Independent Contractor Rights in Ontario

Being classified as an independent contractor in Ontario does not automatically mean you have no legal rights. Many workers labelled as contractors are actually entitled to severance pay and other protections under Ontario law.

Misclassification is extremely common. If a company treats you like an employee but calls you a contractor, Ontario courts may still recognize you as an employee — or a dependent contractor — regardless of what your contract says.

This guide explains independent contractor rights in Ontario, how misclassification works, and when contractors may be owed severance or compensation.

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What Is an Independent Contractor in Ontario?

An independent contractor is a self-employed individual who provides services to a business under a contract, rather than as an employee.

In Ontario, however, the label “independent contractor” is not decisive. Courts look at the actual working relationship, not just the wording of the agreement, to determine whether someone is truly self-employed.

Simply put:
👉 How you work matters more than what your contract says.

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How Ontario Courts Decide Contractor vs Employee Status

Ontario courts examine the full relationship between the worker and the company. Key factors include:

• Who controls how, when, and where the work is done
• Whether the worker can refuse work
• Whether the worker can hire helpers or subcontractors
• Who provides tools, equipment, or vehicles
• Whether the worker takes on financial risk
• Whether the worker works mainly for one company

If a company controls your work in the same way it controls employees, you may be legally classified as an employee — even if you invoice and pay your own taxes.

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Misclassified Independent Contractors in Ontario

Misclassification occurs when a business labels someone an independent contractor but treats them like an employee in practice.

This is one of the most common employment law issues in Ontario, especially in industries such as:

• Trucking and delivery
• Construction and skilled trades
• Sales and commission-based roles
• IT and consulting
• Healthcare
• Gig and platform work

If you’ve been misclassified, you are likely entitled to full employment protections under Ontario law.

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Dependent Contractors in Ontario

Ontario law also recognizes a third category of worker known as a dependent contractor, who may still be entitled to severance pay despite not being an employee.

A dependent contractor is not an employee, but is economically dependent on one company for most or all of their income.

You may be a dependent contractor if:

• You work primarily or exclusively for one business
• Your income depends on that business
• You have a long-term, ongoing relationship
• You can’t easily replace the lost income if the relationship ends

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Severance Pay for Independent Contractors in Ontario

If you are an employee or dependent contractor — even if called an independent contractor — you may be entitled to:

• Common law severance pay (often far more than the ESA minimums)
• Compensation for wrongful dismissal
• Pay in lieu of reasonable notice

Severance in Ontario is based on factors such as:

• Length of service
• Age
• Position and responsibilities
• Availability of similar work

Many misclassified contractors are wrongly told they are owed nothing when the relationship ends or they are fired without cause. That is often incorrect.

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Do Independent Contractors Have Rights Under the ESA?

True independent contractors are generally excluded from the Employment Standards Act (ESA).

However, if you are misclassified as a contractor but legally function as an employee, you may still be entitled to:

• Minimum wage
• Overtime pay
• Vacation and holiday pay
• ESA notice or termination pay

The ESA label does not override the legal reality of the relationship.

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Independent Contractor Agreements in Ontario

Independent contractor agreements are often drafted to protect the company — not the worker.

Common problems include:

• Clauses that mislabel employees as contractors
• Termination clauses that deny severance
• Non-competition or non-solicitation clauses
• Fixed-term contracts that are repeatedly renewed

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Signs You May Be an Employee — Not a Contractor

You may be misclassified if:

• The company sets your schedule
• You can’t refuse assignments
• You report to a manager or supervisor
• You work full-time for one business
• You use company tools or system
• You are subject to discipline or performance management

If these apply to you, you should get legal advice before accepting termination or signing anything.

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Independent Contractor vs Employee in Ontario

Topic	Independent Contractor	Employee
Control	Controls own work	Employer controls work
Taxes	Self-managed	Employer deducts taxes
Benefits	None	Eligible
Severance	No (unless misclassified)	Yes
ESA coverage	No	Yes
Financial risk	Worker bears risk	Employer bears risk

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When to Speak to an Employment Lawyer in Ontario

You should speak with an employment lawyer in Ontario if you:

• Were terminated and told you’re “not entitled to severance”
• Believe you were misclassified as a contractor
• Work mainly for one company
• Were pressured to sign a contractor agreement
• Are a dependent contractor

If you live or work in the GTA, speaking with an independent contractor lawyer in Toronto can help you determine whether you were misclassified and what compensation or severance you may be owed — you may get up to 24 months’ pay.