Bermuda Introduces Guidance On Independent Contractors

• Published date: 03 April 2023
• Subject Matter: Employment and HR, Insurance, Tax, Contract of Employment, Retirement, Superannuation & Pensions, Employee Rights/ Labour Relations, Insurance Laws and Products, National Insurance
• Law Firm: Walkers
• Author: Mr Nicholas Howard

The continuing development of the gig economy and the increased use of remote working following the pandemic has presented challenges for determining the true nature of working relationships. This determination is critical for businesses. Misclassification of workers as independent contractors or consultants can lead to significant consequences.

Properly classifying workers is critical in determining whether a worker will be entitled to the benefits and protections of the Employment Act 2000 ("EA 2000") and to certain other obligatory benefits like health insurance or pensions. In February 2023, the Ministry of Economy and Labour published guidance on the difference between employees nd independent contractors. At the time of writing, this guidance could be found here.

The guidance is careful to note that there is no definitive test applicable in all workplaces to determine whether an individual is an independent contractor. However, the guidance sets out 12 indicators to consider when hiring employees and contractors.

The Guidance: 12 indicators of an employment relationship

The 12 indicators described in the guidance are as follows:

1. Contract type: An independent contractor will work under a contract for service, which engages an individual for a set fee to complete a specific project or provide specific advice.
2. Continuity of work: An independent contractor will typically work for a specific period or task, and has the option to subcontract the job.
3. Control over work: An independent contractor has control over the work and has more freedom to determine how, when, where and by whom the work is performed.
4. Remuneration: An independent contractor can be paid at intervals, at the end of a project or for specific service provided. They will typically set their own fees via quotes or proposals and will submit invoices on completion of work.
5. Control over tools and equipment: An independent contractor will typically provide their own tools or bear the cost of the necessary tools.
6. Integration in the business: An independent contractor's services are typically not integral to the everyday operations of the business.
7. Training from the business: An independent contractor is unlikely to receive training from the client or customer. The guidance caveats this with instances where training in specific systems is required.
8. Share in profit & loss: An independent contractor may incur greater financial risk, through investments into equipment and financial liability for...