What Is an Independent Contractor in Ontario?
An independent contractor is a self-employed individual or business providing services on a contract basis. Unlike employees, independent contractors control how and when they work, and are responsible for their own taxes and business expenses.
They aren’t covered by Ontario’s Employment Standards Act (ESA), which means they don’t receive benefits like vacation pay, overtime, or job protection. But that doesn’t mean they have no rights — especially if they’ve been misclassified.
🟢 Watch: Lior Samfiru on the employee vs. contractor relationship in Ontario, on the Employment Law Show.
What’s In This Guide
📘 View Topics
- How to Know If You’re an Independent Contractor
- Independent Contractor vs Employee Ontario
- What If My Contract Says I’m a Contractor?
- CRA Employee vs Contractor Checklist
- Taxes and Independent Contractors
- Dependent vs Independent Contractor
- Termination Rights for Contractors
- Do Contractors Get Severance?
- Can Contractors Sue for Wrongful Dismissal?
- Why Not to File with the Ministry of Labour
- Speak to an Independent Contractor Lawyer
How to Know if You’re an Independent Contractor
You are an independent contractor in Ontario if:
- You control your schedule (when, where, how you work)
- You own your tools and equipment
- You take financial risk (e.g. unpaid time, business expenses)
- You invoice multiple clients
- You set your own rates
- You don’t receive benefits like vacation pay, sick days, or EI
If these don’t apply — you may be misclassified.
Independent Contractor vs. Employee (Ontario)
| Criteria | Employee | Independent Contractor |
|---|---|---|
| Work Control | Employer sets schedule/tasks | Worker controls how work is done |
| Tools & Equipment | Provided by employer | Provided by contractor |
| Income Risk | No risk — steady paycheque | Takes on business risks/expenses |
| Tax Withholding | Employer deducts at source | Responsible for own tax filings |
| Employment Benefits | Eligible (e.g. vacation, overtime, EI) | Not eligible under the ESA |
| Exclusivity | Often exclusive to one company | May work for multiple clients |
What If Your Contract Says You’re a Contractor?
Even if your contract labels you as an “independent contractor,” the law looks at the actual working relationship, not the title.
If you report to one boss, work regular hours, and follow company policies, you may legally be an employee — even if you’re called a contractor on paper. That could entitle you to full severance pay in Ontario — up to 24 months’ compensation — and other benefits.
CRA Employee vs Contractor Checklist
The Canada Revenue Agency (CRA) uses several factors to determine your real employment status:
- Level of control over your work
- Ownership of tools
- Chance of profit/risk of loss
- Degree of integration with the organization
CRA’s classification affects whether your client has to withhold income tax and CPP/EI. Read more about this through the Government of Canada website.
Do Independent Contractors Pay Their Own Taxes?
Yes. Contractors are responsible for:
- Charging HST/GST (if applicable)
- Filing their own income tax returns
- Paying CPP contributions
- Keeping records and invoicing clients
But again, just paying your own taxes doesn’t automatically make you a contractor.
Dependent vs. Independent Contractors
A dependent contractor is someone who:
- Works mainly for one client
- Is not fully integrated into the company
- Still relies on that client for most of their income
In Ontario, dependent contractors are entitled to reasonable notice or severance pay upon termination.
Termination Rights for Independent Contractors
True independent contractors don’t have the same legal protections as employees.
- Severance pay only applies if it’s in your employment contract
- Notice periods depend on what your agreements says
- Wrongful termination can only be claimed if your contract was breached
But if you were misclassified, you can pursue compensation as an employee.
🟢 Case Win: Severance for Misclassified Tow Truck Driver
Our team secured 6 months’ severance for a Toronto-area tow truck driver wrongly fired “for cause” after being misclassified as an independent contractor. The court found no evidence of theft and confirmed he was legally an employee — entitled to full compensation. 👉 Read more.
Do Independent Contractors Get Severance in Ontario?
Yes — if you were misclassified.
You May Qualify for Severance if:
- You worked full-time under one employer’s control
- You didn’t truly operate your own business
- Your contract didn’t include clear termination terms
📲 Use the Ontario Severance Pay Calculator to get a quick, anonymous, and free estimate of how much severance you may be owed.
Can Contractors Sue for Wrongful Dismissal?
If you’re a true contractor, wrongful dismissal claims are rare — unless your contract was breached.
If you’re a misclassified employee, you can claim:
- Wrongful dismissal Ontario
- Severance Pay — up to 24 months’ pay, based on numerous factors
- Unpaid vacation or overtime
Speak to an employment lawyer at Samfiru Tumarkin LLP to find out.
Should You Contact the Ministry of Labour?
No. The Ministry of Labour only enforces minimum standards under the ESA — and it can’t help most contractors or misclassified workers get full compensation.
Once you file a claim with the Ministry, you typically can’t start a lawsuit. Speak to our employment lawyers before taking any action.
🟢 Real Example: Ministry of Labour Gave Bad Advice
Our firm represented a group of Ontario workers who were wrongly advised by the Ministry of Labour that they were only entitled to a few weeks’ pay in severance after their employer, Trillium Screw, shut down.
But that advice was wrong — and it cost them thousands of dollars.
They only discovered the truth after watching Lior Samfiru on TV. With our help, they took legal action against the Ministry for negligent severance advice.
👉 Read the full story about our lawsuit against the Ministry of Labour
Speal to an Independent Contract Lawyer in Ontario
Were you let go after being misclassified as a contractor? Think your contract was unfair?
At Samfiru Tumarkin LLP, we’ve helped thousands of Ontarians fight back after being denied severance and other employee rights.
🛡️ You may be owed maximum severance pay in Ontario — as much as 24 months’ compensation. An employment lawyer in Toronto or Ottawa employment lawyer can help you get what you’re entitled to.
- 👥 Over 50,000 clients helped across Canada
- 💰 Millions recovered in severance and compensation
- ⚖️ No win, no fee — you don’t pay unless we win*
- ⭐ 2,311 5-star Google reviews across Ontario (4.8 average)
- 🏆 Recognized as one of Canada’s Best Law Firms by The Globe and Mail
* Conditions apply. Not all cases qualify.
Contact us now to find out what you’re owed. Book your consultation or call 1-855-821-5900.
⚠️ UNIONIZED?
You must consult your union representative regarding termination, severance pay, and other workplace issues. By law, employment lawyers can’t represent unionized employees with these issues. You’re governed by your collective bargaining agreement.