(The board of governors approved policy can be found at http://www.usask.ca/university_secretary/policies/index.php)
The purpose of the policy and guideline is to ensure that payments made to individuals and non-incorporated businesses are in compliance with all applicable labour legislation, related statutory regulations (Canada Revenue Agency (CRA), Workers Compensation Board) and collective agreements in order to minimize the university's risks and liabilities. It is also to ensure that any service arrangements adhere to the limits set forth in the university's "Procurement and Solicitation of Competitive Bids" policy.
In calendar 2007, the university processed over 5,000 ‘honorarium' payments ranging in dollar value from nominal amounts up to amounts in excess of $50,000. In analyzing the payments, it was determined that many of these payments represented arrangements that could or should have been considered either as employment or as a ‘contracted service'.
In an attempt to obtain some control over these payments, the university has classified the payments into different groupings and provided a definition of an honorarium and created simplified procedures for two other payment types that occur frequent at the university ... ‘guest lecturer/speaker' and ‘academic reviewer' remuneration.
An honorarium limit of $1,000 has been approved for payments that meet the definition of an honorarium and provisions have been included in the guidelines to simplify the documentation required to support payments for guest lecturers/speakers and academic reviewers, even if the payment exceeds $1,000.
For departments that have frequent recurring arrangements for a particular type of service, they can arrange, via Purchasing Services, to have a contract template approved by Corporate Administration. The template can be used to formalize those arrangements and as supporting documentation for related payments. This is the fourth type of payment/ arrangement that can be processed with minimal on-going administrative effort.
For all other situations, departments would begin by answering the questions set forth in the "Employment versus Contracted Services Questionnaire." In answering the six questions in Section A, departments will be able to determine if the proposed arrangement will be considered employment and, if so, departments don't need to proceed any further but rather need to follow the university's hiring procedures. If departments are able to proceed to Section B, they will be answering other questions to help determine the status of the proposed arrangement. These questions are the same questions that the Canada Revenue Agency (CRA) would be asking if there was a dispute between an individual and the university regarding the arrangement. Again, if the analysis of the answers indicates employment, departments need to follow the university's hiring procedures. If the analysis indicates that the arrangement can be considered as a contracted service, departments need to follow the university's procurement procedures.
For any contracted service up to $5,000, a standard agreement has been created to enable departments to fill-in-the-blanks and supply information related to the particular arrangement. "Where no changes have been made to the standard agreement, except by the addition of information in the spaces provided, deans and heads of administrative units/entities/institutions or their respective designates (appointed in writing) may sign on behalf of the chair and the secretary [of the board of governors]."
While the guideline, along with its procedures, questionnaires, agreement and forms, is fairly complex, this overview will help departments put their service arrangements and related payments in context. As well, a decision tree has been included in the guideline to help departments determine which process and procedures they need to follow depending on the nature of the arrangement/payment.
These guidelines apply to all departments of the University of Saskatchewan, regardless of the source of funding, when arranging with an individual or a non-incorporated business to supply services to the university, other than for the situations described below:
These guidelines also apply to service contracts with a corporation where one of the principals of the corporation is a current university employee.
Note: If the arrangement is being entered into with a university employee, departments must also reference the ‘Additional Procedures - Current Employees' section below.
Service contracts with all other incorporated businesses are subject to normal university procurement policies and procedures. Further guidance is provided on the Financial Service Division's website under Services for Colleges/Depts/Research within Buying Goods & Services.
The following image displays a decision tree designed to help departments navigate through the procedural steps set forth in these guidelines. The numbered processes on the decision tree are referenced to the numbered procedures on the pages that come after the decision tree.
An honorarium is a payment for services for which fees are not legally required. Often there is no expectation of remuneration (i.e. the service would likely be provided whether or not there is payment). Additionally, an honorarium payment:
( Examples of payments which might meet the criteria of an honorarium include payments to elders, research subjects, note takers for students with disabilities, etc.)
Note: For current employees, the work cannot be related to the employee's regular duties. As a result, there will be few, if any, payments to current employees that meet the definition of an honorarium. To report over time, extra hours and other one-time payments to employees, use the applicable Job Information Form (JIF).
Honorarium payments are processed on the Honorarium Requisition form. A T4A will be issued to individuals for all honorarium payments.
Guest lecturer/speaker remuneration is an amount paid to an individual, with expertise in a particular field, engaged to give one or a few lectures for the university on a particular topic (rather than as a substitute for a regular instructor). A guest lecturer/speaker has no ongoing responsibility to the participants (e.g. grading).
Academic reviewer remuneration is an amount paid to an individual, with expertise in a particular field, engaged to perform a review of a department/college/unit or program and to issue a report of their findings. Reviewers, because there is a limited choice of individuals qualified to perform these reviews, are considered to be ‘sole source' suppliers.
Note: A current University of Saskatchewan employee cannot be paid as a guest lecturer/speaker or academic reviewer.
To requisition a payment for:
In the case where the same individual is engaged again under the same terms and conditions as a previous engagement, for which an Employment versus Contracted Services Questionnaire was already completed, departments only need to complete the Recurring Engagement/Approved Contract Template Certification Page.
Depending on the estimated dollar value of the recurring engagement, departments need to follow the applicable instructions set forth under Procedures, point 6 a) [>$50,000] or 6 b) [>$5,000] or 6 c) [up to $5,000] below.
The purpose of the Employment versus Contracted Services Questionnaire (referred to hereafter as the 'Questionnaire') is to provide assistance in determining the income tax status of a prospective service provider by determining if the services are employment or are to be established through an agreement to retain an independent contractor (e.g. consultant, self-employed individual). For additional information, departments may reference Appendix A - Employment vs. Contracted Services - Determining Factors.
Note: If the arrangement will be with a current employee, departments must also reference the ‘Additional Procedures - Current Employees' section below.
The Questionnaire only needs to be completed once per engagement, even where the period of the engagement covers more than one calendar year. However, if the terms of the engagement change, a new Questionnaire must be completed.
After the first two pages of the questionnaire have been completed and the department has signed the “By, or on behalf of, the department head:” section of the Certification Page, before proceeding any further with a proposed arrangement(s), the Questionnaire is to be forwarded to Purchasing Services to review the department’s determination.
If the individual providing the service disagrees with the university's determination, he or she may request a ruling from CRA (Canada Revenue Agancy) (refer to CRA's Form - CPT1 on CRA's
website at: http://www.cra-arc.gc.ca/E/pbg/tf/cpt1/README.html). Where the individual has obtained a CRA ruling, the ruling will be binding.
If it is determined, upon completion of the Questionnaire, that the services should be secured under a contract to retain an independent contractor, the department must submit the signed Questionnaire to Purchasing Services and normal procurement policies and procedures apply based on the value of the services being provided (see 6 a) or 6 b) or 6 c) below). Further guidance is provided on the Financial Service Division's website under Colleges/Depts/Research - Buying Goods & Services.
Note: Where university resources are provided/consumed/used to carry out the services, the university should consider charging the independent contractor a reasonable amount for these services. Generally, the amount will be based on the usual rates and charges that are set by the university (e.g. for details on space rental fees, contact Facilities Management Division - Space Planning and Management Manager; for rates for telephone usage, contact Information Technology Services (ITS) - Telephone Services).
Where the independent contractor is a non-resident, tax will be withheld in respect of services performed in Canada, based on CRA guidelines, unless a waiver form is approved by CRA prior to submission of the payment request. In all cases, a T4A-NR will be issued and mailed out by the end of February of the following calendar year.
For Canadian residents, payments to an individual will be reported on a T4A that will be mailed out by the end of February of the following calendar year.
For services valued at greater than $50,000
The services must be established under a formal competitive bid process managed by Purchasing Services. In this situation, the Questionnaire or the Recurring Engagement/Approved Contract Template - Certification Page will be completed in collaboration with Purchasing Services. All other documentation and processes identified in point 6 b), i. - iv. below also apply.
The department and the independent contractor must complete the Questionnaire (or the department must complete the Recurring Engagement/Approved Contract Template - Certification Page), unless the services will be established under a competitive bid process managed by Purchasing Services.
After the determination of the individual's status, based on the completed Questionnaire, has been confirmed in Purchasing Services, it will be returned to the department for filing.
Note: If a college or a department uses an approved contract template** for a special situation, and follows an approved process, the contract template will be completed in lieu of the Questionnaire and forwarded to Purchasing Services along with a purchase requisition. (See b) iii. below.)
**Note: When requesting or arranging for an approved contract template, the original submission must be accompanied by a completed generic Questionnaire related to the specific situation.
A written contract must be entered into between the university and the independent contractor. The contract must be developed with the due diligence required by the Signing Authority Policy, including appropriate contract development and processing support from Purchasing Services and consultation with other relevant university departments/units (e.g. Risk Management and Insurance Services, Corporate Administration, etc.)
Once the above steps have been completed, a purchase requisition must be created, thus enabling Purchasing Services to set up a purchase order (PO) to facilitate payment processing.
the service provider's invoice referencing the PO number.
For services "valued up to $5,000"
The only services that can be purchased using a PCard are courier services and vehicle rentals.
The completed Questionnaire must be confirmed by Purchasing Services.
After the determination of the individual's status, based on the completed Questionnaire, has been confirmed in Purchasing Services, it will be returned to the department for filing.
Note: If a college or a department uses an approved contract template** for a special situation, and follows an approved process, the contract template would be completed in lieu of the Questionnaire.
**Note: When requesting or arranging for an approved contract template, the original submission must be accompanied by a completed generic Questionnaire related to the specific situation.
A standard University of Saskatchewan Agreement for Services Valued Up To Five Thousand Canadian Dollars ($5,000.00 CAD) or other approved contract template must be completed and signed by the independent contractor and filed in the department.
Note: It is not necessary to complete an "Agreement for Services Valued Up To Five Thousand Canadian Dollars ($5,000.00 CAD)" for contracted services under $1,000 unless the activity poses a potential physical hazard to an individual or a university facility (e.g. use of chemicals, power tools/machinery, etc.) or involves professional services where the advice could impact the liability or reputation of the university.
Note: The account code normally used for these payments is: 70403 - Externally Contracted Services - Other.
Additional Procedures - Current Employees
The work engagement for a current university employee may be arranged under a contract to secure an independent contractor only if the criteria for arranging the work engagement as an independent contractor are met (i.e. determination arrived at after completing the Questionnaire supports an independent contractor.)
Departments must ensure that all requirements are met under any applicable collective agreements, university policy and statutory regulations, including employment laws. (For example, department heads and employees must consider any potential conflict of interest - refer to the university's Conflict of Interest policy and the requirement for employees to obtain approval from the president to serve as a director or officer of a company - refer to the university's Commercial Directorships Held by Faculty and Staff policy, etc.).
This guideline also applies to payments to an incorporated business for services provided to the university where one of the principals of the incorporated business is a current university employee.
For assistance in determining the relationship:
Employment relationships - Human
Resources - 966-6270
Contractual relationships -
Purchasing Services - 966-6704
Honorariums - Payroll - 966-8328
There are many factors that will determine the relationship as being either employment or a contracted service. No single factor is determinative; rather the whole arrangement must be considered. Often, CRA (Canada Revenue Agency) will scrutinize arrangements with current and former employees more closely.
| Versions | Document Name | Help | |
|---|---|---|---|
 | Agreement for Services Valued Up To $5,000.00 CAD - Template V.B.2.11.09 |  | |
| Cheque Requisition/Reimbursement Claim | | |
 | Recurring Engagement / Approved Contract Template - Certification Page | ||
| Employment versus Contracted Services - Questionnaire | ||
| Honorarium Requisition | ||
 | Job Information Form (JIF) - Human Resources | ||
| Service Income Requisition | ||
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