header_people.jpg

Posts tagged: Independent Contractor

Damages Owed Under Fixed Term Contracts

By , November 28, 2017 12:32 pm

In my last blog post, I discussed a case where an independent contractor who signed a fixed term contract was owed notice of termination, specifically, 5 months and 3 weeks. There are very important differences between indefinite and fixed term contracts, particularly at the time of termination. In this week’s blog post, I’ll delve deeper into how damages are calculated when you are subject to a fixed term contract.

 

Mohamed v Information Systems Architects Inc.

Facts

Mr. Mohamed was hired as an independent contractor for Information Systems Architects Inc. (ISA) to provide technological services for their client, Canadian Tire, for a 2 month project. After signing a consulting agreement, he began to perform computer security services for Canadian Tire.

Around this time, Canadian Tire retained ISA for a second project which required a security engineer to temporarily fill a position for six months. ISA offered the project to Mr. Mohamed, which he accepted by signing a second consulting agreement.

Due to the results of Mr. Mohamed’s security background check, which disclosed a past conviction, Canadian Tire asked ISA to replace Mr. Mohamed. ISA terminated Mr. Mohamed, relying on the termination clauses found in the consulting agreement.

Decision

The court moved on to note that nothing turned on whether Mr. Mohamed was an independent or dependent contractor. Whether Mr. Mohamed was an employee, a dependent contractor, or an independent contractor would have been relevant if the employment contract was of indefinite duration, i.e. one in which a person is entitled to reasonable notice of termination unless the parties have contracted otherwise.

With a fixed term contract, such as the one Mr. Mohamed signed, if the parties do not specify a pre-determined notice period, then the early-terminated employee is entitled to the compensation they would have received until the end of the fixed term. As I discussed in my last blog post, the court found that the termination clauses were unenforceable. Therefore, Mr. Mohamed was entitled to damages equivalent to 5 months and 3 weeks of the remaining contract.

Lessons to be Learned

Although independent contractors don’t enjoy protections under the Employment Standards Act, notice of termination may still be required. If you were characterised as an independent contractor and were terminated without notice, it is still advisable to speak to an employment lawyer to ensure that a) you are in fact an independent contractor, and b) you are not owed notice of termination, particularly if you signed a fixed term contract. 

“The material and information in this post are for general information only. They should not be relied on as legal advice or opinion. The author makes no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this post or its links. No person should act or refrain from acting in reliance on any information found in this post. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and the author or the MacLeod Law Firm.”

Independent Contractor Owed Notice of Termination

By , November 1, 2017 10:01 am

One common misconception is that, unlike employees, independent contractors are not owed notice of termination. In one recent case from Ontario, an employer was forced to pay an independent contractor for notice because of the way the termination clause was drafted in the contract. Although the facts of this case are somewhat unique, there are still important takeaway points for independent contractors to keep in mind, which I will discuss below.

Mohamed v Information Systems Architects Inc.

Facts

Mr. Mohamed was hired as an independent contractor for Information Systems Architects Inc. (ISA) to provide technological services for their client, Canadian Tire for a 2 month project. Prior to being hired, on November 1, 2015, Mr. Mohamed consented to a security check and disclosed that he had been convicted for assault with a weapon in 2000 on the consent form. The next day, Mr. Mohamed signed a consulting agreement which included the following termination clause:

This Agreement and its Term shall terminate upon the earlier occurrence of:

I. ISA, at their sole discretion, determines the Consultant’s work quality to be sub-standard.

II. ISA’s project with Customer gets cancelled, experiences reduced or altered scope and/or timeline.

III. ISA determines that it is in ISA’s best interest to replace the Consultant for any reason.

IV. Immediately, upon written notice from ISA, for any breach of this Agreement by the Consultant.

On November 4, 2015, Mr. Mohamed sent ISA a security disclosure form in which he once again disclosed his criminal record. The next day, he began to perform computer security services for Canadian Tire on site.

Around this time, Canadian Tire retained ISA for a second project which required a security engineer to temporarily fill a position for six months. ISA offered to project to Mr. Mohamed, which he accepted by signing a second consulting agreement.

On December 4, 2015, ISA received the security report for Mr. Mohamed, which indicated his conviction. The report was forwarded to Canadian Tire, which asked ISA to replace Mr. Mohamed. Mr. Mohamed was advised that he was being terminated by Canadian Tire and had to leave the premises. Mr. Mohamed sent an email to ISA detailing the steps he had taken to obtain a pardon for his conviction. ISA terminated Mr. Mohamed, relying on the termination clauses found in the consulting agreement.

Decision

The court found that the termination clauses were vague and unclear, and therefore, unenforceable. The termination clauses gave ISA the unfettered right to terminate Mr. Mohamed’s contract. The judge found this to be inconsistent with the doctrine of good faith in the performance of contracts. The judge also commented on how the clauses made no sense in operation as they provided for notice if Mr. Mohamed breached the agreement (without specifying the amount of notice), and yet no notice was required if Mr. Mohamed’s work quality was sub-standard (which is a breach of contract). The judge found it to be illogical for the termination clause to require notice where he breaches the contract, but no notice if he had done nothing wrong.

The court moved on to note that nothing turned on whether Mr. Mohamed was an independent or dependent contractor: as the contract was for a fixed term, Mr. Mohamed was entitled to the balance of contract owing, with no obligation to mitigate his damages. Therefore, Mr. Mohamed was entitled to 5 months and 3 weeks of the contract. In my next blog, I will delve more into how the judge arrived at this decision.

Lessons to be Learned

  1. Although independent contractors don’t enjoy protections under the Employment Standards Act, notice of termination may still be required. If you were characterised as an independent contractor and were terminated without notice, it is still advisable to speak to an employment lawyer to ensure you are not owed notice of termination.
  2. The way damages are calculated for breach of an indefinite contract versus a fixed term contract is very different. I will be exploring this concept further in my next blog.
  3. As an interesting side note, a private member’s bill has recently been introduced which, if passed into law, would extend protections under the Human Rights Code to people with police records (currently, Mr. Mohamed would only enjoy protection under the Code if he had obtained a pardon for his conviction). To read more about my thoughts on this proposed addition to the Code, click here.

“The material and information in this post are for general information only. They should not be relied on as legal advice or opinion. The author makes no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this post or its links. No person should act or refrain from acting in reliance on any information found in this post. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and the author or the MacLeod Law Firm.”

Independent Contractor or Employee? That is the Question.

By , September 14, 2016 1:46 pm

Many companies hire contractors instead of employees. As we have written before, some advantages for contractors are paying less taxes and being able to claim more tax deductions. However, a contractor is not protected by the Employment Standards Act. Those protections include pregnancy and parental leave, termination and severance pay, and overtime pay.

Just because a company labels you as an independent contractor does not mean you are one.

In a recent case, the Court has allowed 7000 sales agents of a company to bring a lawsuit together claiming that they were in fact employees mislabeled as independent contractors.

The Case: Omarali v Just Energy Group Inc. 

Just Energy has been relying on sales agents since 1997 to go door-to-door to potential customers to sell its products.  All of these sales agents had written contracts that stated they were independent contractors. Omarali, the representative plaintiff, made $3.32 per hour in his first month working 12-hour days.

Despite the contract stating they were independent contractors, the court found there was the potential that they were employees. The major factor in this case was the amount of control that Just Energy had over the contractors.  The Court found that there was enough evidence that Just Energy did have some control. Examples of this control was that Just Energy set the schedule, uniform, could discipline them and instructed the workers on what to say when completing sales.

Lessons

Workers rights differ depending on whether they are classified as an independent contractor or employee. There are advantages and disadvantages for both types of worker. It is helpful to examine and understand your obligations when you enter into a new contract.

Even if you have signed a contract as an independent contractor, that does not necessarily mean you are one. It is always helpful to consult an employment lawyer to determine whether you are an contractor or employee, and what your rights may be. In the case above, Omarali earned $3.32 per hour as an contractor. If he is found to be an employee, he would be entitled to at least minimum wage and could be owed substantial compensation.

If you would like to speak with an experienced lawyer at MacLeod Law Firm about this issue, please contact us at [email protected] or 647-204-8107.

“The material and information provided on this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises or guarantees about the accuracy, completeness, or adequacy of any information linked or referred to or contained herein. No person should act or refrain from acting in reliance on any information found on this website or blog, without first retaining counsel and obtaining appropriate professional advice from a lawyer duly licensed to practice law in the relevant jurisdiction. These materials do not constitute legal advice and do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.”

 

Panorama Theme by Themocracy