Difference between revisions of "Preliminary Matters for Employment Law (9:IV)"

In ''McCormick v Fasken Martineau DuMoulin LLP'' (2014 SCC 39), the Supreme Court of Canada affirmed that the key to a determination of employment relationship is the degree of control and dependency.

An employee is typically highly controlled by the employer: the employer might set the employee’s hours, provide training, decide how work should be performed, require adherence to policies such as dress codes, and discipline the employee for misconduct. The employer would also typically make Canada Pension Plan (CPP) and Employment Insurance (EI) deductions, provide Worker’s Compensation coverage, and pay for any business expenses and equipment. Employees tend to rely on their employment with a single employer or business as their primary or sole source of income.

An independent contractor is generally not significantly controlled by the employer: the independent contractor might set their own hours, determine how to perform the work, make their own payments for CPP, EI, and Worker’s Compensation coverage, pay for their own business expenses and equipment, and determine whether to hire their own employees or subcontractors to assist in performing the work. Independent contractors often contract with more than one business, and as a result are less dependent on a single business to earn their living.

A dependent contractor is an intermediate category, falling somewhere in the middle of the scale. A dependent contractor might set their own hours and hire their own employees, but derive most of their income from a contract with one business, and thus be fairly dependent on that business to earn their living.  

None of the factors listed above can alone determine the categorization of the worker. One of the leading tests to apply to determine how to categorize the worker is set out in ''671122 Ontario Ltd v Sagaz Industries Canada Inc'', 2001 SCC 59, [2001] 2 SCR 983:

:[...]The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks.

:It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case.

Although this is one of the leading tests, it should be noted that there are other tests that courts would consider as well.  

*The worker is incorporated (per ''Marbry et al v Avrecan International Inc'', 1999 BCCA 172). However, the worker may wish to see an  accountant or tax lawyer if they are an incorporated employee as they may not be entitled to all of the same tax benefits of other corporations;  

In some cases, a worker may fall into the category of dependent contractor. Those who fall under the intermediate category are entitled to reasonable notice. Some of the factors that are considered in determining whether a worker falls under this category are (''Marbry Distributors Ltd v Avrecan International Inc'', 1999 BCCA 172):  

For additional discussion of intermediate contracts, see “Intermediate Contracts of Employment”, Stephen Schwartz, Employment Law Conference 2010, Paper 4.1, CLE BC. For additional discussion of the tests used to determine whether a worker is an employee or an independent contractor, see the Canada Revenue Agency publication: ''Employee or Self-Employed'' (RC4110). This useful publication lists a number of indicators to  help determine whether a worker is an employee or an independent contractor, but note that it does not consider the category of dependent contractor. It can be found at: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-12e.pdf  

If the worker appears to be a dependent or independent contractor, and the worker has a legal issue that is covered by the ''ESA'' or the ''HRC'', see Sections IV.D.2 and IV.D.3 below to determine whether these statutes’ broader definitions of “employee” include the worker in question. Otherwise, continue to the next step of the checklist.