Labour board looks at whether fired worker was independent contractor or employee
The Ontario Labour Board has dismissed an employer’s application for review of an order to pay a worker public holiday pay, vacation pay, and termination pay because he was an employee and not an independent contractor.
In 2019, a company registered as 11541722 Canada Inc. opened The Duke Restaurant and Bar in Oshawa, Ont. Before the opening, the company’s owner contacted the worker about being involved in the restaurant. The worker had been performing consulting work and was also a chef. The worker started working for the company on Aug. 9.
According to the owner, it wasn’t a typical working relationship and there was no written contract. The owner described it as “mostly verbal” and “just an overall partnership.
The worker developed the restaurant’s menu, dishes, and marketing strategy, and he hired and trained staff. The owner considered him an independent contractor, as he wouldn’t have a “random employee make a menu.”
Regular payment, no statutory deductions
The worker was paid by a monthly e-transfer initially, which later became biweekly. The worker didn’t have an HST number and didn’t invoice the company for his work. According to the owner, the worker said that he would take care of any taxes or other deductions, so he wanted to be paid one amount with everything included. There were no set hours, although the worker worked evenings during the pandemic and then switched to breakfast hours. The owner said that the decisions on what hours the worker worked were made together.
In 2023, the owner learned that the worker sometimes closed the restaurant and took days off when he wanted to. He also heard that there were thefts of product from the worker taking food home, employees at a nearby factory were told that they had to pay the restaurant with cash only, and the worker sometimes wouldn’t accept Uber orders, which were an important source of income for the restaurant. A female customer also told him that the worker “was a perv.”
The manager of the building in which the restaurant was located also reported that the worker fought with neighbours, customers, and delivery drivers; refused service to customers if they upset him, made two female employees uncomfortable; caused many customers to stop coming; pocketed cash; put food in his own car; sold drugs in the restaurant; closed the restaurant during normal operating hours; was called out by customers for a lack of cleanliness and improperly cooked food; and used restaurant money to pay for his car tires.
The owner terminated their working relationship on July 17. According to the owner, he explained what he had heard and told him he needed “to fix this or find separate ways” and “the losses became too great and it didn’t make sense to keep going.”
Employment standards claim
The worker filed an employment standards claim for public holiday pay, vacation pay, and termination pay. He maintained that he was never an independent contractor and the owner had never told him as much. He also said he never received pay stubs and he assumed that the company made the necessary statutory deductions before paying him.
The worker acknowledged taking food home, but said that he was entitled to a meal when he was at the restaurant and most restaurants gave free meals to employees.
An employment standards officer investigated and found that the worker was an employee of the company and was entitled to public holiday pay, vacate pay, and termination pay. The company was ordered to pay the worker nearly $11,000 plus an administration fee of more than $1,000.
The company sought a review of the order to pay by the board, arguing that the worker was an independent contractor. It also argued that it had just cause for termination from the worker’s various instances of misconduct.
Employee responsibilities
The board noted that there was no written agreement expressly describing the worker as an independent contractor, the worker didn’t have an HST number and didn’t invoice the company for his work, and was paid a set monthly and later bi-weekly amount. In addition, there was no evidence that he could hire his own workers or that he took on financial risk in his role, said the board, adding that although he contributed to menu development, promotions, and staff hiring, these responsibilities were consistent with those of an employee rather than an independent contractor.
The board also found that the fact that the company didn’t make any statutory deductions from the worker’s pay didn’t outweigh the other factors that favoured a finding of employee status for the worker.
The board noted that the Ontario Employment Standards Act, 2000 (ESA) defined an employee as “a person who performs any work for or supplies any services to any employer for wages” and the jurisprudence established that the ESA was remedial legislation that should be interpreted broadly as extending protection to as many employees as possible. To that end, the board determined that the worker was an employee entitled to public holiday pay, vacation pay, and termination pay for a without-cause termination.
No warning of misconduct
While the company claimed that the worker wasn’t entitled to termination pay due to various allegations of misconduct, the board found that the company failed to provide sufficient evidence that the worker had been warned or disciplined about – or even been made aware of – the alleged misconduct before his dismissal. As a result, the worker was entitled to three weeks of termination pay, the board said.
The board determined that the company failed to establish that the worker was an independent contractor or that his termination fell under the "wilful misconduct" exemption for termination pay in the ESA. It affirmed the original order to pay requiring the company to pay the worker a total of $11,988.68. See 11541722 Canada Inc v. Jcyk Josefsberg, 2025 CanLII 11895.
