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Q&A: Independent Contractor Rights

Whitten and Lublin | May 14, 2015

QUESTION #1

2 days after I submitted a written request for my 1st Quarter 2015 performance based compensation I was fired for no reason at all.  They told me “you are an independent contractor, so we don’t have to pay you”.  What are my rights in this situation?

ANSWER

You may have rights to severance in this situation, however, this will depend on whether you are truly an “independent contractor” from a legal perspective. Employees who are fired for no reason and without adequate notice are entitled to severance. By contrast,  independent contractors are not entitled to any severance (except what may be set out in a written contract). Merely because the company labelled you an “independent contractor” does not mean that the courts are bound by that label.  Even if you signed a written agreement that refers to you as an independent contractor, this is not determinative of your legal status.  The courts will examine not just what is simply written on paper or how the parties define each other, but how the parties actually carry out the working relationship.  In reality, very few contractors are truly independent contractors at law. Even if a company calls an individual an independent contract, an employment relationship has been nevertheless  found to exist in situations where the company exercises a high degree of direction or control over the individual’s work; the tools or equipment required to perform the work are provided by the company; most or all of the individual’s time is devoted to working for the company; and the individual is integrated into the company’s organizational structure. It is not necessary for all elements to be satisfied and this is not a complete list of examples, however, these are some of the main factors the courts will typically consider in clarifying the nature of your contractual relationship and your entitlements.

Separate from the above, you are entitled to be paid for outstanding earnings or performance-based compensation that was promised for work already performed, regardless of whether you are an employee or independent contractor. You should contact an employment law expert for advice about your legal status and your rights to a severance package.