Introduction

This article discusses what the Canada Revenue Agency (CRA) looks at when determining the employment status of catering service workers, such as chefs, cooks, wait staff, servers and bartenders. It should be read alongside Guide RC4110, Employee or Self-employed You can also see the webinar, Employee or Self-employed?

A person’s employment status directly affects whether they are entitled to employment insurance (EI) benefits under the Employment Insurance Act. This status can also affect how they are treated under other legislation, such as the Canada Pension Plan and the Income Tax Act.

Employees and self-employed workers have different responsibilities, benefits, and entitlements. It is important for employees and self-employed workers, as well as for their employers and payers, to be aware of the differences. For more information, see Responsibilities, benefits, and entitlements for employees and self-employed workers.

Payers and workers can set their employment arrangement as they want. However, whether they choose an employee or self-employed status, they must make sure that the facts of their working relationship support that status.

Employer payroll responsibilities

All employers are required by law to deduct Canada Pension Plan (CPP) contributions and EI premiums from most amounts they pay to their employees. Employers must remit these amounts to the CRA along with their share of CPP contributions and EI premiums.

For more information on employer responsibilities and obligations for these amounts, go to our Payroll page.

Industry overview

In this article, the expression "catering service" means the business of providing food and drinks at events, such as graduation parties, wedding receptions, funerals, corporate events, fundraisers and trade shows. These businesses generally have equipment and vehicles to transport meals and snacks to events or to prepare food at the event site.

The tools and equipment commonly used by a worker in the catering service business could include:

• for servers – pens, notepads, bottle or wine openers, lighters, aprons
• for bartenders – cocktail shakers and strainers, muddlers, jiggers, bottle or wine openers, paring knives, cutting boards
• for cooks – knives, cutting boards, aprons, stoves, ovens, fridges, pots, and pans

Catering service businesses may own or manage permanent facilities in which they provide event-based food services, or they may provide food services at their customers’ location (such as personal or home chefs) or at a location designated by their clients. Some catering businesses specialize only in providing serving staff (such as waiters and bartenders) for events and functions.

It is common in this industry that businesses cannot guarantee a minimum number of work hours each week or month to the workers they hire. It is also common for workers to offer their services to different businesses, work for more than one payer or employer during the same period, or have limited availability (for example, students who want variable hours, or part-time or seasonal work).

How to decide if a catering service worker is an employee or a self-employed worker

The CRA looks at the facts of the working relationship between a payer and a worker to determine if that worker is an employee or self-employed. In this section, we discuss indicators that can help you decide a worker’s employment status.

The facts of the working relationship as a whole decide the employment status.

Is the catering service worker an employee?

Generally, an employee is hired to perform specific duties under the direction and control of the person or the company who hired them. An employee does not normally have the chance to make a profit or suffer a loss. An employee is not seen as operating their own business, but rather as being an integral part of the payer’s business. An employee may be entitled to benefits, be paid for vacation time, or be covered by a collective agreement.

The following indicators can help you determine if a catering service worker is an employee. This is not a complete list, and not all of these indicators will be present in every situation. Consider all facts related to the working relationship.

Indicators that the worker is an employee

The payer:

• organizes or pays training sessions for the workers or gives an incentive to attend (for example, an increase in hourly rate), or both
• provides the worker with written information about company policies and procedures (for example, in an employment contract, memorandum, e-mail, etc.)
• provides or pre-approves a uniform or clothing the worker has to wear
• supervises the worker and provides verbal instructions to them during the event
• can ask the worker to redo work, such as redoing a table, room setup or plate, and the worker is paid when doing so
• determines when the worker can take breaks, work overtime, or leave at the end of the shift
• keeps assessment reports about the worker’s performance
• sets the menu and buys the necessary ingredients, based on the agreement or contract with the client
• determines the worker’s rate of pay
• provides benefits to the worker such as:
  • paid vacation
  • sick days
  • short-term and long-term disability coverage
  • medical or dental insurance
  • a pension plan
• is able to exercise disciplinary actions (for example, a server is not offered shifts for a week as a consequence of not showing up for work as scheduled)
• handles and resolves complaints received from clients
• provides the tools, equipment, or supplies the worker requires to do their tasks
• is responsible for repairs and maintenance of the required tools, equipment, or supplies
• hires and pays for a substitute worker, if the worker cannot do their tasks
• pays worker’s compensation premiums
• pays general insurance premiums to protect themselves from liability related to the worker
• pays any costs due to breakage, damage, negligence or accidental spilling of drink or food
• arranges and pays for transportation to and from the venue and does not charge the worker a fee for this service
• reimburses the worker for all expenses related to the services they performed for the payer’s business

The worker:

• has to wear a uniform with the payer’s logo or specific clothing provided or pre-approved by the payer
• needs to comply with the payer’s requirements related to personal grooming (for example, face needs to be clean-shaven, not to wear jewelry)
• is not required to find or hire a replacement if they cannot work when scheduled – their only responsibility is to tell the payer or find a replacement from a pool of workers already approved or employed by the payer
• has to provide the services personally and cannot hire their own helpers
• has no opportunity of profit or risk of loss
• has no business presence

Example of an employee

The payer, Company B, is a catering service business that provides food and drink services at special events for its clients. Company B hired a worker, Mr. A, to work as a bartender. Mr. A is a full-time student and can only work on weekends. The payer determined Mr. A’s hourly pay based on his experience, invited him to attend an orientation session and paid him to attend it. Company B requires Mr. A to wear a jacket with the company logo and provides him, at no cost, the tools he needs to perform the work (for example, cocktail shakers, bottle openers, corkscrews, and cutting boards). Company B resolves any complaints it receives from the clients and may discipline the worker. Company B also keeps track of the hours that Mr. A works. Mr. A has to ask permission to be absent from work, while Company B chooses who will replace him and pays the replacement’s wages. Furthermore, Company B pays workers’ compensation premiums on Mr. A’s behalf. These facts would support that Mr. A is an employee.

Is the catering service worker a self-employed worker?

A self-employed worker carries on their own business. The self-employed worker enters into a contract for services (a business relationship) with the payer. The payer and worker may sign a written agreement or contract that either one may terminate with short notice.

For more information on the responsibilities of self-employed workers, go to Business taxes or Small businesses and self-employed income.

In this relationship, the self-employed worker agrees to provide services and is not under the direction or control of the payer or a person designated by the payer.

The following indicators can help you determine if a catering service worker is self-employed. This is not a complete list, and not all of these indicators will be present in every situation. Consider all facts related to the working relationship.

Indicators that the worker is self-employed

Generally, a catering service worker is considered to be self-employed if the employee indicators listed above are not present and the worker:

• can set their own hours of work and manage their priorities
• is responsible for hiring and paying a helper or a substitute, if for any reason the worker cannot perform the service or needs help in completing a task
• can hire someone else (subcontract) without the payer’s approval
• can choose where the services are performed when possible
• provides all the tools, equipment, or supplies required to do the work
• is responsible for repairs and maintenance of the tools, equipment or supplies and is not reimbursed by the payer for any of these costs
• guarantees that the work will be completed on a timely basis as agreed to with the payer
• sets the price of their services and can negotiate the contract terms with the payer
• invoices the payer and prepares the invoice using their own template
• is responsible for paying any costs due to breakage, damage, negligence or spilling of drink or food
• arranges for their own insurance, such as workers’ compensation or liability, or both
• pays for their own advertising and all other operational expenses, such as invoicing, maintaining a website, and printing of business cards
• has their own customers
• when required by legislation, has registered for the goods and services tax / harmonized sales tax (GST/HST) or Quebec sales tax (QST), charges the GST/HST or QST, and displays their GST/HST or QST number on their invoices
• has a business presence

Generally, a self-employed catering service worker has a business presence if they:

• advertise their services for hire online, on social media or in newspapers
• have a presence on the Internet
• have personalized invoices or business cards
• bill customers using invoices with their own branding and collect payments from them
• are a member of a professional association
• participate in business development activities, for example networking and finding new markets or business opportunities
• maintain a business place, and may provide services from that business place, whether it is at a commercial site or at their home
• have a separate bank account for their business
• keep books and records
• have a business licence, when required by law or applicable regulations
• registered a business name

Example of a self-employed worker

Mr. C owns a catering business and offers his services to various clients, either at their place or at a venue chosen by them. Mr. C offers a variety of menus and food items that the clients can choose from. One of his clients, Company D (the payer), requires his services regularly. Mr. C sets the price for his services, and when the work is completed, he invoices Company D. Mr. C bought all the tools and equipment he needs: stove, fridge, kitchen tools and supplies, containers to keep the food warm, as well as a computer, cell phones, and a small van. He sometimes hires helpers to help him set up a venue or serve the meals, and he pays their wages. Mr. C also pays for all business operating expenses, such as rent, licences, insurance, and repair and maintenance of equipment. He has a business presence and advertises his services online and in the local newspaper. These facts would support that Mr. C is a self-employed worker.

Neutral or inconclusive facts

Neutral or inconclusive facts support the conclusion that a person is an employee just as much as they support the conclusion that the person is a self-employed worker. Some facts about the working relationship between catering service workers and their payers may be neutral or inconclusive, for example when:

• the worker pays for the cost of obtaining certifications required to work in the catering service industry (for example, obtaining a Smart Serve certification in Ontario)
• the conditions of employment of the worker are imposed by public health or to comply with hygiene and sanitation safety rules (such as tying up hair or washing hands regularly when handling food)
• the worker chooses, as a matter of preference, to use their own hand tools such as a bottle opener, lighter, or knife
• the worker wears industry standard clothing (for example, wearing black clothing for a server)
• a third party (for example, the client or a rental company) chooses the location or provides some of the equipment, such as tables, dishes, tablecloths, napkins, and cutlery
• the temporary or part-time worker can accept or decline shifts without repercussions

Can a catering service worker be classified as both an employee and a self-employed worker?

No matter which classification the worker falls under, they cannot be considered both an employee and a self-employed worker under the same contract or agreement. It is however possible for a worker to be considered an employee under one contract or agreement, while at the same time being considered a self-employed worker under another contract or agreement. Each case must be determined based on the facts of the specific situation.

Example

Ms. Y is an employee of the catering service Company X. She works as a cook at their business place, where she has a weekly schedule. From time to time, the payer asks her to also work as a server at banquets. Company X provides her with all the tools and equipment needed for her to do the work as a cook and server. She wears a uniform with Company X’s logo. The company is responsible for handling complaints received from clients. Company X pays Ms. Y every week and provides benefits such as paid vacation, paid leave and medical insurance.

Ms. Y is also a self-employed worker. She is a baker who specializes in making desserts and pastries for various clients, including Company X. She advertises her baked goods on social media. She cooks from her home and uses her own cooking tools, equipment and supplies. She is responsible for repairing and maintaining her tools and equipment. During the busy seasons, she hires and pays helpers to complete all the orders she receives from clients. She sets the price of the goods she sells. Each month, she bills her clients and collects payments from them.

In this example, Ms. Y is an employee of Company X for her work as a cook and as a server. Ms. Y is also a self-employed worker as a baker, for the work carried out through her own business, for her clients (including Company X).

Related topics: employment agencies, tips

A catering service worker may find their job through a placement or employment agency. They also may receive tips and gratuities.

For information on how the CRA determines whether the employment of placement and employment agency workers is pensionable and insurable under the Canada Pension Plan and the Employment Insurance Act, see Placement/employment agencies.

For information on how to treat tips and gratuities and whether this income is part of an employee's pensionable earnings, insurable earnings, or both, see Tips and gratuities.

How to request a ruling

If you are a catering service worker or a payer who is not sure of the worker’s employment status, you can ask the CRA for a ruling to determine the status. More information on the ruling process is available in How to get a CPP/EI ruling.

For information on the possible implications of a CPP/EI ruling, go to Have you received a CPP/EI ruling?

For more information

To get more information, call the CRA’s business enquiries line at 1-800-959-5525.

Legislative references

• Paragraph 5(1)(a) of the Employment Insurance Act
• Paragraph 6(1)(a) of the Canada Pension Plan