In Ontario, severance pay can be provided if the employee is terminated. However, this entitlement presupposes that one is an employee. Individuals who perform services may do so as independent contractors, however they might not enjoy employment protections.
For example, independent contractors are not entitled to reasonable notice, unless it is later determined that the true nature of the relationship was that of employer and employee. Over time, these binary categories were criticized and an additional, intermediary category was recognized: the dependent contractor. Since then, it has been generally accepted that workers falling under this category are entitled to reasonable notice.
In Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640, the Ontario Court of Appeal provided some updated clarity on how to determine one’s status in the employment context. The Court indicated that “exclusivity is determinative” and the “hallmark” of the dependent contractor category. In Thurston, for example, the plaintiff earned approximately 40% of her income from the employer. However, the plaintiff operated her own business throughout the duration of the engagement with the employer. The Court found that even though a significant portion of the plaintiff’s income was earned through the defendant, there was no exclusivity or near-complete exclusivity.
It can be difficult to determine where the threshold of exclusivity required to be deemed a dependent contractor is met. The Courts have determined that it requires, at the very least, near-complete exclusivity. This may be interpreted as meaning that almost all earnings or entire work portfolio of the contractor comes from one specific employer. Still, there is no strict rule as to what constitutes “near-complete exclusivity”. Several factors may be considered such as earnings, expectations regarding availability, and the language in the employment contract, if any.
You may contact us at any time if you require assistance. As lawyers with expertise in employment law, we often advise our clients with regards to their entitlements including severance pay pursuant to the specific nature of their employment relationship.
