“Independent” Contractor with 2 Years’ Service Awarded 8 Months’ Notice of Dismissal

It is common today for corporations and other organizations to hire consultants to assist them with various aspects of the business. For example, individuals are hired as “independent contractors’ to staff accounting and information technology departments. These individuals may work full-time for the same employer for years invoice the organization through personal service corporations. In situations there is little to distinguish an “independent contractor” from other employees other than the manner in which the individual is paid, a court is likely to find that the individual is either an employee or dependent contractors and, therefore, entitled to reasonable notice of dismissal.

In Tetra Consulting v Continental Bank et al., 2015 ONSC 4610 Justice Morgan considered the case of the plaintiff, Lewis Cassar, an expert in the banking sector. Mr. Cassar owns the plaintiff, Tetra Consulting (“Tetra”) which was retained by the Bank to assist it in obtaining approval from the federal regulator, the Office of the Superintendent of Financial Institutions (“OSFI”), to operate as a Schedule 1 bank.

It was the common intention of all parties that although Tetra would commence its work in a consultant capacity, Mr. Cessar was to become an employee of the Bank once OSFI’s approval was achieved. To this end, in the Bank appointed Mr. Cassar as its Chief Compliance Officer (“CCO”) and Chief Anti-Money Laundering Officer (“CAMLO”). He attended the Bank’s board of directors meetings as a senior management employee, used the Bank’s email address, worked from his desk at the Bank’s premises, was subject to the Bank’s code of conduct, and signed an acknowledgment to be bound by the Bank’s employee policies and procedures.

The Bank ultimately decided not to proceed with the venture and terminated its contract with Tetra.

Dismissing the Bank’s argument that Mr. Cassar was an independent contract, Justice Morgan found that Mr. Cassar was either an employee or a dependent contractor and therefore entitled to notice of dismissal writing at paragraph 16:

Prior to that time, if he was not an employee in substance as opposed to form, then wearing his Tetra hat he was a dependent contractor. The evidence in the record is that he worked exclusively for the Bank for 60-70 hours per week, he had no other employer during the entire period of the relationship, he used the Bank’s tools, had an office and email address there, was subject to the Bank’s control, and represented himself to third parties as the Bank’s employee. These are all indicia of a dependent contractor who is entitled to the same type of reasonable notice of termination as an employee: McKee v Reid’s Heritage Homes Ltd., 2009 ONCA 916 (CanLII), at paras 22-25.

After considering Mr. Cassar’s age of 61 years, his 2 years of service, his very senior position and sophisticated knowledge of the Bank’s regulatory environment and brought this specialized skill to his job, and correspondingly high salary of $210,000 per annum Justice Morgan awarded Mr. Cassar 8 months’ notice of dismissal.

Employers should be aware that individuals hired as consultants to work in their organizations on a full-time basis for significant periods of time will often be found to be either employees or independent contractors entitled to reasonable notice of dismissal. Simply calling a consultant an independent contractor and having the contractor invoice the employer through a personal service corporation will not be sufficient to prevent a finding that the contractor is an employee. The old adage applies – if it walks like a duck and quacks like a duck, then it is probably a duck.