Human resource practitioners often need to determine whether an
individual is an employee or an independent contractor. In some
industries, the use of independent contractors is common place.
A trend is emerging in employment law decisions creating a third
category of worker called the "dependent contractor."
The Ontario Court of Appeal in McKee v. Reids Heritage
Homes said that there may be situations where the individual
is so dependent upon the company, that a court may imply a term
requiring reasonable notice to terminate the relationship where the
contractual agreement does not contain an express termination
In Drew Oliphant Professional Corp v. Dr. Kelly
Harrison, 2011, ABQB 216, the Alberta Court of Queen's
"In recent years, a third
category has developed, in which the party contracting is
considered a "dependent contractor". In those cases,
notice of termination is required notwithstanding the absence of an
The courts have come to this conclusion in order to extend the
safeguards of the employment contract to self-employed workers who
are subject to relatively high levels of subordination or economic
dependency, but technically do not qualify as employees in the
strict sense. If there is a high level of subordination or a high
degree of dependency on the company, then notice of termination
will be required, unless the contract expressly provides for
Defining a Worker as "Dependent"
The factors examined by the courts to determine whether the
worker is a dependent contractor have included:
Duration/permanency of the relationship. The
longer the duration of the relationship, the more likely the
finding of a dependent contractor.
Degree of reliance/closeness of the
relationship. A high degree of reliance on the company can
be a hallmark of the dependent contractor. A marketing or sales
representative who is selling only the company's product is an
example of this.
Degree of exclusivity. An exclusive
relationship with the company is likely to support the conclusion
of dependency. If a contractor is doing a significant amount of
work for several different companies, the contractor is probably
While none of these factors by themselves justify the finding of
a dependent contractor relationship, the presence of a combination
of these factors may substantiate such a claim.
What kind of notice is required? A recent Alberta Court of
Queen's Bench decision stated that a dependent contractor is
entitled to some degree of reasonable notice, although something
less than what an employee would be entitled to.
What You Should Do If You Have a Dependent Contractor
From a practical human resources perspective, it is important
for you to review those situations where you have independent
contractors. It is essential to determine whether they are
"independent" or "dependent." If they are
"dependent" then it is important to expressly state in
the contract the amount of notice required to terminate the
relationship. Failure to do so will allow a court, in the event of
a dispute, to determine what the reasonable notice should be in
order to terminate the dependent contractor relationship.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).