Dependent Contractor: What Makes a Worker a Dependent Contractor?
Most of the folks are familiar with the difference between an independent contractor and an employee. However, some are unfamiliar with the term Dependent Contractor. It is the worker’s category that falls in between the employees and the independent contractor. Some people believe that it is a new concept in the Ontario employment law, but it’s a wrong perception. This concept was first introduced in 1936 by Ontario Court while taking a decision of Carter v. Bell and Sons.
In contrast to independent contractors, dependent contractors have a right to receive rational notice or pay in lieu of notice, as they have worked for a long time and given the degree of exclusivity for one business. If they are terminated without any notice and any solid reason, the employer will have to face legal consequences.
What makes a worker a dependent contractor?
The dependency or independency of a contractor completely depends on the exclusivity factor or the degree of exclusivity. When the employer disallows the worker from working for others, the exclusivity is seen. Further, when there is a high degree of exclusivity weighs in the contract, the contractor is defined as a dependent. The best instance of a dependent contractor is a case of Keenan v. Canac Kitchens Ltd. In 2016, 79 members of ONCA examined the concept of exclusivity and its significance while assessing a workers status. The ONCA decided Marilyn Keenan and Lawrence Keenan are dependent contractors as they have given the high degree of exclusivity in their contract.
What should be considered when terminating dependent contractors?
- Every employer is obliged to present a rational notice and pay in lieu while dismissing any dependent contractor. If the employer fails to do this, he/she will have to face some significant legal consequences.
- It is quite easy to blur the difference between a dependent and an independent contractor. So, make sure to develop a clear written contract for every contractor whom you’re hiring to protect your company from unfavorable consequences. Always remember, courts always examine the substance of the relationship rather than the job title endorsed to a worker.
If you’re still having some confusion about how to make a dependent or independent contact, you may get in touch with an employment lawyer in Toronto. He/she will help you in drafting contracts and can give you the best advice on whether the status of an independent contract may have changed or not.