Relationships between businesses
and workers take different forms.
The most common relationship is
that of the employer-employee, in
which an employee enjoys a guarantee that
he/she cannot be dismissed without some
form of notice or pay in lieu. On the other
hand, businesses often enter into independent
contractor relationships with their
workers, and for good reason. If properly
structured, the relationship allows
businesses to avoid payroll taxes and the
obligation to terminate with notice.
While Canadian courts have articulated
clear principles to identify working
relationships, applying those principles
can be difficult. Making matters worse
is the oft-ignored “dependent contractor”
relationship that lies in the middle of
the spectrum. Dependent contractors are
neither employees nor independent contractors.
Instead, they are self-employed
workers subject to a high level of control
and economic dependency due to the
complete or near-complete exclusivity of
their work for a business.
Like employees, dependent contractors
are entitled to notice of termination
or pay in lieu thereof, and as the case of
Keenan v. Canac Kitchens demonstrates,
the liability to provide them with notice
upon termination can be significant. In
Keenan, an Ontario court awarded an unprecedented
26 months’ reasonable notice
of termination to long-serving plaintiffs.
This appears to be the highest compensation
award ever granted to a dependent
In structuring their relationships with
their workers, businesses ought to be
mindful of this decision. Lawrence and
Marilyn Keenan worked as delivery and
installer leaders for Canac for approximately
32 and 25 years, respectively. They
started working as employees. In 1987,
Canac asked the Keenans to sign an independent
contractor agreement and told
them that henceforth, they would carry on
their work as independent contractors.
The Keenans signed the agreement and
continued their work as they had before.
Together, they supervised the delivery, installation
and service of Canac’s kitchen
cabinets until Canac dismissed them in
2009. Believing that they were entitled to
greater notice of termination than provided
by Canac, the Keenans sued. The result
was a blow to Canac’s bottom line.
Canac argued that the Keenans were independent
contractors not entitled to any
Ontario Court Awards 26 Months’
Pay to Dependent Contractors
ASSUMING RISKS IN INDEPENDANT CONTRACTOR RELATIONSHIPS
By Rich Appiah and Andrew Carricato
HRPATODAY.CA ❚ JULY/AUGUST 2015 ❚ 13