By Trustworthy Legal Services

11/08/2015 Trustworthy Legal Services is your Legal Expert helping people with civil disputes in the areas of Employment, WSIB, Small Claims, Landlord and Tenant, and other tribunal matters with the compensation amount of $25,000 or less. Contact Us for Legal Advice in Ontario at 647-891-9089.


Many companies outsource part of all of the business operation these days by hiring independent contractors or subcontractors, aiming at saving a lot of money such as no more CPP, EI, WSIB payments and such. As much as it is known to many employers, an advantage of hiring an independent contractor includes no obligation to serve him/her a proper notice of termination or a termination package. Nevertheless, it is not uncommon to learn about lawsuits of wrongful dismissal against employers with respect to damages sought by these contractors, when, an individual, in fact, believes that he/she works as an employee or at least a dependent contractor in the hiring company.


Hence, how can an independent contractor be distinguished from an employee under our current law? These are various factors taken into consideration for this analysis:

1. Degree of control over the individual's work by the hiring company;
2. An individual is whether in business for himself/herself OR he/she is part of another business enterprise in regards to risk/profit consideration;
3. The services rendered by the individual an integral part of the business;
4. Durability and degree of exclusivity of this relationship;
5. An individual whether provides his/her own tool(s);

The result of the above-mentioned test will come up to a conclusion that an individual is considered as an employee, if all facts point out (i) high degree of control over the individual's work by the hiring company, (ii) an individual part of another business enterprise, (iii) the rendered services an integral part of the business, (iv) high degree of exclusively of this relationship AND (v) tools provided by the hiring company.


Otherwise, it may prove that an individual is a contractor, when he/she tends to be more likely in business for himself/herself. However, it cannot automatically conclude him/her as an "independent contractor", because there is a possibility of being a "dependent contractor" depending on its own circumstance. In order to determine whether an individual is a "dependent contractor" from an independent one, both exclusivity and durability provisions will be taken into consideration on whether a "dependent contractor" is entirely relied on one company for income during a relatively long duration.


Unlike an independent contractor, a "dependent contractor" is confirmed to the entitlement of a reasonable notice of termination, which is made reference to the decision released by the Ontario Superior Court of Justice in the case of Keenan v. Canac Kitchens, as well as the decision in the case of McKee v. Reid's Heritage Homes Ltd by the Ontario Court of Appeal.


Therefore, when deciding to hire an "independent contractor", the employer should include a clear and unambiguous terms, conditions and termination clause in the independent contractor's agreement, also with careful consideration as to the true nature of the relationship between the parties.


Disclaimer: This information is for your reference only. Each situation can be different. Should you encounter any dispute, you can contact Trustworthy Legal Services for your independent legal advice!


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