Determining the Employer/Employee Relationship - IPG-069

Effective Date: April 2006

The purpose of this IPG is to ensure a uniform national application to determine the existence of an employer/employee relationship. When investigating the matter of employer/employee relationship, the inspector/health and safety officer shall examine the total relationship that exists between the parties utilizing the various criteria set by the courts.

1. Subject

The purpose of this IPG is to ensure a uniform national application to determine the existence of an employer/employee relationship. When investigating the matter of employer/employee relationship, the inspector/health and safety officer shall examine the total relationship that exists between the parties utilizing the various criteria set by the courts.

In order for a worker to be protected by the provisions of part II and part III of the Canada Labour Code as an employee, there must be an employer/employee relationship. This IPG will assist the inspector/health and safety officer in establishing the possible existence of an employer/ employee relationship when conducting investigations under part II and part III of the Canada Labour Code.

2. Background

The employment relationship can be complex, with no quick and easy formulae to use which will provide an instant solution. When gathering information from the parties in regards to their work relationship, the inspector/health and safety officer must keep in mind that the many "tests" are not tests in and of themselves, but rather conditions outlined in jurisprudence. They may be given more or less weight in a particular case to determine if a worker is simply part of the payer's business or in business on his or her own account.

In the Sagaz Case, the Supreme Court of Canada outlined some of the conditions to determine if a worker is an employee or an independent contractor. In the decision, the Supreme Court of Canada makes the following point that one must search for the total relationship of the parties:

"It is exceedingly doubtful whether the search for a formula in the nature of a single test for identifying a contract of service any longer serves a useful purpose…The most that can profitably be done is to examine all the possible factors which have been referred to in these cases as bearing on the nature of the relationship between the parties concerned. Clearly not all of these factors will be relevant in all cases, or have the same weight in all cases. Equally clearly no magic formula can be propounded for determining which factors should, in any given case, be treated as the determining ones."

671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001]

3. What is a contract of service and a contract for service?

In attempting to sort out the question of employee or independent contractor, the inspector/health and safety officer shall first examine what defines employment.

The general principles of contract law govern the formation of the contract of employment. A contract of employment is a contract by which a person, the employee, undertakes for a limited or indeterminate period of time to do work for remuneration according to the instructions and under the direction or control of another person, the employer.

Within the framework of a contract of employment, a person carries out the service of work, receives remuneration and the work is carried out according to the direction and control of the employer. The terms of the contract may be either in writing or given orally, but both are equally binding and enforceable. When a person is hired to be an employee, the person enters into a contract of service, which is an employer/employee relationship.

Another type of contract between two parties is that of an independent contractor or a contract for service. This type of contract may be defined as a contract by which a person, contractor or service provider makes a commitment to another person, the client, to carry out material or intellectual work or to provide a service for a price or fee. The characteristics of a contract for service are that the contractor is free to choose the means of performing the contract and no relationship of subordination exists between the contractor or the provider of services and the client in respect of such performance.

In order to be able to determine the existence of an employment relationship, the inspector/health and safety officer shall review the nature of the contract that binds both parties.

4. Importance of employee status

Over the past two decades the emergence of "own-account" self-employment such as freelancers, consultants and independent contractors, has become more prevalent in the workplace. This has been due to a range of factors such as the globalization of trade, the introduction of new technologies, the volatility of international and domestic markets, and the workers' desire for autonomy and independence. Due to these economic and social reasons, the boundary between independent contractor and paid employment is blurring.

There is a need to differentiate if a worker is categorized as an employee or as an independent contractor. Employees in the federal jurisdiction labour relations system are given numerous protections under labour standards and health and safety legislations. Independent contractors are not employees and thus do not enjoy the protection of these statutes. The inspector/health and safety officer shall review the nature of the relationship to determine if an employer/employee relationship exists in order for Part II and Part III of the Canada Labour Code to apply to the person as an employee.

All statutes have particular policy goals, so it is possible that a worker may be held to be an "employee" for one law, but not for another. The Supreme Court of Canada made it clear that courts and tribunals must take into account the particular policy objectives of the statute when deciding if a person has employee status1. Therefore the Labour Program's investigative process must reflect the policy goals of the Canada Labour Code. The policy objectives of the Canada Labour Code are to ensure minimum employment standards; and to prevent accidents and injuries to health arising out of the course of employment within Federal Jurisdiction.

[1] Pointe-Claire (City) v. Quebec (Labour Court), [1997] 1 S.C.R. 1015 Return to linked annotation note 1

5. Common Law tests in determining an employment relationship

The definition of "employee" and "employer" contained in the specific statutes is not usually helpful in determining an employment relationship between two parties. So when disputes arise as to whether a person is an employee under a certain statute, courts and tribunals have resorted to the common law and civil law tests to determine employee status.

In order to be able to make a determination on the issue of employer/employee relationship, the inspector/health and safety officer shall read and analyze the cases referenced in this document, in order to understand the legal principles and observe how the judge or arbitrator identifies the salient points of each case, as well as be able to scrutinize how each factor of the working relationship between a payer and a worker was weighed.

The following "tests" are only pieces of evidence that shall be weighed, at times differently, depending on the situation, to determine whether a worker is part of the payer's business or in business on his own account (Refer to Appendix B for a listing of all the cases cited. The full text of the document is available at the address provided in the appendix).

  • The Control Test

    This was the first attempt to clarify the relationship between a worker and a payer. It was set out in Regina v. Walker (1858). The Control Test was simply assessing the presence or absence of control a manager or supervisor might or might not have over their worker.

    "…A principal has the right to direct what the agent has to do; but a master has not only that right, but also the right to say how it is to be done."

    Regina v. Walker, (1858) 27 L.J.M.C. 207

    This test was seen as too simplistic especially in recent years, when highly skilled and professional workers possess skills beyond the ability of their employers to direct.

  • The Fourfold Test

    This was developed in a 1947 Privy Council decision in Montreal v. Montreal Locomotive Works Ltd. et al where the court stated:

    "… It has been suggested that a fourfold test would in some cases be more appropriate, a complex involving (1) control; (2) ownership of the tools; (3) chance of profit; (4) risk of loss. Control in itself is not always conclusive."

    Montreal v. Montreal Locomotive Works Ltd. et al, [1947] 1 D.L.R. 161

    Lord Wright went on to indicate the crucial question is "whose business is it?" This question is from the worker's perspective and not the payer's.

  • The Integration Test

    This was first developed in Stevenson Jordon and Harrison, Ltd. v. MacDonald and Evans, (1952). This approach attempts to find if the service being provided by the worker is performed as an integral part of the business, or done on behalf of the business but not integrated into that business. This "test" is best explained by an excerpt from the decision:

    "… One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it."

    Stevenson Jordan and Harrison, Ltd. v. MacDonald and Evans, [1952] 1 T.L.R. 101

6. Making a determination for the purpose of the Canada Labour Code

To help examine the issue of who is an employee or an independent contractor, it may be useful to envision a continuum. On one extreme end of the continuum would fall a worker who is clearly an employee. For example, a person who is hired to be a mechanic, is paid by the hour and is closely supervised by a foreman, would be classified as an employee. On the other end of this continuum is a worker who will obviously be an independent contractor. This would be a worker who has his own company and will perform work for a variety of companies. This worker is contracted for a specific task of upgrading a company's computer software, and who is paid a specified amount for the job, signs a contract for a specific time period, and is not supervised, but reports his progress to the department manager.

The employee/independent contractor continuum has been charted in Appendix A to give a graphic illustration of the points which differentiate an employee and an independent contractor. The points noted are not an exhaustive list.

The difference is clear between the employee and the independent contractor in the example demonstrated in Appendix A. However, attempting to classify the workers in the middle of this continuum is where it becomes complicated. It is because the workers that fall in the middle of this continuum have characteristics of both an employee and an independent contractor, and are therefore not so readily classified.

7. Gathering of the information

In order to make a decision if a worker is an employee or independent contractor, detailed information on how the relationship is structured must be gathered and assessed. In order to assist in the gathering of the facts, the inspector/health and safety officer will use the attached Employer/Employee Relationship Questionnaires as a tool for gathering information on the relationship between the payer and worker (Appendices Appendix-C and Appendix-D with the appropriate covering letter, Appendices Appendix-F and Appendix-G).

Once sufficient information on the relationship has been gathered, the inspector/health and safety officer shall proceed to organize, assess and weigh these facts, to determine if there is an employment or independent contractor relationship.

8. Assessing the information and making a decision

When analyzing the facts gathered on the relationship between the payer and the worker, the inspector/health and safety officer shall follow the format established by the Supreme Court of Canada (Appendix E is a useful guide).

The Court first states that the level of control will always be a factor, but the central question is:

"whether the person who has been engaged to perform the services is performing them as a person in business on his own account."

671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983

The inspector/health and safety officer shall examine all aspects of the relationship and take into account the following factors, bearing in mind this is not an exhaustive list and there is no set formula as to the application, and the relative weight of each will depend on the particular facts and circumstances of the case:

  • Whether the worker provides his own equipment.
  • Can the worker hire their own helpers?
  • Can the worker contract out work to other contractors?
  • Whether the worker can provide services to more than one payer.
  • Is the worker part of the employer's organization?
  • Does the worker have to report to the work site each day?
  • The financial investment made by the worker.
  • The extent to which the worker manages that investment.
  • Is the worker exposed to personal financial risk in carrying out the work?
  • The worker's opportunity for profit, or risk of loss
  • Who is liable for damage or quality of the work?
  • The reporting relationship:
    • Does the worker have to report if he will be absent from work?
    • Is the worker required to submit reports each day, week?
  • Terms of payment, production obligations.
  • The manner in which the worker is hired or terminated.

9. Conclusion

In order for a person to gain the protection afforded to employees under part II and part III of the Canada Labour Code, a worker must have status as an employee. Each case is specific and therefore the inspector/health and safety officer must examine with care all the relevant facts before making a decision if a worker is an employee or an independent contractor.

Once a decision has been made as to the status of the worker, the inspector/health and safety officer shall inform the parties (Appendices Appendix-H, Appendix-I-1 and Appendix-I-2) then return to the appropriate Operations Program Directive to finalize the issue.

Appendix A: Chart - graphic illustration of the points which differentiate an employee and independent contractor

points of differentiation - Description follows image

The employee/independent contractor continuum has been charted in Appendix A to give a graphic illustration of the points which differentiate an employee and an independent contractor. The points noted are not an exhaustive list.

A worker can be classified as an employee if the following characters are present:

  • Works exclusively for the payer
  • Payer provides tools
  • Payer controls duties, whether that control is used or not
  • Payer sets working hours
  • Worker must perform services
  • Provision of pension, group benefits
  • Worker is paid vacation pay
  • Payer pays expenses
  • Paid salary or hourly wage
  • Reports to payer's workplace on regular basis

A worker can be classified as an independent contractor if the following characters are present:

  • May work for other payers
  • Worker provides tools
  • Worker decides how the task is completed
  • Sets own working hours
  • May hire someone to complete the job
  • Not allowed to participate in payers benefit plans
  • No vacation pay, and no restrictions on hours of work, or time off
  • Worker pays own expenses
  • Worker is paid by the job on predetermined basis
  • Submits invoice to Payer for payment
  • Worker may accept or reject work

If the worker falls within the middle of this continuum the classification of employee or independent contractor becomes complicated.

Appendix B: List of cases

  • 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983
  • Dynamex Canada Inc. v. Mamona, [2000] C.L.A.D. No. 477
  • Dynamex Canada Inc. v. Mamona, [2002] F.C.T. No. 393
  • Dynamex Canada Inc. v. Mamona, [2003] F.C.A. No. 248
  • Hyman Aizenberg v. D.H.L. International Express Ltd. YM2707-4996 (Arbitration court - QC)
  • Montreal v. Montreal Locomotive Works Ltd. et al, [1947] 1 D.L.R. 161
  • Quebec Asbestos Corp. v. Couture, [1929] S.C.R. 166
  • Shaw Communications Inc. v. M.N.R., [2002] T.C.J. No. 314
  • Stevenson Jordan and Harrison, Ltd. v. MacDonald and Evans, [1952] 1 T.L.R. 101
  • Technical Service Solutions Inc. (TSS) v. M.N.R., [2002] T.C.J. No. 101
  • Velocity Express Canada Ltd. v. M.N.R., [2002] T.C.J. No. 136
  • Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553

Appendix C: Questionnaire - Payer

**Where input is necessary**

**Name of Payer**

**Address of the payer**

**Telephone number with area code**

The information you provide in this questionnaire will be used by the Labour Program of Human Resources and Skills Development Canada to determine whether or not your relationship with **name of worker** is an employer/employee relationship to which the Canada Labour Code applies. The questions are categorized according to the format outlined by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983.

Please indicate what you feel adequately reflects your situation by checking 'yes' or 'no'. If the question does not apply to your circumstance, indicate 'n/a'. If the question requires that you write an answer, please do so in the space provided.

'Worker' means the person who performed the work.

Control

1. Did you decide on the work location?

  • Yes
  • No
  • n/a

2. Did you decide on the territory to be covered?

  • Yes
  • No
  • n/a

3. Did you decide what work activities (i.e. trips) the worker would perform?

  • Yes
  • No
  • n/a

Please give examples:

4. Did you decide how the work was to be performed?

  • Yes
  • No
  • n/a

5. Did the worker have authority to decline work?

  • Yes
  • No
  • n/a

6. Did you decide on the hours of work required to complete the job?

  • Yes
  • No
  • n/a

7. How was the worker compensated for any extra hours for completing the job?

8. Did the worker have scheduled hours?

  • Yes
  • No
  • n/a

9. How were the hours of work recorded? Please provide copies:

10. Was the worker's work supervised? If no, go to number 12.

  • Yes
  • No
  • n/a

11. a) If yes, was the work supervised by you?

  • Yes
  • No
  • n/a

11. b) If yes, was the work supervised by others?

  • Yes
  • No
  • n/a

Please specify:

12. a) Were you responsible for dealing with customer complaints?

  • Yes
  • No
  • n/a

12. b) Did you decide whether the work must be redone?

  • Yes
  • No
  • n/a

13. a) Did the worker have to report absences to you?

  • Yes
  • No
  • n/a

13. b) If yes, was your approval needed?

  • Yes
  • No
  • n/a

14. a) If the worker was unavailable for work, was he/she permitted to find someone else to replace him/her?

  • Yes
  • No
  • n/a

14. b) If the worker was unavailable for work, did he/she need your approval for the replacement?

  • Yes
  • No
  • n/a

Please explain:

15. Did the worker issue invoices for the work performed?

  • Yes
  • No
  • n/a

If so, provide copies:

16. What was the basis on which the worker was paid (i.e. hourly, mileage, commission, etc.)?

17. Did you decide how much the worker would be paid?

  • Yes
  • No
  • n/a

18. When paying the worker, to whom was the cheque made payable? If business, provide name of business.

19. Was the worker paid for general holidays such as Canada Day, Christmas Day, New Year's Day, etc.?

  • Yes
  • No
  • n/a

20. Was the worker paid vacation pay?

  • Yes
  • No
  • n/a

21. When the worker got paid, were there any deductions made for Canada Pension Plan, Income Tax, Employment Insurance, Worker's Compensation, etc.?

  • Yes
  • No
  • n/a

If no, please explain:

22. Did the worker receive other benefits, such as bonuses, incentive plans, health care coverage, dental plan, pension plans, etc.?

  • Yes
  • No
  • n/a

23. Were the payments for the work performed made to the worker as an individual, to his/her corporation or to his/her registered business name?

24. a) Was training provided?

  • Yes
  • No
  • n/a

24. b) If yes, by whom:

25. Was the worker paid for the time spent in training?

  • Yes
  • No
  • n/a

26. If trucking, did the worker own the operating authority to cross borders?

  • Yes
  • No
  • n/a

27. Could the worker hire other workers to help complete the work activity? If no, go to number 28.

  • Yes
  • No
  • n/a
  1. If yes, did this require your approval?
    • Yes
    • No
    • n/a
  2. Were you responsible for paying those workers?
    • Yes
    • No
    • n/a
  3. Were you responsible for supervising those workers?
    • Yes
    • No
    • n/a
  4. Did you assign the work duty for those workers?
    • Yes
    • No
    • n/a
  5. Did you pay the Worker's Compensation premiums for those workers?
    • Yes
    • No
    • n/a

28. Did you decide on the prices for services or products offered to the customer?

  • Yes
  • No
  • n/a

29. Did the worker have the freedom to change the prices of those services or products?

  • Yes
  • No
  • n/a

30. Could you exercise disciplinary power up to and including termination in cases of insubordination, poor performance, etc.?

  • Yes
  • No
  • n/a

31. Could the worker terminate his/her services with you without penalty?

  • Yes
  • No
  • n/a

32. a) What was the position the worker was hired for?

32. b) What was the position of the worker when the issue arose?

33. If the worker applied for a job in response to a job ad, where was the ad placed?

34. Was there a written contract or agreement with the worker?

  • Yes
  • No
  • n/a

If yes, provide copy:

Tools and equipment

35. If the worker applied for a job in response to a job ad, did the ad request that he/she supply his/her own tools and equipment?

  • Yes
  • No
  • n/a

36. Did you provide the equipment required for the performance of the worker's work:

  • Yes
  • No
  • n/a
  1. Vehicle:
    • Yes
    • No
    • n/a
    1. did you own the vehicle?
      • Yes
      • No
      • n/a
    2. did you own the license plate(s) for the vehicle?
      • Yes
      • No
      • n/a
    3. did you pay the insurance for the vehicle?
      • Yes
      • No
      • n/a
    4. did you pay for the operating expenses of the vehicle, such as fuel, oil, etc.?
      • Yes
      • No
      • n/a
    5. did you pay for the vehicle maintenance?
      • Yes
      • No
      • n/a
  2. Tools?
    • Yes
    • No
    • n/a
    Specify:
  3. Office space?
    • Yes
    • No
    • n/a
  4. Other?
    • Yes
    • No
    • n/a
    Specify; stationery, materials, etc.:

37. Were you leasing any equipment (vehicles, radio, satellite, etc.) to the worker?

  • Yes
  • No
  • n/a

Specify and provide copy(ies):

Chances of profit / Risk of loss

38. Did you cover the costs of the work to be redone?

  • Yes
  • No
  • n/a

39. Did you cover the cost of bad debts, such as damages or losses resulting from work performed by the worker?

  • Yes
  • No
  • n/a

40. Did you pay for the Worker's Compensation premiums?

  • Yes
  • No
  • n/a

41. Did you pay the cost of the training?

  • Yes
  • No
  • n/a

42. Did you cover the cost of damages to equipment or materials?

  • Yes
  • No
  • n/a

Integration

43. Was the worker required to wear a uniform or use company logos (i.e. on truck, on log book, on bill of lading)?

  • Yes
  • No
  • n/a

44. Did the uniform bear your company name?

  • Yes
  • No
  • n/a

45. a) Did the worker perform the same work as your other workers?

  • Yes
  • No
  • n/a

45. b) Were those other workers considered employees?

  • Yes
  • No
  • n/a

46. Did you consider the worker an employee or an independent contractor working for you?

  • Yes
  • No
  • n/a

Please explain:

47. Was the worker required to attend your company meetings?

  • Yes
  • No
  • n/a

48. Was the worker paid for the hours he/she attended those meetings?

  • Yes
  • No
  • n/a

49. Was the worker covered by your Worker's Compensation benefits account?

  • Yes
  • No
  • n/a

50. Was the worker registered as an employer with a Worker's Compensation Board?

  • Yes
  • No
  • n/a

51. Was the worker permitted to perform similar work for others while working for you?

  • Yes
  • No
  • n/a

52. To your knowledge, did the worker perform similar work for others while working for you?

  • Yes
  • No
  • n/a

53. Did the worker have a financial investment in your corporation/business?

  • Yes
  • No
  • n/a

If yes, please provide amount and copy of your certificate of incorporation:

54. Was the worker paid from your payroll account or accounts payable?

55. Were you charged GST by the worker for services rendered?

  • Yes
  • No
  • n/a

56. a) Did you give the worker a T4 slip for tax purposes?

  • Yes
  • No
  • n/a

56. b) Did you give the worker a Record of Employment?

  • Yes
  • No
  • n/a

57. a) While working for you, was the worker working as:

  • an incorporated business (corporation)
  • an unincorporated business (sole proprietor)
  • a registered business
  • an individual

57. b) If a corporation, was it your idea to incorporate?

  • Yes
  • No
  • n/a

57. c) What was the name of the corporation?

Print name and title

Signature

Date

Appendix D: Questionnaire - Worker

**Where input is necessary**

**Name of worker**

**Address of worker**

**Telephone Number and area code**

The information you provide in this questionnaire will be used by the Labour Program of Human Resources and Skills Development Canada to determine whether or not your relationship with **name of payer** is an employer/employee relationship to which the Canada Labour Code applies. The questions are categorized according to the format outlined by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983.

Please indicate what you feel adequately reflects your situation by checking 'yes' or 'no'. If the question does not apply to your circumstance, indicate 'n/a'. If the question requires that you write an answer, please do so in the space provided.

'Payer' means the person, business or organization that paid you for your work performed.

Control

1. Did you decide on the work location?

  • Yes
  • No
  • n/a

2. Did you decide on the territory to be covered?

  • Yes
  • No
  • n/a

3. Did you decide what work activities (i.e. trips) would be performed?

  • Yes
  • No
  • n/a

Please give examples:

4. Did you decide how the work was going to be performed?

  • Yes
  • No
  • n/a

5. Did you have the authority to decline work?

  • Yes
  • No
  • n/a

6. Did you decide on the hours of work required to complete the job?

  • Yes
  • No
  • n/a

7. How were you compensated for any extra hours for completing the job?

8. Did you have scheduled hours?

  • Yes
  • No
  • n/a

9. How were your hours of work recorded? Please provide copies:

10. Was your work supervised? If no, go to number 12.

  • Yes
  • No
  • n/a

11. a) If yes, was the work supervised by the payer?

  • Yes
  • No
  • n/a

11. b) If yes, was the work supervised by others?

  • Yes
  • No
  • n/a

Please specify:

12. a) Were you responsible for dealing with customer complaints?

  • Yes
  • No
  • n/a

12. b) Did you decide whether the work must be redone?

  • Yes
  • No
  • n/a

13. a) Did you have to report absences to the payer?

  • Yes
  • No
  • n/a

13. b) If yes, was the payer's approval needed?

  • Yes
  • No
  • n/a

14. a) If you were unavailable for work, were you permitted to find someone else to replace you?

  • Yes
  • No
  • n/a

14. b) If you were unavailable for work, did you need the payer's approval for the replacement?

  • Yes
  • No
  • n/a

15. Did you issue the payer work invoices for the work performed?

  • Yes
  • No
  • n/a

If so, provide copies:

16. What was the basis on which you were paid? (i.e. hourly, mileage, commission, etc.):

17. Did you decide how much you would be paid?

  • Yes
  • No
  • n/a

18. a) When you were paid, to whom was the cheque made payable? If business, provide name of your business:

18. b) When you were paid, from whom was the cheque?

19. Were you paid for general holidays such as Canada Day, Christmas Day, New Year's Day, etc.?

  • Yes
  • No
  • n/a

20. Were you paid vacation pay?

  • Yes
  • No
  • n/a

21. When you got paid, were there any deductions made for Canada Pension Plan, Income Tax, Employment Insurance, Worker's Compensation, etc.?

  • Yes
  • No
  • n/a

If no, explain:

22. Did you receive other benefits such as bonuses, incentive plans, health care coverage, dental plan, pension plans, etc.?

  • Yes
  • No
  • n/a

23. Were the payments for the work performed made to you as an individual, to your corporation or to your registered business?

24. a) Was training provided?

  • Yes
  • No
  • n/a

24. b) If yes, by whom:

25. Were you paid for the time spent in training?

  • Yes
  • No
  • n/a

26. If trucking, did you own the operating authority to cross borders?

  • Yes
  • No
  • n/a

27. Could you hire other workers to help complete the work activity? If no, go to number 28.

  • Yes
  • No
  • n/a
  1. If yes, did this require approval?
    • Yes
    • No
    • n/a
  2. Were you responsible for paying those workers?
    • Yes
    • No
    • n/a
  3. Were you responsible for supervising those workers?
    • Yes
    • No
    • n/a
  4. Did you assign the work duty for those workers?
    • Yes
    • No
    • n/a
  5. Did you pay the Worker's Compensation premiums for those workers?
    • Yes
    • No
    • n/a

28. Did you decide on the prices for services or products offered to the customer?

  • Yes
  • No
  • n/a

29. Did you have the freedom to change the prices of those services or products?

  • Yes
  • No
  • n/a

30. Could you terminate your services without penalty?

  • Yes
  • No
  • n/a

31. a) What was the position for which you were hired?

31. b) What was the position you held when this issue arose?

32. If you applied for a job in response to an ad, where was the ad placed?

33. Was there a written contract of agreement with the payer?

  • Yes
  • No
  • n/a

If yes, provide copy:

34. Could the payer exercise disciplinary power up to and including termination in cases of insubordination, poor performance, etc.?

  • Yes
  • No
  • n/a

Tools and equipment

35. If you applied for a job in response to a job ad, did the ad request that you supply your own tools and equipment?

  • Yes
  • No
  • n/a

36. Did you provide the equipment required for the performance of your work:

  • Yes
  • No
  • n/a
  1. Vehicle:
    • Yes
    • No
    • n/a
    1. did you own the vehicle?
      • Yes
      • No
      • n/a
      Amount invested $:
    2. did you own the license plate(s) for the vehicle?
      • Yes
      • No
      • n/a
    3. did you pay the insurance for the vehicle?
      • Yes
      • No
      • n/a
    4. did you pay for the operating expenses of the vehicle such as fuel, oil, etc.?
      • Yes
      • No
      • n/a
    5. did you pay for the vehicle maintenance?
      • Yes
      • No
      • n/a
  2. Tools?
    • Yes
    • No
    • n/a
    Specify:
  3. Office Space?
    • Yes
    • No
    • n/a
  4. Other?
    • Yes
    • No
    • n/a
    Specify; stationery, materials, etc.:

37. Were you leasing any equipment (vehicles, radio, satellite, etc.) from the payer?

  • Yes
  • No
  • n/a

Specify and provide copy(ies):

Chances of profit / Risk of loss

38. Did you cover the costs of the work to be redone?

  • Yes
  • No
  • n/a

39. Did you cover the cost of bad debts such as damages or losses resulting from your work?

  • Yes
  • No
  • n/a

40. Did you pay the cost of the training?

  • Yes
  • No
  • n/a

41. Did you cover the cost of damages to equipment or materials?

  • Yes
  • No
  • n/a

42. Did you pay for the Worker's Compensation premiums?

  • Yes
  • No
  • n/a

Integration

43. Were you required to wear a uniform or use company logos (i.e. on truck, on log book, on bill of lading)?

  • Yes
  • No
  • n/a

44. Did the uniform bear the payer's name?

  • Yes
  • No
  • n/a

45. a) Did you perform the same work as other workers?

  • Yes
  • No
  • n/a

45. b) Were those other workers considered employees?

  • Yes
  • No
  • n/a

46. Did you consider yourself an employee or an independent contractor?

Please explain:

47. Were you required to attend company meetings?

  • Yes
  • No
  • n/a

48. Were you paid for the hours when attending those meetings?

  • Yes
  • No
  • n/a

49. Were you covered by the payer's Worker's Compensation benefits account?

  • Yes
  • No
  • n/a

50. Were you registered as an employer with a Worker's Compensation Board?

  • Yes
  • No
  • n/a

51. Were you permitted to perform similar work for others while working for the payer?

  • Yes
  • No
  • n/a

52. Did you perform similar work for others while working for the payer?

  • Yes
  • No
  • n/a

53. Did you have financial investments in the payer's corporation/business?

  • Yes
  • No
  • n/a

If yes, please provide amount:

54. Were you on the payer's payroll?

  • Yes
  • No
  • n/a

55. Did you charge the payer GST for services rendered?

  • Yes
  • No
  • n/a

56. a) While working for the payer, were you working as:

  • an incorporated business (corporation)
  • an unincorporated business (sole proprietor)
  • a registered business
  • an individual

56. b) If a corporation, was it your idea to incorporate?

  • Yes
  • No
  • n/a

56. c) What was the name of your corporation?

57. a) Did the payer give you a T4 slip for tax purposes?

  • Yes
  • No
  • n/a

57. b) Did the payer give you a Record of Employment?

  • Yes
  • No
  • n/a

Signature

Date

Appendix E: Assessment Guide

Assessment Guide - Description follows image

Appendix E graphically demonstrates the factors that should be taken into consideration when determining if a worker is an employee or an independent contractor.

Assessment Process

The task is now to organize and assess the information gathered. This process will move the worker into one side of the continuum, and confirm if there is an employment relationship, or if the worker is in business on his own account.

The first stage is to organize the results of the Questionnaires, and any other material that has been gathered. Analyze the answer to each question from both the Payer and the Worker and decide if the evidence moves the worker to the Employee or Independent Contractor side of the Continuum.

These factors (not an exhaustive list) can include:

  • Total Relationship
  • Control
  • Tools
  • Change of Profit
  • Risk of Loss
  • Integration

Application of the Facts

To move the worker to one side of the continuum, it is necessary to examine the total relationship and answer the central question as posed by the Supreme Court of Canada:

"whether the person who has been engaged to perform the services is performing them as a person in business on his own account."

In making the determination if a worker is classified as a person in business on his own account, remember, the Supreme Court of Canada states that

"the level of control the payer has over the worker's activities will be a factor, but other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks."

It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each depends on the particular facts and circumstances of the case.

When examining the information, remember that an answer to the question of "whose business is it?" cannot be completed by taking a sum total in one or more categories. This will not move a worker into one category or another. It is the total relationship that is being examined.

Listed below is a brief explanation of the terms which have been used to discern if a working relationship is that of an employee or an independent contractor:

  • Control

    The Supreme Court of Canada indicates that in making the determination of whether a person is in business on his own account, the level of control an employer has over the worker's activities will always be a factor. An employment relationship implies some supervision or control over the worker. The right to exercise control is significant, whether or not the control is actually exercised.

  • Ownership of Tools

    If a worker provides their own tools, this may be indicative of an independent contractor. Also important is the amount of money invested by the worker in these tools.

  • Chance of Profit and Risk of Loss

    If the worker has a financial investment in a business, this is considered a strong indicator of an independent contractor. If there is no risk of loss this usually is determinative of an employment relationship. If a worker may possibly lose financially from the relationship, he will generally be considered to be an independent contractor.

  • Integration

    It is important to remember that this point must be examined from the worker's perspective, not the payer. A contract of service (employee) is where the work is done as an integral part of the business of the payer, as opposed to a contract for services (independent contractor), where the work done, although being done for the business, is only an accessory to the core or central function of the payer. Does the worker behave in a "businesslike" manner as someone in business for himself?

Weighing the facts

This is the most important part of analyzing the information. When reviewing the factors, there may be some facts that support an employment relationship and other facts indicative of an independent contractor.

In order to resolve this issue, the investigation must discover the true essence of the working relationship of the parties. Review the evidence falling in the categories of control, ownership of tools, chance for profit and risk of loss, and integration. As the facts emerge you should be able to decide what weight to assign each category based on a thorough review of all the evidence. In other words, control may favour an employee relationship, but ownership of tools may be assigned more weight due to how the total relationship is structured. Therefore, because of the increased weight given to this factor, the worker is moved into the independent contractor side of the continuum.

Conclusion

Whether a worker is an employee or an independent contractor is "one of fact", in each particular case. Each case is unique and requires a thorough review of the facts. It is also important to remember that when attempting to move a worker to one side of the continuum or the other, you must examine the total working relationship. There is no one factor that is determinative, and there is a non-exhaustive list of factors to consider.

Appendix F: Letter to Payer

2 asterisks (**) Where input is necessary
4 asterisks (****) Use one or the other possibility given in between the asterisks

**Date**

File No.: **Auto fill**

Assignment No.: **Auto fill**

**Name of Payer**

**Address**

Dear Mr./Mrs./Ms. **name of payer**,

Subject: Canada Labour Code

This is further to **indicate if this is a complaint, an inspection, a refusal to work, an accident, etc..** As it is your position that **name of employee or the employees named on the attached list** ****was or were**** not ****an employee or employees**** of your business, but rather operating as ****an independent contractor or independent contractors****, further information is required.

In order to assess the working relationship between your business and ****name of employee or the employees named on the attached list****, please complete the attached Employer/Employee Questionnaire. I have also requested ****name of employee or the employees named on the attached list**** to complete a similar Questionnaire.

Please complete the Questionnaire, and return to my attention, with any supporting documents, by **date - normally 15 calendar days**. Also please note that, if the Questionnaire is not completed and returned, a decision will be made utilizing information gathered.

When examining the information, remember that an answer to the question of "whose business is it?" cannot be completed by taking a sum total in one or more categories. This will not move a worker into one category or another. It is the total relationship that is being examined.

If you have any questions or require further information, please feel free to contact me at **telephone number**.

Yours sincerely,

**Name**, **Title**

**Complete address if not shown on letterhead**

Fax Number: **Fax Number**

E-mail: **E-mail**

Att.

c.c. **Name of employee or The employees named on the attached list**

Appendix G: Letter to Worker

2 asterisks (**) Where input is necessary
4 asterisks (****) Use one or the other possibility given in between the asterisks

**Date**

File No.: **Auto fill**

Assignment No.: **Auto fill**

**Name of employee**

**Address**

Dear Mr./Mrs./Ms. **name of employee**,

Subject: Canada Labour Code

This is further to **indicate if this is a complaint, an inspection, a refusal to work, an accident, etc.** against **name of payer**. It is the position of **name of payer** that you were not an employee, but operating as an independent contractor.

In order to assess this issue, I must request that you complete the attached Employer/Employee Questionnaire. I have also requested **name of payer** [insert if sending to multiple employees and the employees named on the attached list] to complete a similar Questionnaire in order to assess the working relationship between ****yourself or yourselves**** and **name of payer**.

Please complete the Questionnaire, and return to my attention, with any supporting documents, by **date - normally 15 calendar days**. Also please note that, if the Questionnaire is not completed and returned, a decision will be made utilizing information gathered.

When examining the information, remember that an answer to the question of "whose business is it?" cannot be completed by taking a sum total in one or more categories. This will not move a worker into one category or another. It is the total relationship that is being examined.

If you have any questions or require further information, please feel free to contact me at **telephone number**.

Yours sincerely,

**Name**, **Title**

**Complete address if not shown on letterhead**

Fax Number: **Fax Number**

E-mail: **E-mail**

Att.

c.c. **Name of payer**

[insert if sending to multiple employees and the employees named on the attached list]

Appendix H: Decision Letter - Payer

2 asterisks (**) Where input is necessary
4 asterisks (****) Use one or the other possibility given in between the asterisks

**Date**

File No.: **Auto fill**

Assignment No.: **Auto fill**

**Name of Payer**

**Address**

Dear Mr./Mrs./Ms. **name of Payer**,

Subject: Canada Labour Code

This is further to **indicate if this is a complaint, an inspection, a refusal to work, an accident, etc.**. I have reviewed the completed Employer/Employee Questionnaires submitted by both parties, and **name any other documents examined**. Based on all the facts presented by the parties, it is my decision that **name of employee or the employees named on the attached list** ****was in an employment relationship with your company, **name of employer's company** or were in an employment relationship with your company, **name of employer's company** or was in business on his own account or were in business on their own account****.

The assessment of this working relationship was based on the model outlined in the case of the Supreme Court of Canada, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983. I have based my decision on the following factors:

  • Control

    **enter the pertinent information for the control factor**

  • Tools and Equipment

    **enter the pertinent information for the tools and equipment factor**

  • Profit and Risk of Loss

    **enter the pertinent information for the profit and risk of loss factor**

  • Integration

    **enter the pertinent information for the integration factor**

In reviewing the total working relationship between the parties, **provide a summary of the findings, and reasons why one or more factors were given more weight which moved the worker to one side of the continuum**.

If you have any questions or require further information, please feel free to contact me at **telephone number**.

Yours sincerely,

**Name**, **Title**

**Complete address if not shown on letterhead**

Fax Number: **Fax Number**

E-mail: **E-mail**

Appendix I.1: Decision Letter - Payer - Employee

2 asterisks (**) Where input is necessary
4 asterisks (****) Use one or the other possibility given in between the asterisks

**Date**

File No.: **Auto fill**

Assignment No.: **Auto fill**

**Name of employee**

**Address**

Dear Mr./Mrs./Ms. **name of employee**,

Subject: Canada Labour Code

This is further to **indicate if this is a complaint, an inspection, a refusal to work, an accident, etc.** against **name of payer**. I have reviewed the completed Employer/Employee Questionnaires submitted by both parties, and **name any other documents examined**. Based on all the facts presented by the parties, it is my decision that you were engaged in a contract of service with **name of business**. As a result, you are an employee as per paragraph 167(1)(b) of the Canada Labour Code. Therefore, you are entitled to the benefits under the Code.

The assessment of this working relationship was based on the model outlined in the case of the Supreme Court of Canada, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983. I have based my decision on the following factors:

  • Control

    **enter the pertinent information for the control factor**

  • Tools and Equipment

    **enter the pertinent information for the tools and equipment factor**

  • Profit and Risk of Loss

    **enter the pertinent information for the profit and risk of loss factor**

  • Integration

    **enter the pertinent information for the integration factor**

In reviewing the total working relationship between the parties, **provide a summary of the findings, and reasons why one or more factors were given more weight which moved the worker to one side of the continuum**.

If you have any questions or require further information, please feel free to contact me at **telephone number**.

Yours sincerely,

**Name**, **Title**

**Complete address if not shown on letterhead**

Fax Number: **Fax Number**

E-mail: **E-mail**

Appendix I.2: Decision Letter - Worker - Independent Contractor

2 asterisks (**) Where input is necessary
4 asterisks (****) Use one or the other possibility given in between the asterisks

**Date**

File No.: **Auto fill**

Assignment No.: **Auto fill**

**Name of employee**

**Address**

Dear ****Mr./Mrs./Ms.**** **name of employee**:

Subject: Canada Labour Code

This is further to **indicate if this is a complaint, an inspection, a refusal to work, an accident, etc.** against **name of payer**. I have reviewed the completed Employer/Employee Questionnaires submitted by both parties, and **name any other documents examined**. Based on all the facts presented by the parties, it is my decision that you were in business on your own account because you were engaged by **name of business** under a contract for service. Therefore, you are not entitled to the benefits under the Code because you are not an employee as per paragraph 167(1)(b).

The assessment of this working relationship was based on the model outlined in the case of the Supreme Court of Canada, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. I have based my decision on the following factors:

  • Control

    **enter the pertinent information for the control factor**

  • Tools and Equipment

    **enter the pertinent information for the tools and equipment factor**

  • Profit and Risk of Loss

    **enter the pertinent information for the profit and risk of loss factor**

  • Integration

    **enter the pertinent information for the integration factor**

In reviewing the total working relationship between the parties, **provide a summary of the findings, and reasons why one or more factors were given more weight which moved the worker to one side of the continuum**.

If you have any questions, or require further information on this decision, please feel free to contact me at **telephone number**.

Yours sincerely,

**Name**, **Title**

****Complete address if not shown on letterhead****

Fax Number: **Fax Number**

E-mail: **E-mail**

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