Independent vs. Dependant Contractors – What’s the difference?

November 14th, 2011 by

There are many examples of people who are employed in the workforce as “independent contractors”, such as independent sales agents, consultants, legal professionals, just to name a few. However, just because an employment contract states the employee is an “independent contractor/agent”, doesn’t necessarily mean that such an employee is “independent” for the purposes of employment rights. An “independent contractor” may in fact be a “dependant contractor”, or even a full-fledged employee, which changes their entitlements quite drastically.

In a 2007 Ontario Superior Court of Justice case, Slepenkova v. Ivanov, the employee, who was employed as an “independent contractor” real estate agent for a firm operating under a brokerage, was deemed to be an employee for the purposes of determining reasonable notice upon termination of employment. The plaintiff employee had signed multiple agreements over a 3 year period, agreeing to work for the defendant employer as an “independent contractor”. However, the plaintiff had also initially signed a general employment agreement with the real estate brokerage that employed her employer, which contradicted her subsequent agreements with the defendant employer.

In determining the issue of the nature of employment, the Trial Judge, considering the existing agreement between the plaintiff and the real estate brokerage, took note of the following factors:

  • That the employer had substantial control over the employee;
  • the employer owned and provided the majority of the tools the employee used in the course of her employment duties;
  • the employee’s chance for profit was limited;
  • the employer bore most of the risk of loss;
  • the business was clearly the employer’s.

The above factors, all answered in the affirmative, clearly demonstrate that, regardless of the label given to an employee in an employment contract, employers cannot contract out of their obligation to provide reasonable notice upon termination, among other entitlements afforded to employees under statutes such as the Employment Standards Act, as well as the common law, merely by stating that an employee is an “independent contractor”.

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