If you consider that you are working full-time for this one “employer”, then in all likelihood, you are not an independent contractor. If this employer has fired you, and claims you are not entitled to notice of termination or any pay in lieu of notice, or offers a small amount in return for a release, the good news is that there is a lot you can do.

Rather than walk away empty-handed, understand your rights. Start by consulting an experienced employment lawyer, who can help you understand whether you are an employee or perhaps a dependent contractor, entitled to termination notice or termination pay in lieu of such notice. There is a good chance that you are entitled to significant termination pay.

Below is an overview of why you might be owed significant termination pay.

What the Law Says

Under common law, independent contractors are not entitled to notice of termination or pay in lieu of notice, unless their contract explicitly provides for it.

However, courts and tribunals have recognized that some individuals labelled as “independent contractors” are actually employees or dependent contractors, both of whom are generally entitled to notice of termination or pay in lieu under common law, unless a valid contractual clause provides otherwise.

Three Legal Categories of Workers

As explained in Keenan v. Canac Kitchens Ltd., 2015 ONSC 1055, (“Keenan”, affirmed by Ontario’s Court of Appeal, 2016 ONCA 79) at paragraph 17, “[e]mployment relationships exist on a continuum; with the employer/employee relationship, at one end of the continuum, and independent contractors at the other end. Between those two points, lies a third intermediate category of relationship, now termed dependant contractors.”

Employees are fully protected by and entitled to minimum entitlements on termination under employment standards legislation (“ESL”) and may be entitled to reasonable notice under the common law. Dependent contractors are contractors who are economically dependent on a single client. They are generally entitled to reasonable notice upon termination.  True independent contractors are self-employed, with multiple clients and significant control over their work. They are not entitled to termination notice unless specified in their contract.

As confirmed by Ontario’s Court of Appeal in McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916, the first issue is whether a worker is an employee or contractor.  If the worker is a contractor, the court will then consider whether the worker is a dependent contractor or an independent contractor.

Employee v Contractor

In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, the Supreme Court explained how to tell if someone is an employee or an independent contractor. The main question is whether the person is running their own business or working for someone else. Although there is no universal test, the following factors are usually considered:

• how much control the employer has over the worker’s activities,
• whether the worker uses their own equipment,
• if the worker hires help,
• how much financial risk the worker takes,
• how much responsibility the work has for investment and management, and
• what the opportunity the worker has for profit in the performance of their tasks.

Dependent v Independent Contractor

As examined in Keenan, the court will usually consider the following principles to determine if a worker is a dependent or independent contractor:

• Exclusivity of the relationship (do you work only for one company?).
• Degree of control the company has over your work.
• Ownership of tools or equipment (do you provide your own?).
• Opportunity for profit and risk of loss (can you make a profit or suffer a loss?)
• Ownership of the business. (Whose business is it?)

To be considered a dependent contractor, exclusivity does not have to be completely exclusive at all times. In affirming Keenan, the Court of Appeal explained that the court will look at the full history of the relationship, rather than a point in time, to decide whether the worker was economically dependent on the company, due to exclusivity or a high level of exclusivity. In Keenan, although the workers worked for the hirer’s competitor during the last two years of the relationship due to a slowdown in the hirer’s work, the court still found them to be dependent contractors, as more than 90% of their income came from the hirer and they worked exclusively for the hirer for more than 20 years.