What Is A Dependent Contractor’s Entitlement to Notice of Termination?

The recent case of Tetra Consulting and Cassar v. Continental Bank of Canada may advance the law on the manner in which the Court will calculate reasonable notice on the case of a dependent contractor.

In this case, the defendant Bank retained a consulting firm called, Tetra Consulting, to help it obtain approval from the Office of the Superintendent of Financial Institution to operate as a Schedule 1 bank under federal banking legislation. It was understood that once such approval was obtained, the owner of the consulting firm, Lewis Cassar, would become an employee of the Bank.

Approval was obtained in December 2014 in which time Cassar was appointed to several offices in the Bank. In the next month, before a formal employment agreement could be signed, the Bank venture came to an end, and the Bank terminated the relationship with Cassar and his consulting firm.  The Bank refused to provide any pay in lieu of notice on the ground that Cassar had never been employed by the Bank.

Cassar and his consulting company sued and brought a motion for summary judgment.

In his decision, the motions judge concluded that Cassar had become an employee of the Bank even if the drafting of an employment contract had not been completed.  The final agreement, if it had been completed, would simply have documented a relationship that was already in place.

The interesting question, however, had to do with the relevance of the fact that Cassar had been doing work at the Bank through his consulting company since January 2013, almost two years before Government approval had been obtained.

The law appears to be well established in Ontario that a worker who provides service only for one company but is not an employee will usually be considered to be a dependent contractor if he occupies space at the company’s premises, remains subject to the control of the company at all times, and represents himself to third parties as an employee. It has been clear for some time that a dependent contractor is entitled to reasonable notice of termination by the company.  What has been less clear is the extent of that notice and particularly, how such a notice period would compare to the worker’s notice entitlement if he had been an employee.

In this case, the Court had no hesitation in finding that Cassar had been a dependent contractor for almost two years. As such he was entitled to the same notice as would have been the case had he been an employee.  The Court concluded that there is no distinction between the amount of notice that a company must provide a dependent contractor or an employee performing the same tasks.

While the decision in this case certainly makes sense given the relationship between Cassar and the Bank, it should be borne in mind that an individual may be considered to be a dependent contractor in circumstances in which he does not necessarily devote one hundred percent of his working time to a particular company – such as, for example, where a dependent contractor continues to maintain a relationship with one or more other clients although only to a very small extent. There are other factors for a court to consider coming to the conclusion that an individual is a dependent contractor that also might not be totally consistent with an employment relationship.

In such cases, I would suggest that a period of reasonable notice of termination might not be equivalent to the notice period for an employee. In my view, this case does not stand for the proposition that a dependent contractor will be entitled to the same notice of termination as an employee in every case.  That principle should only apply where, as in the case of Mr. Cassar, a worker’s relationship with the company is indistinguishable from that of an employee.

 

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