences in Schedule A.
- Confirm the independence terms. Make sure Sections 1.2 to 1.4 are true in practice.
- Set the term and notice. A fixed end date or project completion, and a notice period that reflects how dependent the contractor will be on you.
- Set fees and invoicing. Hourly, per deliverable or fixed fee; HST if registered; which expenses, if any, you reimburse.
- Settle intellectual property. List the contractor's pre-existing materials and any permitted third-party or AI-generated content.
- Set insurance and WSIB requirements. Ask for a clearance certificate for construction work.
- Run the status checklist. Complete Schedule C before signing and review it every year.
Example: a freelance developer
Fictional client Harbourline Logistics Inc. of Hamilton engages Nadia Petrova's company, Petrova Digital Inc., to build and maintain a customer portal from January 5, 2026.
Fees: fixed fee of $36,000 in three milestones of $12,000 (design, build, launch), plus 13% HST, then $95 an hour for support. Notice: 30 days, or fees in place of notice based on the last three months' average. IP: copyright in the portal assigned to Harbourline and moral rights waived; Petrova Digital keeps its own component library, licensed for use in the portal. Status: Nadia works from her own studio on her own equipment, has four other clients, and uses a subcontracted tester.
If Harbourline ends the support work on September 30, 2027, when the average monthly support invoice was $3,800, it can pay $3,800 plus HST in place of 30 days' notice, plus all fees earned to that date.
Ontario rules to know
- Misclassification (ESA section 5.1). Treating an employee as a non-employee is prohibited; the business must prove the worker is not an employee.
- The legal test. Whether the worker is in business on their own account, weighing control, tools, helpers, and profit and loss (Sagaz, 2001).
- Dependent contractors. Owed reasonable notice at common law where economically dependent on one client (McKee, 2009).
- Copyright (sections 13(3), 13(4) and 14.1). Employers own employees' work; contractors keep theirs unless they assign it in writing; moral rights can only be waived.
- HST. Registration required above $30,000 in four quarters; 13% in Ontario.
- WSIB. Construction contractors generally need their own coverage; get clearance certificates.
- Non-competes (ESA section 67.2). Banned for employees; still subject to strict reasonableness for contractors.
Where contractor relationships go wrong
The typical Ontario contractor dispute starts years into a relationship that began as a short project. The contractor now works full-time hours for one client, on the client's laptop, with a company email address and a manager, and is let go with a week's notice. A court then treats them as a dependent contractor or an employee, with months of notice owed and possible ESA claims. The other common problem surfaces later: a client sells its business and discovers it never owned the software or brand its contractor created. The independence terms, notice clause, status checklist and IP assignment in this agreement are designed to prevent both.
Frequently asked questions
How do I know if someone is an independent contractor in Ontario?
Courts and the CRA look at the whole relationship, especially whether the worker is in business on their own account. Key factors are who controls how the work is done, who supplies the tools, whether the worker can hire helpers, and whether they bear a risk of loss and a chance of profit (Sagaz, 2001). The label in the contract does not decide it, and the ESA makes misclassifying an employee illegal.
Do I have to give an independent contractor notice in Ontario?
A genuine contractor is owed only the notice the contract provides. But a "dependent contractor", who works exclusively or almost exclusively for one client over a long period, is entitled at common law to reasonable notice, which can be several months. An express, agreed notice period in the contract gives both sides certainty.
Who owns the work an independent contractor creates in Ontario?
The contractor does, unless the copyright is assigned in writing. Under the Copyright Act, an employer automatically owns work made by employees in the course of employment, but not work made by contractors. Moral rights cannot be assigned, only waived, so the contract should include both an assignment and a waiver.
Do independent contractors charge HST in Ontario?
Yes, if they are registered for HST, which is mandatory once their taxable revenue passes $30,000 over four consecutive calendar quarters. Registered contractors add 13% HST to fees for services supplied in Ontario and show their HST number on invoices.
Can I make a contractor sign a non-compete in Ontario?
The ESA ban on non-competes applies to employees, so it does not directly stop a non-compete with a true contractor. But courts apply a strict reasonableness test, and a broad non-compete can itself suggest the person is really an employee. A narrow non-solicitation clause is the safer choice.
