Employer/Employee Relationship

If you work in the province of Ontario and the company falls under its jurisdiction, you may be covered under the Employment Standards Act, 2000. The Act sets minimum standards that an employer must follow, if it does not, you can file a claim with the Ministry of Labour. If you are still working for the company, you may be able to request that your name should not be disclosed. The Act protects you if you are exercising your rights.

 

You and the employer have a right to appeal officer’s decision within 30 days to Ontario Labour Relations Board. The Board’s decision is final and binding on both parties.

 

Sometimes, the employer wants the employee to work as an independent contractor because it is a simpler relationship and believes by doing so, it does not have to comply with the Act. Also, the employer does not have to make employer’s contribution for Canada Pension Plan and Employment Insurance. The employee sometimes agrees to it willingly and sometime not knowing its disadvantages. Many times, the employer requires the employee to incorporate a company and invoice it for services rendered. The employee may think that it will save on Federal and Provincial taxes by claiming expenses and paying the taxes himself/herself. Such an arrangement may be voided even if both parties had agreed to it if the facts of the case determine that such an arrangement is a sham and was designed to defeat the purpose of the Act.

 

Both the Federal and Provincial Legislation require that there is an employer/employee relationship if the following criteria are established:

 

(a)        Who has control on the activities of the employee? If the employer tells the employee where and when to work, it exercises control on the employee,

 

(b)        Who provides tools of the trade? If the employee performs his/her duties using employer’s tools, then it is likely, he/she is an employee. In some cases it may not be this simple, for example, a mechanic may be required to provide its own tools and yet he/she may be considered as an employee of the company.

 

(c)         Chance of Profit? Did the employee invest money in the business? If so, he stands to gain from investment. If the investment he made simply consisted of his labour. In such a situation, his gain is based on the hours of his labour and he is likely an employee rather than an independent contractor.

 

(d)        Risk of Loss? When an individual does business, he/she invests more than the labour in the business and thus may take a risk of loss. If there is no risk of such a loss, he/she may not be an independent contractor.

 

(e)        Was the employee an integral part of the organization? If so, he/she is probably an employee.

This information is only provided to guide you about your entitlements under the Employment Standards Act, 2000 and should not be considered as a legal advice.

This article is provided by Rajinder K. Batra, who is a retired Employment Standards Officer with the Ministry of Labour with 15 years experience in these matters.

If you have any questions regarding your employment, please contact the writer by e-mail at esaconsulting@hotmail.com

If you don’t have access to e-mail; you can fax your question at (905) 331-1805.