Dependent Contractor Entitled to Notice: Not an Employee But…
October 3, 2013
In a decision of a trial judge in Alberta, a dependent contractor was awarded notice even though she was found not to be an employee. The Plaintiff first started providing services in August 2004 as an assistant area manager to the Defendant corporation through another company which the Plaintiff owned 50% of for a period of time. The Plaintiff then took over as area manager with the Defendant corporation in March 2006, and was paid commission payments to her own wholly owned company. There was no written contract or agreement between the parties.
After being terminated without notice or cause, the Plaintiff sued the corporate Defendant for wrongful dismissal.
The judge reviewed the facts, including the level of control the Defendant exerted over the Plaintiff’s provision of services and other factors. The judge concluded that the Plaintiff’s relationship with the Defendant was that of a dependent contractor for the period wherein she worked directly for the Defendant and that she was entitled to reasonable notice; albeit less than that which would be afforded to an employee. The Plaintiff received 2 months’ reasonable notice, amounting to $25,000 plus GST, less an amount deducted by the Court for the Plaintiff’s inadequate mitigation efforts.
The Alberta Court’s decision reaffirms what the Ontario Court of Appeal for Ontario held in principle in the 2009 case of McKee v Reid’s Heritage Homes Ltd. 2009 ONCA 916, but did not find in fact; that the legal category of “dependent contractor” exists and they are entitled to “reasonable notice”. However, the Alberta Court qualifies “reasonable notice” for this category as being less than that for an employee; something which the McKee decision did not disceuss as it did not arise on the facts of that case.
These decisions are a caution to employers. Even though you may not have an employee/employer relationship, the nature of the relationship may give rise to a successful claim for reasonable notice in any event; albeit potentially in an amount less than what an employee would be awarded. A properly drafted agreement between the parties setting out the nature of the relationship and the specific rights and obligations of the parties may have changed the result.