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Ontario Court of Appeal rules that dependent contractors are entitled to reasonable notice

In its recent decision in Keenan v. Canac Kitchens (Keenan), the Court of Appeal for Ontario confirmed that dependent contractors are entitled to reasonable notice of employment termination. The required notice period can extend to years, and such as in this case, amount to 26 months.

In Keenan, two long–term contractors of a kitchen cabinet manufacturing firm, with a total of over 50 years of experience with the company, were dismissed without notice. The pair were first hired as employees, but were later told that they would be classified as contractors, and signed new agreements for this purpose. They were required to use their own cars as well as purchase their own insurance. The pair sued for wrongful dismissal and claimed damages in lieu of reasonable notice of termination.

The Court emphasized that the totality of the parties’ work relationship must be looked at in order to determine whether a party is an employee or a contractor. In other words, the language of the agreement between the parties is not determinative, and cannot be used to avoid respecting the employee’s legal rights, such as the right to reasonable notice of termination. In this case, the judge focused on five factors, namely the exclusivity of service, control, ownership of tools, participation in risk and opportunity of profit, and the general question of whose business it is. The judge found that these factors supported the conclusion that the plaintiffs were dependent contractors, an intermediate category between independent contractors (not entitled to reasonable notice), and employees (entitled to reasonable notice). As dependant contractors, they were also entitled to reasonable notice. The substantial time the pair had spent with the company further entitled them to a very long notice period of 26 months.

The fact that the totality of the parties’ relationship will determine whether one is an employee or a contractor is an important reminder to employers and those that are hired on a contractor basis. Even if hired on a contractor basis, you may have common law rights stemming from the details of the relationship with your employer. In addition, as mentioned in our previous blog post, employers are required to provide fresh consideration for employment contracts entered into mid-employment, if they introduce new material terms.

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De Bousquet PC Barristers and Solicitors

Civil Litigation Lawyers at De Bousquet PC Barristers and Solicitors
De Bousquet law offers experienced counsel and representation in multiple aspects of employment law, labour relations, commercial law and civil litigation. Jean-Alexandre De Bousquet, founder of the firm, interned for the Canadian Centre for International Justice, worked for an Ottawa law firm and pursued a career with the Attorney General of Ontario. In 2014, Jean-Alexandre was named one of Ontario's "leading experts" in human rights law by Legal Action Magazine. Jean-Alexandre handles cases related to wrongful dismissal, workplace discrimination, breach of contract, fraud and commercial disputes. Jean-Alexandre is fully fluent in French and English and represents clients before courts and tribunals using both official languages.Before the practice of law, Jean-Alexandre was a journalist at the CBC for 3 years. Other notable achievements include employment with the Canada Research Chair on Native Peoples and Legal Diversity, the Canadian Research Chair on Metis Identity and the Urban League, a U.S. civil rights organization. Jean-Alexandre has also published articles in prominent academic journals and presented papers at international conferences in Canada and the U.S.
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