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Many employers and providers of services operate under the assumption that the providers of services are independent contractors. The service providers do not have deductions made for them by their employers. They invoice their employers. They should charge GST. Parties in these relationships commonly believe that their contracts can be terminated without any notice or severance pay. If the relationship is truly one of an independent contractor – the foregoing arrangements are safe and contracts can be terminated without notice. However, if they are not independent contractors the parties can expose themselves to substantial risk.
In a recent Ontario case, Keenan v. Canac Kitchens, the employer found himself liable for 26 months of severance pay to contract cabinet installers. The court found that the installers were “dependent contractors” and therefore entitled to notice of termination or termination pay in lieu. There are many factors that are considered by the courts in distinguishing between independent contractors and dependent contractors including degree of control, ownership of tools and risk of profit or loss.
Article written by Alfred C. Kempf
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
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