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(1) Beware of misclassification if hiring someone full time as a contractor in Canada. In this case the fact that the employee is planning to pick up a side gig is a good indicator they are a genuine contractor instead of a disguised employee. Similarly it helps if the worker provides their own equipment and has responsibility for their own working hours.

(2) Do not offer health and other benefits directly or via an allowance as this is the act of an employer. (3) Instead build them into the total salary e.g. increase salary by 5k.

Lastly if engaging as a contractor make sure it is for a fixed term (e.g. 6-12 months). Towards the end of the contract initial duration both parties can assess whether the setup still works or whether an employed solution might be more appropriate.

This article might be helpful: https://www.hrreporter.com/workplace-law/39422-independent-c...