The Ontario Court of Appeal has further shattered the
"24 month maximum" myth. In Keenan v. Canac Kitchens Ltd., the Court
of Appeal upheld a Trial Judge's finding that two long service
workers were "dependent contractors" and
therefore entitled to 26 months' reasonable notice on
We do not think that this appeal decision is particularly
ground-breaking. While unusual, it is not the first time that a
Court has awarded more than 24 months' notice (we are aware of
at least one case where a court awarded 30 months). Also, dependant
contractors have long been a recognized category of worker.
However, the decision does provide Alberta employers with some
Before engaging a worker as an
"independent contractor", consider that the label that
the parties agree to and put on the relationship will most likely
be irrelevant to a Court's view of whether the worker is an
employee or contractor. Most contactor agreements contain a clause
stating something like "the parties agree that [NAME] is
an independent contractor and not an employee". That
clause is of no value to an employer when trying to defeat the
worker's wrongful dismissal lawsuit.
A court will look at the true nature
of the relationship. As shown by the Trial Judge in Canac, this
means examining a series of factors including:
"exclusivity, control, investment, risks, expectation of
profit and, whose business is it?" Even after these
factors are analysed and an employer believes that it is
appropriate to treat a worker as an independent contractor, that
employer really has no comfort that when the relationship ends the
worker will not claim that he or she is an employee and sue for
In our experience, it is usually the
worker that wants to be treated as an independent contractor,
mostly likely because of the tax advantages. Employers should make
this decision carefully and after a thoughtful analysis. It often
provides the employer with no advantages. Most employers are
already set up to make employment related deductions and pay
statutory entitlements such as vacation pay so there may be little
advantage to the employer – especially if the intention is to
retain the worker for the long term.
Certainly, there are many times when
it is very appropriate to treat a worker as an independent
contractor. In cases that appear to be on the line, employers may
want to treat the worker as an employee. If an employer is
concerned about possible severance obligations (that independent
contractors are not entitled to), it has the option of (a) hiring
the employee with a written employment agreement that limits the
employee to the statutory minimum pay in lieu of notice, or (b)
hiring the employee on a short fixed term contract. Both of these
options may be increasingly appropriate in today's economy
where there may be no need for those specific services indefinitely
or a few months down the road.
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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