You can be self-employed and still be owed severance. In Ontario, a contractor who depends heavily on one company for their income can be a dependent contractor.
Dependent contractors are not employees, but they aren’t completely independent either. If the company ends a long-term, economically dependent relationship without enough notice, the contractor can be entitled to significant compensation.
The Quick Answer: A dependent contractor is usually someone who works mainly or almost exclusively for one company and relies on that relationship for their livelihood. If that sounds like you, don’t assume the company can simply end your contract and pay you nothing.
On This Page:
- 1. What Is a Dependent Contractor?
- 2. How Do You Know if You Qualify?
- 3. Dependent vs. Independent Contractor
- 4. Are Dependent Contractors Owed Severance?
- 5. What if You Signed a Contractor Agreement?
- 6. Frequently Asked Questions
What Is a Dependent Contractor in Ontario?
A dependent contractor is a self-employed worker who has become economically dependent on one company or client.
You might invoice through your own business, pay your own taxes and technically work as a contractor. But if one company provides almost all of your work and income, the relationship can look very different from that of a truly independent business.
Ontario law recognizes this middle ground between:
- Employee: Works as part of the employer’s business and receives employment-law protections
- Dependent contractor: Is self-employed but economically dependent on one company
- Independent contractor: Operates a genuinely independent business serving its own clients
If you’re unsure whether you’re actually self-employed at all, see our guide to independent contractor rights in Ontario.
How Do You Know if You’re a Dependent Contractor?
Economic dependence and exclusivity are the most important signs.
You are more likely to be a dependent contractor if:
- You worked almost exclusively for one company
- Most or all of your income came from that company
- The relationship lasted for many years
- You had few meaningful opportunities to develop other clients
- You became closely integrated into the company’s business
- The company expected you to remain available for its work
No single factor decides the issue. Courts look at the real history of the relationship.
Does all of your income have to come from one company?
No. Complete exclusivity is not required.
You can perform some work for other clients and still be economically dependent on your main client. What matters is whether the overall relationship was exclusive or close to exclusive.
Ontario courts look at the full relationship rather than focusing only on the final few months before the contract ended.
Is earning more than 50% from one company enough?
Not by itself. There is no simple “more than 50% equals dependent contractor” rule.
Ontario’s Court of Appeal has said that dependent-contractor status requires a high level of exclusivity. A substantial client that provides only part of your overall business is different from a company on which you rely for nearly all of your livelihood.
That is why the percentage of your income matters—but it isn’t the only thing that matters.
Dependent Contractor vs. Independent Contractor in Ontario
The biggest difference is how dependent you are on the company for your livelihood.
| Dependent Contractor | Independent Contractor |
|---|---|
| Relies heavily on one company | Has a broader client base |
| Most income comes from one relationship | Income comes from multiple clients |
| Relationship is often long-term and near-exclusive | Operates a genuinely separate business |
| Can be owed reasonable notice when terminated | Termination rights usually come from the contract |
How is a dependent contractor different from an employee?
A dependent contractor remains a contractor rather than an employee.
That distinction matters because a dependent contractor does not automatically receive all of the rights employees have under Ontario’s Employment Standards Act, such as overtime, vacation pay or statutory termination pay.
The key protection for a dependent contractor is the right to reasonable notice when the relationship ends.
If the company actually controlled and treated you like an employee, however, you may have been misclassified rather than merely economically dependent. Our Independent Contractor Ontario guide explains that distinction.
Are Dependent Contractors Owed Severance in Ontario?
Yes. A dependent contractor can be entitled to reasonable notice or compensation instead of notice when the company ends the relationship.
People commonly call this severance. Legally, the claim is usually for common-law reasonable notice rather than statutory severance pay under Ontario’s Employment Standards Act.
The important practical point is the same: the company may owe you substantial compensation instead of simply ending a long-term contractor relationship overnight.
How much notice can a dependent contractor receive?
There is no fixed formula.
Factors can include:
- How long the relationship lasted
- Your age
- The nature of your work
- How economically dependent you were on the company
- The availability of comparable work
- The terms of your contractor agreement
Long-term dependent contractors can be owed many months of compensation.
Do dependent contractors get ESA severance pay?
Not simply because they are dependent contractors. A dependent contractor is still not an employee for Employment Standards Act purposes.
If you were actually a misclassified employee, however, ESA termination and severance rights can apply in addition to common-law rights.
What if You Signed an Independent Contractor Agreement?
Signing an independent contractor agreement does not prevent you from becoming a dependent contractor.
A contract can start as a genuinely independent arrangement and become economically dependent over time.
For example, you might initially have several clients but gradually:
- Take on more work from one company
- Stop working for other clients
- Depend on that company for nearly all of your income
- Work in that arrangement for many years
The relationship at that point can be very different from what existed when the contract was first signed.
Can the agreement limit your notice?
Yes. The wording of a valid termination clause can affect what notice is owed when a contractor relationship ends.
That is why the agreement needs to be reviewed alongside the history of the relationship.
See our guide to independent contractor agreements in Ontario for more on termination clauses and other important contract terms.
What should you do if your contractor relationship has ended?
- Don’t assume you’re owed nothing. Contractor status does not settle the notice question.
- Keep your contractor agreements. Save the original contract and any later amendments.
- Gather records showing your income. Invoices and tax records can help establish how dependent you were on the company.
- Consider the entire relationship. How long did it last, and how much of your work came from this one company?
- Have your status and notice entitlement reviewed.
Dependent Contractor Ontario: Frequently Asked Questions
What is a dependent contractor?
A dependent contractor is a self-employed worker who relies heavily on one company or client for their work and income. That economic dependence can create a right to reasonable notice when the relationship ends.
Can a dependent contractor get severance?
Yes. Dependent contractors can receive reasonable notice or compensation instead of notice when a company terminates a sufficiently dependent relationship.
How much of my income must come from one company?
There is no fixed percentage that automatically makes you a dependent contractor. The relationship normally needs to show a high degree of exclusivity or near-exclusivity. Courts consider your income and the full history of the relationship.
Is 50% of my income enough to make me a dependent contractor?
Not automatically. Ontario’s Court of Appeal has made clear that simply receiving a majority of your income from one client is not enough on its own. The relationship must show a much stronger level of economic dependence.
Can I be a dependent contractor if I have other clients?
Yes. Having some other clients does not automatically prevent dependent-contractor status. What matters is whether the main company provided most of your work and whether the overall relationship was close to exclusive.
Does a dependent contractor get vacation pay or overtime?
Not simply because they’re a dependent contractor. Those Employment Standards Act rights generally apply to employees. If you believe you were actually an employee who was incorrectly labelled a contractor, your status should be reviewed for misclassification.
Can a dependent contractor claim constructive dismissal?
Yes. A fundamental change to a dependent contractor’s agreement can amount to constructive dismissal in Ontario and trigger reasonable-notice damages rather than requiring the contractor to accept the new arrangement.
What if the company says I was an independent contractor?
The company’s label is not the final answer. Courts look at the real relationship, including exclusivity, economic dependence and the history of the work.
Contract Ended? Find Out if You’re Owed Compensation
If you’ve worked primarily for one company for years, losing that relationship can mean losing most of your income overnight.
Ontario law recognizes that economic dependence. You can be entitled to reasonable notice even if you were genuinely self-employed and your agreement called you an independent contractor.
The Ontario employment lawyers at Samfiru Tumarkin LLP can review your contractor agreement, income history and working relationship to determine whether you’re a dependent contractor, a true independent contractor or a misclassified employee—and calculate the compensation you’re owed.
Workers and contractors in the GTA and across the province can speak with our Toronto independent contractor lawyers.
The process doesn’t need to be overwhelming. In many cases, reviewing the agreement and how much of your income came from the company provides a clear starting point.