A husband (63 years old) and wife (61 years old) spent almost their entire working lives providing services “as contractors” for the same company. The company terminated both of them without notice or severance claiming they were independent contractors and thus not entitled to anything.  Thankfully, the Ontario Court of Appeal did not agree and awarded both, substantial severance.

A dependent contractor may be entitled to reasonable notice of termination, whereas an independent contractor does not have this right. The Court of Appeal agreed that in determining whether a person is a dependent or independent contractor, exclusivity is a significant factor. The pivotal question in this appeal was when should one determine a contractor’s exclusivity: at the termination of the business relationship or at another time?

The defendant company argued that the court should consider the end of the working relationship in determining a worker’s exclusivity. Such a finding would have been favourable to the defendant company because of the contractors’ work with a competing company during their last two years of service.

The Court of Appeal took a different approach stating that to determine a worker’s exclusivity, one must consider the full history of the relationship. The Court of Appeal thus rejected the defendant company’s snapshot approach and indicated that the trial judge had correctly considered the plaintiffs’ entire work history. In this case, the plaintiffs had worked exclusively for the defendant for 24 years. When they provided services to a competing company, they did so for a relatively short period (i.e. two years) and in response to a scarcity of work with the defendant. Even when the plaintiffs worked for both companies, the majority of the plaintiffs’ work was still for the defendant company. The Court of Appeal ultimately agreed with the trial judge’s finding that the plaintiffs had the requisite high degree of exclusivity to assist in finding that they were dependent contractors.

The Court of Appeal then addressed the issue of the appropriate notice period. The Court of Appeal upheld the trial judge’s award of 26 months of notice because of the plaintiffs’ ages, their respective lengths of service, and the facts that they held supervisory positions and were the public face for the defendant for over a generation.

Key Takeaways:

  • Exclusivity is a significant factor in characterizing a contractor as dependent or independent. In determining whether a contractor has a sufficient degree of exclusivity to be a dependent contractor, the contractor’s entire work history with a company is relevant, not just the last few years. If the contractor is a dependent one, then the company must provide notice or pay in lieu of notice for the contractor’s dismissal.
  • Dependent contractors who spend the majority of their working lives as the face of a company might be in a position to attract substantial severance.

Date: June 7, 2016
Subject: Case Summary: Keenan (cob Keenan Cabinetry) v Canac Kitchens Ltd, a Division of Kohler Ltd, 2016 ONCA 79