A recent decision of the Ontario Court of Appeal upheld a lower
court decision awarding 26 months of notice to two individuals
deemed dependent contractors. Specifically, Keenan v Canac
Kitchens sheds some light on factors leading to the
characterization of a 'dependent contractor' relationship
as well as a review of characteristics that justify an award
greater than 24 months.
Summary of Factual Context
The two plaintiffs, Lawrence and Marilyn Keenan, had very
lengthy periods of service (32 and 25 years), were 63 and 61 at the
time of termination, held supervisory positions and up until the
final 2 years of the relationship, worked exclusively for the
defendant, Canac Kitchens.1 Initially the plaintiffs
were employees but in 1987 were told that they would carry on their
work as independent contractors. At that time they were given new
job titles, told to obtain insurance coverage, were provided with
records of employment and draft agreements indicating the end of
the prior employment relationship and the start of the new
The Keenans were not provided with independent legal advice or
advised to obtain any. Only Mrs. Keenan signed the agreement.
Neither paid attention to the records of employment, as the working
relationship with Canac was continuing. Despite this change in
1987, the working relationship with Canac and related duties
remained the same.3
At termination Canac's position was that the Keenans were
independent contractors and therefore not entitled to notice of
Which One Is It? — Employment vs. Independent and
Dependent Contractor Relationships
The concept of a 'dependent contractor' relationship was
recognized previously by the Ontario Court of Appeal in McKee v
Reid's Heritage Homes Ltd.5 and to
determine the relationship, 5 principles are applied, which derive
from Belton v Liberty Insurance Co of Canada.6
One of the most significant principles identified in
Belton is that of "exclusivity" — whether
or not an agent is limited exclusively to the service of the
principal.7 The more exclusive the relationship, the
more likely a contractor will be found to be a "dependent
Looking at the full history of the relationship between the
Keenans and Canac, the Court upheld the Trial judge's finding
of exclusivity on the basis that over 30 years the Keenans were
economically dependent on Canac and despite Canac turning a
'blind eye' to non-exclusive work the Keenans carried out
for a competitor during the last two years of their relationship,
the substantial majority of the work done by the Keenans continued
to be performed for Canac.9
Extraordinary Notice Periods for Dependent Contractors?
At trial the plaintiffs were found to be dependent contractors
and were awarded compensation for 26 months of notice.10
On appeal the award was upheld despite the defendant's
objection that the trial judge did not find exceptional
circumstances supporting a notice period in excess of 24 months as
required by the Ontario Court of Appeal's decision in
Lowndes v Summit Ford Sales Ltd.11 The Court
did not find the lack of an explicit finding of "exceptional
circumstances" fatal to the award, but considered the length
of service, ages at termination, supervisory status and exclusivity
as all factors justifying an award in excess of 24
This decision serves as a reminder for employers to carefully
evaluate working relationships with contractors and to be cautious
when considering a switch from an employer-employee relationship to
an employer-contractor relationship. It is advisable to weigh the
risks and benefits of doing so and implement procedures to effect
the change in relationship. Independent legal advice for all
parties is recommended.
Where employers are in long-term relationships with contractors,
the history of their relationships will be taken into consideration
when determining whether or not a dependent contractor or
employment relationship exists. A non-exclusive relationship for a
period of time is not necessarily fatal to the finding of a
dependent contractor relationship and awards of lengthy notice
periods are a real possibility.
1. Keenan (cob Keenan Cabinetry) v Canac Kitchens
Ltd, a Division of Kohler Ltd, 2016 ONCA 79, at para 32,
 OJ No 455 [Keenan].
2. Ibid at paras 7-10.
3. Ibid at paras 9-11.
4. Ibid at para 15.
5. McKee v Reid's Heritage Homes Ltd, 2009
ONCA 916, at para 22, 256 OAC 376 [McKee].
6. Belton v Liberty Insurance Co of Canada
(2004), 72 OR (3d) 81, at paras 11, 15 (CA)
7. Ibid; Keenan, supra note 1 at para
8. Keenan, supra note 1 at paras
9. Ibid at para 26.
10. Ibid at para 19.
11. Ibid at para 30; Lowndes v Summit Ford
Sales Ltd,  OJ No 13, at para 11 (CA).
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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