How can you be sure the independent contractor you have retained
will not be considered an employee? In a
post last year we outlined the importance of the distinction,
the consequences if you get it wrong, and the four tests that
are typically applied. We concluded the four tests boiled
down to this question: Is the person in business for
whether the person is
performing the services as his own business, on his own
But in doing so, the court specifically calls for a two-step
inquiry: First – what is the subjective intention
of the parties? Second – does the objective reality of
the relationship match the subjective intent?
In our experience, there are not many cases where the parties
have not put their minds to what they want to accomplish,
and almost always they specifically state an intention to form
an independent contractor relationship. Nevertheless, the
court determined that the question of intention must be addressed,
and it must be addressed as the first step. So if the parties
have not specifically stated their intentions, the court can look
at their behaviour, such as the form of invoices that are being
rendered, registering for GST, and filing income tax returns as an
But even if the parties have clearly expressed their intention,
or behaved as if they had an independent contractor
relationship, the second step can override all those good
intentions. As the court said:
... the subjective intentions of the
parties cannot trump the reality of the relationship as ascertained
through objective facts.
And so the second step involves going back to look at all the
tests we reviewed in our earlier post: control, provision of tools,
risk and opportunity for profit and integration.
Despite your best intentions, and despite getting past the first
of this new two-step inquiry, you still have to show that the
person is in business for himself.
Having a properly drafted agreement is important, but how the
relationship works in fact is even more important.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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