The Differences Between An Employee And An Independent Contractor.

According to a 2001 case that was argued in the Supreme Court of Canada, there is no conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor.

On the contrary, the courts look at a plethora of different factors when assessing what is the appropriate characterization of a worker’s status. They look at things like integration of the employee’s work into the employer’s business. Is the worker an intrinsic part of the organization or merely ancillary to it? Under a Contract of Service, which is an employment relationship, a worker is employed as part of the business and an integral part of the business. Under a Contract for Services, an individual’s work, although it may be done for the business, is really considered to be ancillary. Courts also look at opportunity of profit and risk of loss. Does the worker have a financial investment in the business, over and above providing labour? Who owns the tools that are necessary in order to perform the job? Is the worker coming to work every day at the same place, sitting at the same desk, using that same computer? Are they sitting in the back room giving the appearance of being an employee like every other worker in the office?

The final and the most important test, arguably, is the issue of control. The courts will look at whether the worker mostly works on their own, or whether they are free to accept or refuse other work. Are they required to attend the hirer’s place of business? Who does the evaluations, and are there even evaluations done? When all four of these factors are looked at, a court will decide whether the worker is an employee or an independent contractor. In Employment Law, the determination of employee status is really the gateway to most employment protection under both the Common Law and the Employment Legislation and so the determination is really crucial.

If you are an independent contractor, the nature of the relationship means that you are free to provide your services to other organizations, whereas an employee generally has an exclusive, sometimes long-term relationship. In order to protect the employee/employer relationship, the Legislation as well as the Common Law has developed over time to provide the employee with notice of the termination of their employment. The notice period is a payment for the period of time which it should take the employee to secure other work. That sort of protection isn’t given to independent contractors.

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If you, or someone you care about, is dealing with employment law issues in the Ottawa, Ontario Region, contact Law Office of Melynda Layton.

This article is taken from an interview on October 9, 2007 with Melynda Layton, Employment Lawyer at Law Office of Melynda Layton , an Ottawa, Ontario Employment Law Firm. Note that laws vary from province to province. Please consult with a lawyer in your own area to be sure of the laws and specific issues in your own jurisdiction.