• Introduction
• Employer responsibilities
• Definition
• Employment Status
  • If the individual being placed is an employee of the agency
  • If the individual being placed is not an employee of the agency
• Conditions Required for Employment to be Pensionable
• Conditions Required for Employment to be Insurable
• Requesting a ruling
• For more information
• Legislative references

Introduction

This document provides information on what the Canada Revenue Agency (CRA) looks at when determining the employment status of placement/employment agency workers pursuant to the Canada Pension Plan (CPP) and the Employment Insurance Act (EIA).

Employer responsibilities

All employers are required by law to deduct CPP contributions and employment insurance (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. More information on employer responsibilities and obligations can be found through our Payroll menu page.

Definition

For the purposes of the CPP and EIA, a placement/employment agency includes any person or organization that is engaged in the business of placing individuals in employment or for performance of services or of securing employment for individuals. (We will refer to a placement/employment agency as an ''agency'' in the remainder of this article)

Employment Status

If the individual being placed is an employee of the agency

If it is determined that the individual being placed in that employment is an employee of the agency, the agency would be responsible for making the appropriate deductions. The determination of whether or not an individual is an employee is outlined in our guide RC4110, Employee or Self-Employed

If the individual being placed is not an employee of the agency

If it is determined that the individual being placed in that employment is not an employee of the agency, the employment may still be included in pensionable and insurable employment if certain conditions exist.

Conditions Required for Employment to be Pensionable

The employment of individuals placed by an agency is pensionable when all the following conditions are met:

• the employment is performed in Canada;
• the agency receives a fee, reward or other remuneration for placing that worker in that employment;
• the agency's contract with the client is restricted to providing the worker(s);
• the worker is performing services for the client of the agency;
• the terms and conditions under which the services are performed are similar to a contract of service i.e., an employer-employee relationship, and
• the worker is paid by either the agency or by the client of the agency.

Whether the agency or the client pays the worker is not a factor relevant to determining the pensionability of the employment. However, whoever pays the worker is deemed to be the employer and is liable to deduct and remit CPP contributions.

Conditions Required for Employment to be Insurable

The employment of individuals placed by an agency is insurable when all the following conditions are met:

• the employment is performed in Canada;
• the agency's contract with the client is restricted to placing the worker(s);
• the worker is placed in that employment by the agency to perform services for and under the direction and control of the client of the agency;
• the worker is remunerated by the agency for the performance of those services.

When the employment of an individual placed by an agency is insurable and that person is paid by the agency, the agency will be considered the deemed employer of that individual and is liable to deduct and remit EI premiums.

Requesting a ruling

If a worker or payer is not sure of the worker's employment status, either party can request a ruling by the CRA to have the status determined. 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

• Paragraphs 6(1)(a), 6(1)(c) and 7(1)(d) Canada Pension Plan
• Subsections 34(1) and 34(2) Canada Pension Plan Regulations
• Paragraphs 5(1)(a), 5(1)(d) and 5(4)(c) Employment Insurance Act
• Paragraph 6(g) Employment Insurance Regulations
• Section 7 Insurable Earnings & Collection of Premiums Regulations