Tuesday, 3 April 2012

Man or Muppet? Employee or Contractor?

In the recent Muppet movie human protagonist Gary finds himself asking “Am I Man or am I Muppet?”  Unfortunately many employees find themselves asking a similar question when their services are no longer required by their employers.

Although many workers may think themselves “independent contractors” either because they wish to be or, more commonly, because their employers told them they were at the time of hire, such may not necessarily be the case.

Ontario courts have long recognized that what counts in an employment relationship is not the title one is assigned, but rather the nature of the relationship between employer and employee.  The more it looks like a typical employer/employee relationship, the more likely it is that the court will deem it as such.

Complicating this rather simple dichotomy is the court’s recognition of an “intermediate category” of employees – those that the law regards as neither true employees but not truly independent contractors either.  The term “dependant contractor” is also used interchangeably in these discussions.

In the 2009 Ontario Court of Appeal decision in McKee v.Reid's Heritage Homes Ltd., 2009 ONCA 916 MacPherson J.A. held that, “an intermediate category exists, which consists, at least, of those non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity.  Workers in this category are known as “dependent contractors” and they are owed reasonable notice upon termination.”  [Paragraph 30.  Emphasis my own.]

This case, and others like it, are important because they recognize that when dependant contractors are fired by their employers they might be entitled to some form of “notice.”  “Notice” is a term of art in employment law and is often confused with “severance.”  What Justice MacPherson said in McKee was that sometimes, people who are told they are independent contactors are not, and those people have the right to severance pay on termination.

Whether someone is an employee, dependant contractor, or independent contractor depends on the specific facts of the case and different judges see things differently.

What should be borne in mind however is that even if your employer has always told you you’re an independent contractor, you may not be.  The same way as if I were to call you a muppet would no more make you one.

Because there are implications to persons who have long worked as independent contractors beyond simply their entitlements to termination pay, it is always prudent to seek the advice of properly-licensed employment lawyer.

As always, everyone’s situation is different.  The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.
Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer. He tweets from @SeanBawden.

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