The Advantages of Being an Employee vs. An Independent Contractor 

In the past, working as a self-employed RMT was the only option. In recent years many more positions as employees have opened up.

Now RMTs have a greater choice between being an employee or pursuing self-employment. With the freedom of self-employment, why would an RMT want to consider working as an employee?

While self-employment offers independence, being an employee brings forth several advantages, rooted in workplace standards, financial security, and additional perks. Here's a concise overview of the benefits of being an employee:

  1. Workplace Standards and Protection:
    • Employees enjoy legal protections and workplace standards that safeguard their rights, including minimum wage, maximum working hours, and overtime pay. 
    • Employers are obligated to provide a safe and healthy working environment, adhering to occupational health and safety regulations.  
  2. Financial Contributions to Canadian Pension Plan (CPP) and Employment Insurance (EI):
      • EI is a benefit that allows you to collect some income if you unable to work due to illness, injury or take maternity/paternity leave. Employers pay $2.32 per $100 dollars the employee earns in EI premiums.  
      • CPP contributions are mandatory for all workers whether they are self-employed or employees. As a self-employed person you must contribute the total amount of CPP, which is 11.9% of your earnings. An employee you pay 5.95% while the employer pays the remaining 5.95%.  
  1. Statutory and Vacation Pay:
    • Employees are entitled to statutory holidays with full pay, providing valuable time for relaxation and personal activities.
    • Vacation pay ensures employees receive compensation during their time away from work, promoting a healthy work-life balance.  
  2. Access to Benefits:
      • Many employers offer comprehensive benefits packages, including health, dental, and vision insurance, providing employees with access to essential healthcare services. 
      • Benefits contribute to overall well-being, addressing both physical and mental health needs.  
  3. Professional Development Opportunities:
    • Employers may invest in their employees' professional development, offering training programs, workshops, and opportunities for career advancement.  
  4. Tax Considerations:
    • While self-employed individuals may have certain tax advantages, employees can still benefit from write-offs, such as membership dues and professional development expenses. 
    • The pay disparity may be partially offset by the ability of employees to claim deductible expenses, providing some financial relief. 

Conclusion:  

Often the commission percentage of an employee is lower than that of an independent contractor leading to the belief that being an employee is not beneficial, however, the additional employer expenses of CPP, EI and vacation pay, which are benefits to the employee, need to be considered.  

Being an employee as an RMT comes with a host of advantages, ranging from legal protections and financial contributions to enhanced well-being through benefits and stability. While self-employment offers autonomy, the benefits of being an employee should not be ignored.  

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