Protection for contractors?
Question: Do independent contractors have any protections under employment standards legislation or are companies free to include any demands in such contracts?
Answer: Employment standards legislation in Canada applies to “employees” and “employers.” Who constitutes an “employee” under employment standards legislation is expressly defined in the legislation. A true independent contractor is not an employee under employment standards legislation or at common law, and therefore is not covered by the protections of the legislation.
In many cases disputes arise respecting whether a worker is an employee, deserving of the protections of employment standards legislation, or whether the worker is an independent contractor, exempt from the shield of legislation. The ultimate question respecting the legal status of a worker is whether the worker is performing services “as a person in business on his own account:” see 1671122 Ontario Ltd. v. Sagaz Industries Canada Inc. If the worker is in business on his own account, he will be an independent contractor, not an employee. In assessing whether a worker is an independent contractor or an employee, the following factors are relevant to consider:
• The level of control exercised by the employer over the worker’s activities.
• Whether the worker provides his own equipment and hires his own helpers.
• The degree of financial risk assumed by the worker.
• The degree of responsibility for investment and management assumed by the worker.
• The worker’s opportunity for profit in the performance of his tasks.
The greater the level of control the worker has over his activities, the more likely the worker is an independent contractor.
If a worker is found to be a true independent contractor, a contract for services between the independent contractor and his client does not need to comply with any of the minimum protections of employment standards legislation. The parties are free to contract for whatever terms and conditions they can mutually negotiate. See 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. 2001 CarswellOnt 3357 (S.C.C.).
