An employee's right to implied reasonable notice of
termination in the absence of an express termination provision
depends on various factors, such as age, length of service, and
character of employment. Very few awards have exceeded 24
The Ontario Court of Appeal recently upheld a lower court's
decision finding that two long service, dependent contractors
should have been provided 26 months of notice. Keenan v
Canac Kitchens Ltd., 2016 ONCA 79 sheds light on the factors
that lead to a finding of a "dependent contractor"
relationship, and the circumstances that led to this extraordinary
The plaintiffs, Lawrence and Marilyn Keenan, worked for Canac
Kitchens Ltd. ("Canac") for 32 and 25 years,
respectively. Initially, the plaintiffs were employed as
foremen, supervising installation crews. In 1987, they were
informed that they were to be converted to independent
Under the new arrangement, they were given new titles, required
to obtain insurance coverage, and to provide their own trucks and
construction tools. Canac provided the plaintiffs with
records of employment and draft agreements ending their employment,
and agreeing to the new arrangement. They did not obtain
legal advice, and only Mrs. Keenan signed the new
Despite these changes, for all intents and purposes, the
Keenans' day to day working relationship with Canac remained
the same. They worked exclusively for Canac until it closed
its operations and terminated them without any advance
notice. The Keenans brought an action for wrongful dismissal,
seeking pay in lieu of notice.
Ontario Superior Court of Justice
The Ontario Superior Court of Justice concluded that the Keenans
were not employees, but were "dependent contractors", and
entitled to reasonable notice of termination. In arriving at
this determination, the court considered the following:
The plaintiffs worked exclusively for the defendants until
2007. Any work done for other customers was infrequent and driven
by economic necessity.
Canac unilaterally set the Keenans' rates for service and
dictated their work flow.
While the Keenans owned their own truck and supplied their own
tools, this arrangement was not dissimilar to their arrangement as
employees. Further, Canac still provided pagers, phones and
office space to conduct their work.
The Keenans were exposed to very little business risk of loss
or chance of profit, as the majority of their work came from
The business arrangement between the parties was primarily for
Canac's benefit. To the outside world and their
customers, the Keenans appeared to work for Canac.
Court of Appeal
Canac appealed the decision, citing two grounds of appeal:
first, the Keenans were independent contractors because they did
not work "exclusively" for Canac during their last two
years of service; and, second, the case did not present any
'special circumstances' to warrant notice in excess of 24
In considering the full 30 year relationship between the Keenans
and Canac, the Court of Appeal dismissed Canac's
arguments. The Keenans were economically dependent on Canac
for a number of years. Despite the fact that a marginal
percentage of their work came from competitors, the substantial
majority of their work continued to be performed for the benefit of
Canac. The Court found that the dependent contractor
relationship was not simply a snapshot of the last two years of
service, and any period of non-exclusivity did not affect the
entire working relationship.
The Court of Appeal also upheld the trial judge's award of
26 months' pay in lieu of notice. In the Court's
decision, the lack of an explicit finding of 'exceptional
circumstances' was not fatal to the award. The Court
concluded that given the Keenans' ages at the time of
termination, their length of service, and the character of their
positions, 26 months was appropriate.
Note to Employers
This decision serves as a reminder that employers must monitor
employment relationships and document any transitions from an
employment relationship to a contractor relationship.
Contracts should be reviewed and updated, and require fresh
consideration each time any agreement is amended. Whether
employment or contract for services, an express termination
provision, properly drafted and implemented, can limit the
company's liability on termination of the relationship.
Any notice period provided in the agreement should never be less
than the statutory minimums required by the applicable employment
standards legislation, to protect against the possibility that the
relationship might later be found to be one of employment. In
such a case, a notice period less than the legal minimum standard
would be void, and the court would then imply an obligation to
provide reasonable notice.
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.
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