How do Ontario Courts determine if someone is really a contractor or an employee?
In other words, if the “contractor” works like an employee, is managed like an employee, and overall appears to be like an employee, chances are this “contractor” is actually an employee under Ontario employment law.
47 Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.
It is not enough to simply call someone a contractor. For the contracting relationship to be legally binding, the very essence of the working relationship itself needs to have the markings of independence and exclusivity.
Perhaps our best advice to our employer clients is to start from within, by frankly considering how a worker is likely perceived within the company itself. If there is a degree of control, dependency and answerability, it is quite possible that this individual is an employee, no matter what you call him or her, and has legal status as an employee that provides for numerous employment entitlements, and entitlements upon termination of employment and wrongful dismissal.