Independent Contractors in Ontario: What Are They?

What Is An Independent Contractor in Ontario?

An independent contractor is a self-employed individual or entity that provides services to multiple clients under a contract or agreement.

Unlike employees, independent contractors have more control over their work, but have fewer employment rights under Ontario’s Employment Standards Act (ESA).

Watch the video below from the Employment Law Show and read on to learn more about independent contractors and their rights in Ontario.

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How To Tell If You’re an Independent Contractor

You are likely an independent contractor in Ontario if you:

• Control Your Work: You decide when, where, and how you complete your tasks.
• Own Your Tools: You provide your own tools, equipment and resources needed for the job.
• Take on Financial Risk: You are responsible for your own business expenses and profits.
• Work With Multiple Clients: You are free to work with multiple clients and are not tied to one employer.
• Set Your Own Terms: You negotiate your own rates and terms of work in a contract or agreement.
• No Employment Rights: You do not receive employment benefits such as vacation pay, sick leave, or employment insurance from your clients.

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What Is The Difference Between an Independent Contractor and an Employee?

Understanding the key differences between an independent contractor and an employee in Ontario is crucial for both workers and employers. Our comparison chart below provides a clear overview of the main distinctions:

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Do Independent Contractors Have the Same Rights as Employees in Ontario?

No, independent contractors do not have the same rights as employees in Ontario. While employees are entitled to various protections and benefits under employment law, such as minimum wage, overtime pay, vacation pay, and employment insurance, independent contractors are considered self-employed and do not receive these benefits.

They have more autonomy in their work but are responsible for their own taxes, insurance, and business expenses.

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Employment Contract Says I’m an Independent Contractor

Just because you sign an employment contract that labels you as an independent contractor, it doesn’t necessarily mean that’s your true employment status. In Ontario, the nature of your working relationship, rather than the wording of your contract or what your employer says, determines whether you are an employee or an independent contractor. Your employment agreement can’t override the law.

Likewise, the fact that your employer doesn’t deduct any taxes from your paycheques doesn’t automatically make you an independent contractor.

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Taxes and Independent Contractors

A common misconception is that if you’re responsible for paying your own taxes instead of your employer, you’re automatically classified as an independent contractor. However, in Ontario, the determination of your employment status goes beyond just tax responsibilities, and is based on several factors.

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Difference Between an Independent and Dependent Contractor

In Ontario, understanding the distinction between an independent contractor and a dependent contractor is crucial for both workers and employers. These classifications have significant implications for employment rights, responsibilities, and entitlements.

While independent contractors operate their own businesses and work with multiple clients, dependent contractors have a closer relationship with a single client, often relying on them for the majority of their income.

The following chart outlines the key differences between these two types of contractors, providing a clear comparison to help you determine the appropriate classification and understand the associated rights and obligations.

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Termination Rights for Independent Contractors

In Ontario, independent contractors do not have the same termination rights as employees or dependent contractors. Here are some key points regarding termination rights for independent contractors:

• Contract Terms: The termination rights of independent contractors are typically governed by the terms of their contract. It’s important for the contract to clearly outline the conditions under which the relationship can be terminated, notice of termination or severance payments, and any compensation or penalties for early termination.
• No Severance Pay: Independent contractors typically don’t get severance pay when their contract ends, unless it’s stated in the contract.
• Notice Period: Independent contractors may be entitled to a notice period before termination, as outlined in their contract. The length of the notice period can vary depending on the agreement between the parties.
• Wrongful Termination: If the termination of an independent contractor violates the terms of the contract, the contractor may have grounds for a legal claim. However, they do not have the same protections against wrongful dismissal in Ontario as employees.

It’s essential for independent contractors to have a well-drafted contract that clearly defines their rights and obligations to protect their interests.

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Severance Pay For Independent Contractors in Ontario

In Ontario, independent contractors qualify for severance pay when they lose their job if:

• They were actually an employee, but misclassified as an independent contractor.
• The contract with their client provides a severance package.

Remember, proper classification depends on the nature of your work relationship instead of what your client or employer says.

• Client Win: Samfiru Tumarkin LLP recently achieved a significant victory in a wrongful dismissal case against a tow truck company. The company had terminated a driver for cause, claiming he was an independent contractor. Our firm successfully proved that the driver was dismissed without cause and established his status as an employee. As a result, we secured six months’ pay in severance for our client, demonstrating our commitment to fighting for employees’ rights and compensation.

How Much is Severance?

In Ontario, severance pay for a misclassified independent contractor can be as much as 24 months’ pay.

The amount is calculated by considering an employee’s age, position, and length of employment. Other factors that affect the amount you’re owed by your employer include commission, bonuses, vacation pay, overtime pay, pension, what your employment contract says and the availability of similar work.

You can use the free and anonymous Severance Pay Calculator to estimate approximately how much severance you might be owed.

How Do I Get Severance Pay?

If you lose your job and think you were misclassified as an independent contractor in Ontario, contact Samfiru Tumarkin LLP immediately! Our experienced team has helped thousands of people across the province identify their true relationship wth their employer, and pursue a proper severance package.

Severance Offer Deadlines

In Ontario, you are not obligated to sign a severance offer by your employer’s deadline. During a termination meeting, you may be presented with a severance offer and pressured to sign quickly. These deadlines are often used as pressure tactics to encourage employees to accept inadequate severance packages without fully understanding their rights.

• Fact: You have up to two years from the termination date to claim your full severance entitlement, which can be as much as 24 months’ pay.

Your employer can’t force acceptance of a severance package. You are entitled to have the offer reviewed by an employment lawyer at Samfiru Tumarkin LLP to ensure it meets your full entitlements.

If you sign off on a severance package before we have a chance to review it, you forfeit your ability to negotiate fair compensation.

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Should I Contact the Ministry of Labour?

No, you should not go to the Ontario Ministry of Labour if you are let go without cause as an employee or an independent contractor. The Ministry of Labour can only help you get your minimum entitlements to severance under the Ontario’s Employment Standards Act (ESA), which could be a few weeks at most.

An Ontario employment lawyer at Samfiru Tumarkin LLP can help you pursue your full entitlements, potentially up to 24 months’ pay. This could translate to tens of thousands of dollars more than what the Ministry might secure.

You can use the free and anonymous Severance Pay Calculator to estimate approximately how much severance you might be owed. An employment lawyer at Samfiru Tumarkin LLP can then work to get a severance package through a wrongful dismissal claim in Ontario.

Here are some other things to keep in mind when you lose your job:

• You have the option to file a complaint with the Ontario Ministry of Labour for severance, or pursue a legal claim through an employment lawyer, but you can’t do both.
• If a severance complaint has already been submitted to the Ministry, there is typically a two-week window from the filing date to retract it, allowing an employment lawyer at Samfiru Tumarkin LLP to start a wrongful dismissal legal claim on your behalf.
• You can’t file a complaint with the Ministry once you start a legal claim through an employment lawyer.

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Ontario Independent Contractor Lawyers

An Ontario independent contractor lawyer specializes in legal cases where employees have lost their job after being incorrectly identified as a contractor, a common practice in workplaces across the Canada.

At Samfiru Tumarkin LLP, our exceptional team of independent contractor lawyers have been pillars of strength and success for tens of thousands of clients across Ontario. With proven results and a comprehensive understanding of the legal landscape, our lawyers diligently work to safeguard your rights, ensuring you receive the appropriate guidance and support through every step of your wrongful dismissal claim.

Our solid track record and dedicated approach make us a top choice for employee misclassification and dismissal cases in Ontario. We stand strong as a highly regarded and extensively reviewed law firm, delivering successful outcomes for employees faced with problems. Partnering with us guarantees steadfast legal support focused on securing your rightful severance and justice in the workplace.

Benefit from our unwavering commitment, ensuring you navigate through your severance claim with clarity, confidence, and a powerful advocate firmly by your side.

If you are a non-unionized employee in Ontario, Alberta, or British Columbia who was misclassified as an independent contractor and need assistance with an employment matter, contact us or call 1-855-821-5900 to get the advice you need, and the compensation you deserve.