Business and information technology consultants exception

Overview

Effective January 1, 2023, an individual who meets the definition of “business consultant” or “information technology consultant” (IT consultant) does not have rights under the Employment Standards Act, 2000 ESA if certain conditions are met.

This exception applies to individuals who would otherwise be covered by the ESA and does not affect whether someone meets the definition of “employee” under the ESA. For example, where the individual is an independent contractor, the ESA does not apply, and the consultant exception is not relevant. See the Employee Status chapter of this guide for more information about determining who is an employee.

Business and information technology (IT) consultants defined

Under the ESA a “business consultant” is defined as someone who provides advice or services to a business or organization on its performance, including:

• operations
• profitability
• management
• structure
• processes
• finances
• accounting
• procurements
• human resources
• environmental impacts
• marketing
• risk management
• compliance
• strategy 

Under the ESA an “information technology consultant” is defined as someone who provides advice or services to a business or organization on its information technology systems, including:

• planning
• designing
• analyzing
• documenting
• configuring
• developing
• testing
• installing

It does not matter whether the business or organization the consultant provides advice or services to is the consultant’s employer, or a client of the consultant’s employer.

Determining if the exception applies

For a business or IT consultant to be excluded from the ESA all four of the following conditions must be met:

1. The individual meets the definition of business consultant or information technology consultant under the ESA. The ESA includes definitions of the terms business consultant and information technology consultant.
2. The consultant provides services through a corporation or sole proprietorship. The individual must be providing their services through either:
   • a corporation of which they are a director or a shareholder party to a unanimous shareholder agreement
   • a sole proprietorship if the services are provided under a business name of the sole proprietorship that is registered under the Business Names Act.
3. There is a written agreement containing specified terms. The employer and consultant must have an agreement in writing that sets out when, and how much, the consultant will be paid. The agreement must express the consultant’s pay as an hourly rate, which must be at least $60 per hour. The hourly rate cannot include:
   • bonuses
   • commissions
   • expenses
   • travelling allowances
   • benefits
4. The consultant must be paid at the time, and for the amount, specified in the agreement.

Applying the exception

If all four of the conditions are met, the exception will apply, and the individual will not have rights under the ESA.

If any of the conditions stops being met, the exception no longer applies, and the individual may have rights under the ESA.