One of the key distinguishing feature between an independent and dependent contractor, particularly for employers, is that dependent contractors are owed reasonable notice upon dismissal. As reported by the Toronto Star, the distinction between the classifications is very important.
The question at issue in a recent case before the Ontario Court of Appeal (reported on by the Star in the link provided above) was the point in time at which a worker’s “exclusivity” of work with a particular employer is to be assessed. Although the employees in question had 32 and 25 years of service with the employer, respectively, in their final two years of employment they began working for a competitor. The employer argued that this should be taken into consideration when assessing whether there was an exclusive relationship between the employer and employee.
The Court of Appeal upheld the trial judge’s decision, which used a holistic approach to determining the exclusivity relationship. Since the reason for assessing exclusivity is to understand the degree of economic dependency on an employer, the trial judge correctly examined the entirety of the employees’ relationship with the employer to determine that they were in an exclusive relationship, thus they were dependent contractors that required reasonable notice damages upon dismissal.
Exclusivity is not a black and white issue. This decision reminds employers that they must be aware of how frequently they seek the work of independent contractors. If a contractor is gradually reducing their remuneration from sources outside of the employer over time, that contractor may have the requisite level of dependency such that they can demand reasonable notice upon dismissal as a dependent contractor.
Written with the assistance of William Goldbloom, articling student.