A dependent contractor in Canada is a self-employed worker who relies heavily on one company for their income.
If you worked mainly or almost entirely for one company, you may be entitled to severance pay when that relationship ends.
The label in your contract does not decide your rights. Even if you are called an “independent contractor,” your actual working relationship matters.
On This Page:
- 1. What Is a Dependent Contractor?
- 2. How Do You Know If You Are One?
- 3. Dependent vs. Independent Contractor
- 4. Dependent Contractor vs. Employee
- 5. Severance Pay for Dependent Contractors
- 6. Ontario, Alberta & B.C. Rules
What Is a Dependent Contractor?
A dependent contractor is a contractor who depends heavily on one company or client for work and income.
You can still be self-employed, send invoices and pay your own taxes, but if one company provides most of your livelihood, the law may treat you differently from a truly independent contractor.
The main practical difference is that a dependent contractor can be entitled to severance pay when a long-term relationship ends.
Is a dependent contractor still self-employed?
Yes. A dependent contractor is still a contractor, not automatically an employee.
However, because the contractor depends so heavily on one company, they can have stronger rights when that relationship is terminated.
How Do You Know If You Are a Dependent Contractor?
The biggest question is how dependent you were on one company for your work and income.
You may be a dependent contractor if:
- You worked exclusively or almost exclusively for one company
- Most of your income came from that company
- You worked with the company for many years
- The company expected you to be available for its work
- You had few other meaningful clients
- Losing that one company would remove most of your income
Courts look at the real relationship over time, not just the wording in your contract.
Do you have to earn 100% of your income from one company?
No. You can have some other clients and still be a dependent contractor.
The more heavily you depend on one company, the stronger the argument can become. Complete or near-complete exclusivity is an important factor, but there is no single percentage that automatically decides the issue.
Is there a 50% income rule?
No. Earning more than 50% of your income from one client does not automatically make you a dependent contractor.
Income is important, but the full relationship matters, including how long you worked together, whether you had other clients and how dependent your business was on that company.
Dependent Contractor vs. Independent Contractor
The main difference is how much you depend on one company for your livelihood.
| Dependent Contractor | Independent Contractor |
|---|---|
| Relies heavily on one company | Runs a more independent business |
| Works mainly for one client | Regularly works for several clients |
| Losing one client removes most income | Can more easily replace one client with others |
| May be entitled to severance pay | Rights usually depend more heavily on the contract |
For the broader rules, see our guide to independent contractors in Canada.
Does your contract decide your status?
No. Calling you an “independent contractor” does not automatically make you one.
Your contract matters, but so does what actually happened. If you spent years working almost entirely for one company, the relationship may look very different from what the paperwork says.
Dependent Contractor vs. Employee
A dependent contractor is still self-employed, while a misclassified employee is legally an employee even if the company calls them a contractor.
This distinction matters because an employee can have broader rights to things such as vacation pay, overtime and employment standards protections.
A useful way to look at the issue is:
- Are you really an employee or a contractor?
- If you are a contractor, are you truly independent or heavily dependent on one company?
If the company controlled your work so closely that you may actually have been an employee, see Employee vs. Independent Contractor in Canada.
Do Dependent Contractors Get Severance Pay?
Yes, dependent contractors can be entitled to severance pay when a long-term working relationship ends.
How much you may be owed depends on your situation, including:
- How long you worked with the company
- How much of your income came from that company
- How dependent you were on the relationship
- The kind of work you performed
- The terms of your contract
- How difficult it may be to replace the lost work
A contractor who worked almost exclusively for one company for many years can potentially be owed significant severance when the relationship ends. The amount can be as much as 24 months’ pay.
Learn more about severance pay in Canada.
Can a company end the relationship immediately?
Not necessarily. If you are a dependent contractor, the company may owe you severance pay instead of simply ending the relationship without compensation.
Your contract can affect what you are owed, so have it reviewed before accepting that the company can terminate the relationship immediately.
What if your contract says you get no severance?
Don’t assume that wording automatically ends your claim.
The exact contract language and the real working relationship both matter. If you worked mainly for one company for years and the relationship was suddenly terminated, have the agreement reviewed before signing a release or accepting no compensation.
Can dependent contractors get vacation pay or overtime?
Not automatically. Dependent-contractor status mainly affects what you may be owed when the relationship ends.
If you believe you should also have received vacation pay, overtime or other employee benefits, the bigger question may be whether you were actually an employee who was misclassified as a contractor.
Dependent Contractor Rights in Ontario, Alberta and British Columbia
Ontario, Alberta and British Columbia all recognize that some contractors who depend heavily on one company can have severance rights when the relationship ends.
Ontario
Ontario courts recognize dependent contractors where a worker is genuinely self-employed but highly dependent on one company, often because they worked exclusively or almost exclusively for that business.
Read Dependent Contractor in Ontario.
Alberta
Alberta courts have also recognized severance rights for contractors who were sufficiently dependent on one company. The length of the relationship, exclusivity and the actual working arrangement can all matter.
See our guide to independent contractors in Alberta.
British Columbia
BC courts also recognize dependent contractors, including long-term contractors who worked exclusively or almost exclusively for one company.
Read Dependent Contractor in BC.
Dependent Contractors in Canada: Frequently Asked Questions
What is a dependent contractor in simple terms?
A dependent contractor is a self-employed worker who relies heavily on one company for their income.
Can I be a dependent contractor if I have other clients?
Yes. You do not necessarily need to work 100% for one company. The question is how dependent you were on that company when the relationship is viewed as a whole.
Does incorporating prevent me from being a dependent contractor?
No. Working through your own corporation does not automatically decide your legal status. The actual relationship still matters.
Can gig workers be dependent contractors?
Potentially. Gig workers are not automatically employees, independent contractors or dependent contractors. Their rights depend on how the relationship actually works.
See our guide to gig economy worker rights in Canada.
What should I do if my contract was terminated?
Keep your agreements, invoices and income records and have your status reviewed before signing a release.
Those records can help show how long you worked with the company, how much of your income came from it and how dependent you were on the relationship.
Contract Ended? Find Out What You Are Owed
Being called an independent contractor does not always mean a company can end a long-term relationship without paying you anything.
Samfiru Tumarkin LLP helps workers in Ontario, Alberta and British Columbia determine whether they are employees, dependent contractors or truly independent contractors and what compensation they may be owed.
If one company provided most or nearly all of your income, have your status reviewed before accepting that you are owed nothing.