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Here is one example though I mean to ask this in a general sense:

I had an interview where we agreed on the pay rate of $27/hr. In my contract the pay rate was written as $25.92/hr. When I pointed out there was a mistake they said since they pay 4% vacation pay (which is required by the government) this amounts to the $27/hr.

I feel this was misleading. Is this normal?

Roughly speaking, can someone argue they are getting paid more or less if they are a contractor because they can claim business expenses and report their own tax? Or is this confused?

In summary, when a pay rate is agreed upon, it means just what it say, before taxes or deductions or vacation pay etc. isn't this right?

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  • Are you an independent contractor or an employee?
    – joeqwerty
    Jan 19, 2022 at 13:45
  • Country? That could be important here. In the US, employers don't withhold anything from contractors, but Canada (for example) may be different.
    – PeteCon
    Jan 20, 2022 at 2:59

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It’s not normal. If you have a hourly salary, any reasonable/decent person will advertise what money they pay you for every hour you work. It is then understood that they subtract taxes or health insurance that they are legally required to pay to the government on your behalf and pay only the difference to you. In addition they would pay these 4% which are not for hours you worked but for holidays.

In the UK they will also by employer’s national insurance contributions without mentioning it to you. Of course they would have advertised the job for $25.92 per hour, so you don’t gain anything.

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The act of "agreeing upon" is when you sign the contract.

Within the contract, it is very clear (hopefully) regarding what the figures mean.

Where there is to be a formal written contract, it is generally understood that any preliminary discussions are merely indicative and not binding.

Where I am in Australia, it is quite usual to include all taxes in the figure discussed. Because tax is typically withheld from the employee, this does mean that paycheques can be lower than expected.

To get a sense of what is usual in Canada, you should look for job advertisements and see if they specify "net" or "gross" pay.

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    This probably applies in most jurisdictions. Also, note that "net pay" is often difficult to offer, because the deductions will be different depending on the employee's situation (married, children, other jobs etc.), so usually employers offer "gross pay".
    – sleske
    Jan 19, 2022 at 12:08
  • I disagree with the "act of agreeing upon is when you sign the contract". If someone agrees to x and then has y in the contract, I call that bait and switch.
    – user39743
    Jan 28, 2022 at 3:03
  • @user39743 It will depend on the wording used. The legal obligations usually start once the formal contract is signed (that's why it exists after all) In this instance there was likely vague terms used during the discussion of pay which probably doesn't meet the requirement for certainty.
    – Gregory Currie
    Jan 28, 2022 at 3:46

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