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What’s in a name – Employee or Independent Contractor?

By , March 21, 2016 10:00 am

Have you been recently terminated and the company did not provide notice or pay-in-lieu of notice because you are an “independent contractor”?

Sometimes organizations believe that it is more advantageous to categorize the working relationship as one of independent contractor in order to avoid making payroll remittances and to permit termination of the relationship without notice or pay-in-lieu of notice.

However, whether you are truly an independent contractor depends on a variety of factors. The Courts have established a category between employee and independent contractor called dependent contractor. Dependent contractors are entitled to reasonable notice, similar to an employee, upon termination.

Keenan v. Canac Kitchens

In a Keenan v. Canac Kitchens, 2015 ONSC 1055,  two dependant contractors were awarded 26 months’ reasonable notice each.

Canac Kitchens manufactured and sold kitchen cabinets. At the time Canac terminated Mr. and Mrs. Keenan, they had worked there 32 years 25 years respectively as delivery and installation supervisors. They were originally hired as full-time employees, but in or about 1987, Canac told them that they would become contractors and they were given an agreement to sign reflecting this arrangement.

The Keenans continued working under this agreement until their termination in 2009. Canac did not provide them with any notice or pay-in-lieu of notice as they were considered contractors and thus not entitled to such notice. The Keenans brought wrongful dismissal claims alleging that they were in fact employees and as such entitled to reasonable notice of termination. The Court concluded that they were dependent contractors and awarded them 26 months’ notice each.

This decision was recently upheld by the Ontario Court of Appeal. See Keenan v. Canac Kitchens Ltd., 2016 ONCA 79.

Factors Considered by the Court

  • Exclusivity of Services
  • Control
  • Ownership of Tools
  • Participation in risk and opportunity for profit
  • An assessment of the question – who business is it?

These factors are rarely black and white. The Courts will consider each factor contextually when making a decision. If the company exerts considerable control over the terms of how you provide services or if a majority of your income is derived from that one company, it’s possible that you are a dependent contractor.

If you have been terminated and the company has not provided reasonable notice or pay-in-lieu of notice because it considers you an independent contractor, you may be entitled to notice if you are a dependent contractor. One of our lawyers would be happy to meet with you to discuss your situation to see if you’re likely to be considered a dependent contractor. Please contact us at 647-204-8107 or by email at [email protected]

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