Independent contractors are not governed by the ESC. Various tests have been developed to determine whether an individual is an employee or an independent contractor.
In Connor Homes v. Canada (National Revenue), 2013 FCA 85, the framework to determine legal status of a worker was outlined:
- Ascertaining the subjective intent of each party
- Ascertaining whether the objective reality sustains the subjective intent of the parties
- Considering factors for objective reality(Wiebe – Control test, ownership of tools, chance of profit and risk of loss and the integration into the business; Sagaz – Whether or not the individual is performing the services as his own business on his own account);
- Understand that subjective intent cannot trump the reality ascertained through objective facts
However, section 1(1)(l) of the ESC does recognize “dependent contractors” as individuals economically dependent and under an obligation to perform duties for an individual that more closely resembles the relationship of an employee rather than an independent contractor.
Some of the factors involved in determining whether an individual is a dependent contractor are as follows:
- The way the industry operates;
- The type of work involved and its source;
- The nature of the applicant’s operations;
- The organization of the employer’s operations and the degree to which the contractors are a continuing part of it
- Any contractual arrangements between the parties and others;
- The type and extent of control and direction exercised by the employer with respect to such matters as hiring, firing, discipline, work assignment, hours of work, and so forth;
- The nature and manner of compensation and how it is determined;
- The percentage of income which the contractor derives from the employer;
- The opportunity for the contractor to make a profit through the exercise of independent entrepreneurial judgment; and
- The contractor’s opportunity for economic mobility and whether the contractor advertises or solicits customers elsewhere
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