Landmark decision in employment courts formalizing the new employment classification of Dependent Contractor
Keenan vs. Canac Kitchens, 2015 ONSC
Ontario Supreme Court up holds lower court decision to award an Independent Contractor (newly reclassified by the employment court as a Dependent Contractor) with over 2 years of severance. Decision seen as landmark in employment courts because of the award and the formalization of the new employment classification of Dependent Contractor.
- Existence of contract will not be determinative
- Historical thinking Dependent Contractor entitled to less reasonable notice than employee is disappearing
- Common law “cap” of 24 months for reasonable notice is not a cap for dependent contractors
In 1976 Mr. Keenan began working for Canac Kitchens. Initially he installed kitchens and he was later promoted to foreman. In 1987 Canac told Mr. Keenen that he would thereafter work as a Canac sub-contractor basically performing the same tasks. Mr. Keenan operated as a sole proprietor. Thereafter Mr. Lawrence continued to wear Canac shirts, Canac business cards, enjoy employee discounts and he received a signet ring for 20 years of loyal service.
In 2007 Mr. Keenen started to perform services for a Canac competitor because Canac’s business was slowing down. In March 2009 Canac ended its relationship with Mr. Keenan. At that time 72.3% of his revenue was derived from his relationship with Canac.
The Court of Appeal concluded that Mr. Keenan was neither employee nor an independent contractor; rather he was a dependent contractor. The court concluded that Mr. Keenan did not have to derive 100% of his income from Canac to be a dependent contractor.
A true independent contractor is generally not entitled to any notice of termination. A dependant contractor, however, is entitled to notice of termination. Mr. Keenan earned a living at Canac for 33 years and he was 63 years old when Canac terminated its relationship with him. The trial judge ordered Canac to pay him 26 months pay in lieu of notice, and the Court of Appeal upheld this damage award.