Dependent Contractor in Ontario: Definition, Rights, and Legal Test

Understanding your work status in Ontario is crucial — it determines your rights, benefits, and severance pay. Many workers believe they are independent contractors, but under Ontario law, some are actually dependent contractors — a category that sits between employees and independent contractors.

What Is a Dependent Contractor?

A dependent contractor is someone who technically works as a contractor but relies heavily on one company for most (or all) of their income. While not considered a full employee, they are economically dependent on the business they serve.

In Ontario, dependent contractors are legally recognized under the common law (court decisions) and are entitled to certain employee-like protections — especially reasonable notice or severance pay when their contract ends.

Dependent Contractor Definition in Ontario

In simple terms, a dependent contractor:

• Works independently but is tied closely to one company
• Depends on that company for the majority of their income
• May wear company branding or represent the company publicly
• Often works long-term for the same business without the flexibility of a true contractor

Dependent Contractor vs. Independent Contractor

The Dependent Contractor Test in Ontario

Courts in Ontario use several factors — often called the dependent contractor test — to determine whether a worker is dependent or independent. These include:

1. Exclusivity of work – Do you earn most of your income from one company?
2. Length of relationship – Have you worked for the same company long-term?
3. Level of control – Does the company set your hours, clients, or workflow?
4. Ownership of tools – Do you use the company’s equipment or your own?
5. Financial risk – Do you bear the risk of profit or loss?

If most answers point toward dependency, the law may find that you are a dependent contractor — and therefore entitled to severance pay in Ontario when your contract ends.

Why the Distinction Matters

Being classified correctly affects your employment rights, including:

• Severance pay or notice upon termination
• Access to benefits (if provided to similar employees)
• Legal protection under employment standards and human rights laws

What to Do if You’re a Dependent Contractor in Ontario?

If you lose your contract or believe you’ve been misclassified, you may be owed significant compensation. An employment lawyer in Toronto or Ontario can review your contract, work pattern, and payment structure to determine your true status.