Contract term pushed too far

How long is too long for a contractor? In a recent court ruling, an employer was rebuked for its treatment of a worker who served 15 years on renewable contracts.

Diane Ceccol was a loyal employee who re-signed her contract annually with the Ontario Gymnastic Federation. Despite her seniority, the federation laid her off with only seven weeks’ notice, arguing she was on a fixed-term contract in which reasonable notice did not apply. Ceccol took the federation to court for wrongful dismissal.

“There was evidence from former senior officers and managers of the federation that she was always treated as a full-time permanent employee as opposed to a contract worker,” says Ceccol’s lawyer, Connie Reeve of Blake, Cassels and Graydon. “Fundamentally, if you are going to employ someone for a number of years, that’s a contract of indefinite duration.”

The Ontario Court of Appeal ruled in favour of Ceccol with a 3-0 decision, sending a strong message to employers that they should not try to “get out” of legal responsibilities to employees by keeping them on a renewed contract. If the federation’s argument succeeded, Ceccol would have ended up with only $7,700 as opposed to the $66,700 she received from the appeal.

Sharon Chilcott, a lawyer with Filion Wakely Thorup Angeletti, says the courts look at the continuous renewal of a fixed-term contract very critically.
“Courts will look at what the rationale is and what the intention of the parties is. Judges will not put up with employers seeking to evade the common law or employment standards reasonable notice provisions.”

Under Ontario’s Employment Standards Act, an employee who has worked eight years or more with the same company is entitled a minimum of eight weeks notice. In Ceccol’s case, the court ruled that she should have received at least 16 months’ notice of termination based on her age, the position she held and her length of service.

So, when does a contract worker become a full-time employee? Lucas Corwin, a lawyer with Fasken Martineau DuMoulin in Vancouver, says the problem arises when a company hires on a contractor when they really want a full-time employee. A contractor should be hired only when a specific job needs to be done, but if an employer wants someone who will work for an indefinite period and exclusively for their company, that’s an employee, according to Corwin. The contract between employer and employee is crucial.

“HR practitioners need to make sure the language in the contract is clear. That it reflects the work relationship and the termination of the relationship.”
Corwin says employers have to think hard about what they want from an individual before deciding to hire her. A few questions to ask: Is this person going to have key institutional knowledge? Or key technical knowledge? Are they going to be a communication hub, someone who everyone comes to for information?
In essence, will this person be valuable to the company in the long-term perspective?

“If you answer ‘yes’ to these questions, then it’s likely you don’t want a definite-term employee. You want an indefinite-term employee, someone who is going to be there for a long time.”

Marcia McDougall, editor of The Canadian Employer, offers some tips for employers when it comes to establishing the expectations of a contract worker:

Watch what you call the contract worker. Don’t call them “full time” or “permanent” employees. Always use the term “contract worker” and make it clear to other employees.

Emphasize the termination provisions in the contract. This is particularly the case when you use a standard form contract, if you’re dealing with a high-level contractor or if the contractor has been with the company for a considerable length of time. Put these provisions in bold in the contract or point them out to the employee before she signs, or even get her to initial that section of the contract.

Watch your investments. If you make an investment in the worker’s future, make sure she doesn’t think it’s because you expect her to work with you for a long time. The worker should know that it doesn’t mean she has to stay with the company nor that you anticipate keeping the worker on indefinitely.

Plan for the future. If you ask the contract worker to take on a job that exceeds the expiration date of his employment, make sure he knows that you may replace him if the contract is not renewed.

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