An increasing number of businesses (think: Uber!) use “independent contractors” instead of “employees”, casting off the responsibility to deduct taxes and contribute to programs like Employment Insurance or the Canada Pension Plan.
But what effect does working as an independent contractor have on your rights as a worker? Does the fact that you are called an independent contractor actually make you one?
AM I REALLY A CONTRACTOR?
The question of whether you are an employee or a contractor effects your rights at work, especially if you are dismissed. Generally, employees who are fired without cause are entitled to notice or pay in lieu of notice but contractors are not. Employees, unlike contractors, can unionize their workplace.
In cases where a company claims that some one is a contractor and not an employee, Ontario courts consider factors including:
-Do you work exclusively for one company or boss?
-How much does the company or your boss control how you do your work?
-Do you own the tools you use to do your job?
-Do you share in the business risk or profit?
-Whose business is it?
While some people are clearly employees or clearly contractors, many workers fall in between these two categories.
In Ontario, both the common law and the Ontario Labour Relations Act recognize a middle category between independent contractors and employees: the dependent contractor. Dependent contractors, like employees, may be entitled to notice if their employer dismisses them without cause and may be able to unionize.
KEENAN V CANAC KITCHENS – DEPENDENT CONTRACTORS
A recent Ontario Court of Appeal decision confirmed that courts will look at what your work is really like rather than focusing on the title a company gives you in a contract.
In this case, husband and wife Lawrence and Marilyn Keenan had worked for a company called Canac Kitchens Ltd for more than 30 years when their employer closed its door and dismissed them without any notice or compensation. Roughly 20 years before their dismissal the Keenans had signed an agreement that said they were working as full-time “sub-contractors”, not as employees. In spite of this written agreement, their work remained unchanged.
At trial, the Judge found that the Keenans were “dependent contractors” and ordered their former employer to pay them 26 months’ notice. The Court of Appeal upheld this decision, even though the Keenans’ work for another company in the last 2 years of their employment made them somewhat less dependent on Canac.
This flexible, realistic approach to the question of whether a worker is a contractor or an employee (or something in between) is good news for Ontario workers who may have been mislabelled by their employer or are unsure about whether they really are a contractor.
Belton v. Liberty Insurance Co. of Canada, 2004 CanLII 6668 (ON CA)
McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916 (CanLII)
Keenan v. Canac Kitchens Ltd., 2016 ONCA 79 (CanLII)
This blog is for educational and informational purposes only and does not constitute legal advice. If you would like legal advice or have questions about your particular workplace problems please contact a lawyer. Our lawyers’ information is available on our Contact Us page.
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