Do I Owe A Contractor Reasonable Notice to End Services?

| July 17th, 2017 | No Comments »

Independent contractors are not bound to their clients by an employment relation. Independent contractors are, in essence, their own employers. The courts will apply a number of tests which look at certain factors such as economic dependency, permanency, control, and risk of loss/profit among other factors to establish whether there is an employment relation. The less integrated the contractor is within the business to which services are rendered, the more likely the contractor is an independent contractor. When the contractor is deemed a dependent contractor, however, the courts view this as an employment relationship. In this instance, the contractor would be owed reasonable notice or pay in lieu if services are no longer required.

A case that demonstrates a relationship of a dependent contractor is Mancino v. Nelson Aggregate Co., [1994]. Mancino was a self-employed truck driver that served Nelson Aggregate almost exclusively. Nelson Aggregate closed the shipping location that was responsible for providing Mancino his work. Although Mancino was under his own business, the trial judge found that there was a dependency between Mancino and Nelson Aggregate characterized as “mutual and permanent in nature”. The judge looked at Mancino’s economic dependency, consistent daily attendance, requests for vacation time, and so on. Ultimately, what was an independent contractor on paper was determined to be a ‘dependent’ contractor and thus deemed an employment relation. The trial judge found that Nelson Aggregate had disclosed the likelihood of the shipping location being closed, as it was under contract, a year prior to its closing. Nelson Aggregate therefore did fulfill its duty of reasonable notice to Nancino.

Overall, employers must be aware of the difference between independent and dependent contractors. Often, businesses will seek service from an independent contractor for efficiency and affordability. However, employers must recognize situations that indicate a dependency with a contractor. Factors such as length of service, regular attendance, economic dependency, and lack of control over hours and work may indicate dependency. If services are no longer required after a dependency is established, reasonable notice may be owed. Ontario employment laws are going to become more strict in this regard, which means employers must be more aware of the nature of their relation with independent contractors. It is always advisable to seek the advice of an employment lawyer if faced with this uncertainty to avoid possible claims of notice pay, which can be costly.