Did You Know Contractors May Be Entitled To Reasonable Notice of Termination?

When an employee is dismissed without cause, that individual is entitled to reasonable notice of termination or the equivalent in remuneration for that same timeframe. However, sometimes it is not entirely clear whether an individual is an employee or an independent contractor.

An employee can often be identified through the means by which the payment of remuneration is handled. If you take a look at an employee’s pay statement, you will generally see deductions for income tax and contributions to the Canada Pension Plan and Employment Insurance. Independent contractors, on the other hand, typically do not have these kinds of statutory deductions taken from their remuneration because they take care of remitting income tax and CPP contributions on their own. In addition, independent contractors often have more than one person that they perform work for.

There are, however, individuals who may be described as dependent contractors. Although they may not have statutory deductions taken off of their remuneration, they tend to perform work for only one person and are dependent on that person for income. As a result, dependent contractors are left vulnerable to the termination of the working relationship, so the law recognizes this and protects them by way of an entitlement to reasonable notice of termination of the contract governing the working relationship.

There are other indicia which help to identify a dependent contractor. An example of a case where a dependent contractor was awarded damages for pay in lieu of reasonable notice can be found here.

This article is intended only to provide general information and does not constitute legal advice. Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.