Dependant Contractor and the Employer-Employee Relationship
10 Nov 2015
Our common law governs employee and employer relationships ensuring that the principles of justice are served whilst balancing the diverse interests of all parties involved. One of the chief concerns of employment law is whether an employer-employee relationship exists in the first place.
Through the common law various tests were developed to assess whether an employer-employee relationship exists in situations where employment circumstances may be unclear.
Tetra Consulting v Continental Bank et al., 2015 ONSC 4610 (CanLII) dealt with a determination as to whether an employer-employee relationship existed for the purposes of making a disposition with regards to the appropriate notice period owed. An employee deserves an adequate notice period prior to termination, or else compensation in lieu of such notice.
FACTS OF THE CASE
The plaintiffs, Tetra Consulting and Lewis Cassar ("Mr. Cassar") brought an action to the Ontario Superior Court of Justice as against the Continental Bank of Canada ("the Bank") and Continental Currency Exchange Canada Inc. ("CCEC"), the defendants, for pay in lieu of notice of termination.
Mr. Cassar owned Tetra Consulting, through which he contracted out his expertise in the banking sector in the manner of a consultant. The defendants initially hired Mr. Cassar through Tetra Consulting to aid in their obtaining the Office of the Superintendent of Financial Institutions’ ("OSFI") approval for the newly created Continental Bank of Canada.
The plaintiffs commenced work in January 2013, and invoiced their fees to CCEC. Mr. Cassar was named the Chief Compliance Officer and Chief Anti Money Laundering Officer of the Bank. This was in keeping with the intention of both parties to have Mr. Cassar become an employee of the Bank once the OSFI approves the Bank.
Mr. Cassar had represented himself as an employee of the bank to the OSFI, and had business cards confirming his employee status. Furthermore, the Bank had included Mr. Cassar in their organizational documents setting out the Bank’s management hierarchy and assuring the OSFI that Mr. Cassar would remain with the Bank going forward.
The Bank was granted approval by the OSFI on December 8, 2013. In January 2015 Mr. Cassar was contacted by the Bank’s legal department and notified that his employment documents are being prepared for execution. However, much to Mr. Cassar’s dismay, on January 14, 2015 the Bank had permanently closed, ending its operations because a major shareholder had gone on to pursue other ventures.
Tetra Consulting and Mr. Cassar had worked exclusively for the Bank, and were unable to find work elsewhere after the Bank’s closure. Furthermore, the Bank had made perfectly clear its intention to hire Mr. Cassar after achieving the OSFI’s approval. Relying on the facts of the case the judge made clear that an employment relationship could exist without an actual employment contract. The relationship exists de facto, as per the actual arrangement of events; the employment contract, the judge explained, could be seen as merely confirming in writing what had already existed.
Moreover, the Court continued its analysis by focusing on whether Mr. Cassar could be considered an employee prior to the OSFI’s approval of the Bank. When he wasn’t an employee, Mr. Cassar, was a dependent contractor. The courts outlined the evidence available in accordance with McKee v Reid’s Heritage Homes Ltd., 2009 ONCA 916 (CanLII), at paras 22-25:
He worked exclusively for the Bank
He used the Bank’s tools to complete his work
He had an office
He had an email address
He was subject to the Bank’s control
He represented himself to third parties as an employee of the Bank.
As such, the court determined that the notice period Mr. Cassar would be owed should be considered with his entire working term in mind (pre-approval as well as post-approval).
Considering that Mr. Cassar was 61 years old, held a senior management position, and earned a high salary, commensurate with his role, allowed the court to conclude that he was indeed a "key employee." The court assessed comparable cases with older, key employees, whose employment was terminated after only a short period of time and concluded that the proper notice period in this case would be eight (8) months, awarding Mr. Cassar his fees for eight (8) months including an eighteen percent (18%) interest rate as per Tetra Consulting’s invoices.
Whether you have an employment contract or not, the facts of your situation will play a crucial role in defining whether an employer-employee or a principal-dependant contractor relationship actually exists. If you were terminated, or your services abruptly cancelled, you may have access to the protections offered to employees under the common law. It is important to be clear with whomever you do business, and maintain a consistent paper trail detailing the nature of your relationship as well as the actual circumstances under which the work is being completed. If your employment was terminated and you are unsure what protections are available to you, contact an employment lawyer as soon as possible to review the facts of your case.
The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.