Employment & Labour Law Alert - Intention to Create Independent Contractor Relationship Not Enough According To Ontario Court

Independent Contractor or Employee: The intention of the contracting parties does not necessarily determine the legal character of the relationship.

One issue we encounter quite frequently in our practice is the difference between an employee and an independent contractor. Often times, companies seek to enter into an independent contractor relationship because there are potential benefits not available in an employment relationship. Balanced against those benefits however, are the potential liabilities that may arise if the relationship is determined to be an employment relationship, including liability in relation to CPP/EI, Income Tax, employment standards, common law reasonable notice, Workplace Safety and Insurance, amongst other things. Unfortunately, the intention of the parties to create an independent relationship does not trump the actual character of the relationship.

A recent case from the Ontario Superior Court of Justice, Ligocki v. Allianz Insurance Company of Canada, reinforces the notion that the intention to create an independent contractor relationship will not be enough to trump the actual substance of the relationship, even if the employee benefited from being treated as an independent contractor.

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