Ask an expert

Can a worker’s salary be scaled back when accommodating an injury? • The difference between employees and contractors

Can a worker’s salary be scaled back when accommodating an injury?

We have a salaried employee in Ontario who has given us a doctor’s note that states he is only able to work 70 per cent of his previous capacity. While we are able to spread the added workload around for a short period of time, we do not feel it is sustainable over an extended period. Do we have to continue paying this employee full-time pay or are we able to scale his salary back?

Answer: The issues that arise in this circumstance are complicated and must be determined on a case-by-case basis. The Ontario Human Rights Code prohibits discrimination against individuals due to (among other grounds): race, sex, age and disability. The code also places a duty on employers to accommodate an employee who is unable to continue to perform his duties due to a disability. The employer has a duty to accommodate to the point of undue hardship. Depending on the circumstances this duty may require moving the employee to another position and/or reducing his responsibilities.

Once it has been resolved how the employee will be accommodated in lieu of the disability, the employer may have the right to alter the employee’s compensation accordingly.

The Ontario Court of Appeal has held that requiring work in exchange for compensation is a reasonable and bona fide requirement. Accordingly it would seem that if an employer accommodates an employee who is unable to perform his duties at 100 per cent capacity due to a disability by either placing the employee in a new position or removing duties from the current position, the employer may correspondingly adjust the employee’s compensation.

In fact the Ontario Court of Appeal has held it is not prohibited discrimination to distinguish between employees who are providing services to the employer and those who are not for the purposes of compensation. But one must bear in mind that questions involving an employer’s duty to accommodate are extremely fact specific and therefore it is recommended that you proceed with caution and consult a lawyer as necessary.

The difference between employees and contractors

How is an employee distinguished from an independent contractor and why is this distinction important?

Answer: It is important to distinguish between an “employee” and an “independent contractor” because the majority of protective employment statutes apply to contracts of employment. Workers who are employees are also taxed at a higher scale than independent contractors who are running their own businesses.

The key distinguishing factor between an independent contractor and an employee is the degree of control the employer exhibits over the manner in which the employee performs the job. This control of the employment relationship manifests in the subordination of the employee to the authority of the employer. This distinguishes whether the worker is an entrepreneur operating her own business, or forms part of the employer’s business. But control is not always conclusive in determining the legal employment relationship.

Five factors should be evaluated to determine if a person is an employee or independent contractor:

Control. Independent contractors have a greater ability to delegate authority, whereas employees are more likely to perform the work themselves.

Ownership of the tools. Although an employee may use some of her own tools, an independent contractor likely brings all of her own equipment to the job site.

Chance of profit. An employee likely receives more regular compensation with little fluctuation, whereas an independent contractor has the ability to negotiate a new contract for each assignment.

Risk of loss. A person who has a financial investment in the business beyond providing her labour is likely to be an independent contractor.

Regularity of employment. It is common for an independent contractor to take on a number of jobs for a variety of employers, while an employee might do many jobs but will only answer to one employer.

It is important to remember that simply calling the individual an employee or an independent contractor will not make it so. Courts and government agencies will look beyond the label to determine the true nature of the relationship by taking into account the above considerations.

Peter Israel is the head of Goodman and Carr LLP’s Human Resource Management Group. He can be reached at (416) 595-2323 or [email protected]. Address questions to [email protected].

To read the full story, login below.

Not a subscriber?

Start your subscription today!