Transition from a contractor to an employee

Under common law, an employer is required to provide an employee reasonable notice of termination. The reasonableness of the notice must be decided after considering many factors, such as the character of the employment, the age of the employee, the availability of similar employment, the employee’s experience, training and qualifications, and the length of service.

If the employee worked for the same company as an employee continuously, then it may be easy (or less contentious) to determine the length of service. However, what if the employee initially started as a contractor, but later hired as an employee? Should we ignore the length of tenure as the contractor?

In Cormier v 1772887 Ontario Limited, 2019 ONSC 587, the court in Ontario considered whether the length of tenure as a contractor should be considered in determining the length of reasonable notice period at common law. In that case, the Plaintiff worked as a contractor for approximately 10 years, then as an employee for approximately 13 years, in the total of 23 years’ workplace relationship. In this case, the trial judge determined that it would be wrong to ignore the years of contractor relationship, whether independent or dependent contractor, in determining the reasonable notice period, and awarded twenty-one months of pay in lieu of reasonable notice period.

At the Court of Appeal, the employer raised an interesting argument: that their employment agreement stated “your original hire date of June 7, 2004 will be recognized as your start date for the calculation of your years of service, vacation entitlement and health care benefits under this agreement”, and as such the length of reasonable notice period at common law should not be calculated with regard to the period of time prior to June 7, 2004, when the employee worked as a contractor. In this regard, the Court of Appeal disagreed with the employer and ruled that nothing in the employment agreement prevented the employee’s common law entitlement.

If the nature of your relationship has changed from a contractor to an employee during your workplace relationship, understanding your entitlement can be complicated. Osuji & Smith Employment Lawyers can review your case to determine if you were wrongfully dismissed. Our Calgary employment lawyers will make sure you know your rights including the pay you should receive.

Author: Justin Kwon