So you’ve decided to hire a caregiver for your elderly relative. Congratulations: This is a courageous and positive step in finding your loved one the care they need so they can live a happier and more fulfilled life.
There are plenty of aspects of the relationship to consider—from the duties your senior caregiver will perform to how well they click with your family dynamic. But there are also more practical concerns to deal with, too: Namely, their employment status and how this will affect their—and your—tax and social security obligations and the paperwork you have to do.
Household employees vs. independent contractors
Establishing whether your senior caregiver is self-employed or employed by you is an important distinction with legal consequences for both of you. Their status will affect eligibility for employment insurance (EI) benefits under the Employment Insurance Act and other entitlements under the Canada Pension Plan and the Income Tax Act.
The rules on whether a worker counts as a household employee or an independent contractor are largely based on the concept of control. An independent contractor usually has complete control over their own rate of pay, working hours, the equipment they use, their place of work, and the scope of what they do. They will operate their own business, likely with a range of different clients they work for. Lastly, and crucially, they take charge of their own payroll taxes, benefit and pension entitlements, and other administration involved in running a business.
An employee, however, takes instruction from the individual or organisation who hires them. In the context of your senior caregiver, this means you! For the most part, in-home care workers are classified as employees. When it comes to how they spend their time with your elderly relative, ultimately, you call the shots: Deciding which errands they run and how best they can support your loved one. You or your relative’s healthcare provider are in charge of strategizing and providing the equipment and supplies they need.
If the above describes your relationship with your senior caregiver, then chances are you have an employer-employee relationship with them—and the corresponding obligations apply.
Note that where you live, however, may be another factor governing your relationship with your senior caregiver: The situation may vary depending on the province or territory in which you live, with some special conditions applying in Quebec, for instance.
If you’re unclear about your caregiver’s employment status, help is at hand to keep you on the straight and narrow. You can apply to the CPP/EI Rulings Program for a definitive official ruling on whether the caregiver counts as self-employed or a household employee—giving you peace of mind and a clear indication of the next steps to take.
Your obligations as an employer
In Canada, employers have a range of obligations: They are responsible for deducting Canada Pension Plan (CPP) contributions, employment insurance, and income tax from what they pay their employees. As an employer, you must pay (or ‘remit’) these deductions, along with CPP contributions and EI premiums, to the Canada Revenue Agency (CRA), which is responsible for taxation.
Failing to do so comes at a cost, so make your calculations carefully: If you fail to deduct the required contributions or premiums, you will ultimately be required to pay everything you owe, plus penalty charges and interest.
But it isn’t just about law and penalties—taking care of your household employees has a benefit for your senior caregiver, too. Contributing to their benefits under CPP and EI helps them financially, keeps the Revenue Agency happy and you on the right track—and helps create a safety net for someone who is performing a crucial caring role for a valued member of your family.
