Being called an independent contractor does not make you one. In Ontario, your legal status depends on how you actually work—not simply what your contract says.
If a company controls your work like an employee, you can be a misclassified employee with rights to vacation pay, overtime, termination pay and other employment protections. If you operate independently but rely heavily on one company for your income, you can instead be a dependent contractor who is entitled to reasonable notice when the relationship ends.
The Quick Answer: Ontario recognizes important differences between employees, dependent contractors and true independent contractors. If you’re labelled a contractor but work mainly or exclusively for one company, don’t assume you have no employment or severance rights.
On This Page:
- 1. What Is an Independent Contractor?
- 2. Independent Contractor vs. Employee
- 3. Misclassified Independent Contractors
- 4. Dependent Contractors
- 5. Contractor Severance Rights
- 6. Frequently Asked Questions
What Is an Independent Contractor in Ontario?
A true independent contractor is self-employed and operates their own business rather than working as an employee of another company.
Independent contractors typically have more control over:
- How and when they perform their work
- Which clients they work for
- The tools or equipment they use
- Whether they hire others to help perform the work
- How they earn a profit and manage business expenses
The key question is whether you are really operating a business of your own. No single factor decides the answer. Courts look at the working relationship as a whole.
Does having an independent contractor agreement make you a contractor?
No. A contract that calls you an “independent contractor” does not override the reality of the relationship.
If the company treats you like an employee day to day, you can still be legally recognized as an employee.
Our separate guide to independent contractor agreements in Ontario explains what these contracts should contain and why the wording matters.
Independent Contractor vs. Employee in Ontario
How much control the company has over your work is one of the clearest signs of whether you’re really an employee or an independent contractor.
You are more likely to be an employee if the company:
- Sets your hours and work schedule
- Tells you how the work must be performed
- Provides the tools, equipment or systems you use
- Requires you to work mainly or exclusively for it
- Does not allow you to hire others to perform the work
- Supervises and manages you like other employees
You are more likely to be an independent contractor if you control your own work, serve multiple clients, supply your own equipment and have a genuine opportunity to make a profit or suffer a financial loss.
What if you invoice the company and pay your own taxes?
That does not settle the issue. Invoicing, registering a business or handling your own taxes can support contractor status, but the actual working relationship still matters.
A company can’t turn an employee into an independent contractor simply by changing how they are paid.
What if You’re Misclassified as an Independent Contractor?
Misclassification happens when a company calls you an independent contractor even though you are legally an employee.
Ontario employers can’t avoid employment standards by incorrectly labelling an employee as a contractor.
If you’ve been misclassified, you can have rights under Ontario’s Employment Standards Act, including applicable rights to:
- Minimum wage
- Overtime pay
- Vacation time and vacation pay
- Public holiday pay
- Protected leaves
- Termination notice or pay
Your employment rights can apply even if you signed a contractor agreement and operated under that label for years.
Signs you may be misclassified
Take a closer look at your status if:
- You work full-time for one company
- You have a boss or direct supervisor
- The company controls your schedule
- You can’t turn down assignments
- You use company equipment and systems
- You are subject to the same performance management as employees
- You have little real opportunity to make a business profit beyond simply working more hours
What Is a Dependent Contractor in Ontario?
A dependent contractor falls between an employee and a true independent contractor.
You can genuinely operate as a contractor but become economically dependent on one company because most or all of your income comes from that relationship.
Signs of dependent-contractor status include:
- Working almost exclusively for one company
- Receiving most of your income from that company
- Having a long-term, ongoing relationship
- Being unable to easily replace the income if the relationship ends
The importance of dependent-contractor status is severance. A dependent contractor can be entitled to reasonable notice before the company ends the relationship, even though they are not an employee.
See our complete guide to dependent contractors in Ontario.
Do Independent Contractors Get Severance Pay in Ontario?
True independent contractors usually do not receive employee severance when a contract ends. But many people who are called independent contractors are actually misclassified employees or dependent contractors.
That difference can be worth months of compensation.
If you’re actually an employee
A misclassified employee can be entitled to the same termination rights as other non-unionized employees.
Your full Ontario severance entitlement can be based on factors such as your age, length of service, position and the availability of similar work. Depending on your circumstances, severance can reach 24 months’ pay.
If you’re a dependent contractor
A dependent contractor can be entitled to reasonable notice or compensation when a company ends a long-standing, economically dependent relationship.
The amount depends on the nature and length of the relationship and the degree of economic dependence.
If you’re a true independent contractor
Your rights will primarily come from the independent contractor agreement itself. The termination clause can determine how and when either side can end the relationship and whether contractual notice is required.
Independent Contractor Ontario: Frequently Asked Questions
Does an independent contractor have rights in Ontario?
Yes. A true independent contractor has contractual rights under their agreement. If you are actually a misclassified employee, you can also have Employment Standards Act and common-law employment rights. A dependent contractor can have reasonable-notice rights when the relationship ends.
Can my employer just call me an independent contractor?
No. The name used in your contract does not determine your legal status. How the relationship actually operates is what matters.
Can an independent contractor work for only one company?
Yes, but exclusivity is important. If virtually all of your income comes from one company over a long period, you can become a dependent contractor with reasonable-notice rights when the relationship ends.
Are independent contractors covered by the Ontario ESA?
True independent contractors are not employees under the ESA. If you’ve been misclassified and are legally an employee, ESA protections still apply despite the contractor label.
Can I get severance if my independent contractor agreement is terminated?
Yes, if you are actually an employee or a dependent contractor with reasonable-notice rights. True independent contractors instead rely primarily on the termination rights contained in their contract.
What is the difference between a dependent contractor and an employee?
An employee works as part of the company’s business and receives employment-law protections. A dependent contractor remains self-employed but relies heavily on one company economically. That economic dependence can give the contractor reasonable-notice rights without making them an employee.
Should I sign an independent contractor agreement?
Understand what you’re agreeing to first, particularly provisions dealing with your status, exclusivity, payment and termination. See our guide to independent contractor agreements in Ontario.
Told You’re an Independent Contractor? Find Out What You Really Are
The words at the top of your contract do not determine your employment rights.
If you work mainly for one company, have been treated like an employee or recently had your contract terminated, the Ontario employment lawyers at Samfiru Tumarkin LLP can determine whether you’re a true independent contractor, a dependent contractor or a misclassified employee.
That assessment can determine whether you’re owed severance, unpaid employment entitlements or other compensation.
Employees and contractors in the GTA can speak with our Toronto independent contractor lawyers.
The process doesn’t need to be overwhelming. In many cases, reviewing the contract and the way you actually worked is enough to identify which category you fall into and what rights follow.