Unjust Dismissal Under Canada Labour Code

Dependent Contractor

The issue of employee, dependent contractor and independent contractor was reviewed in a 2018 Federal Court decision. 1 To make matters somewhat more confusing, there were two adjudicative hearings. The first one is not reported. This first decision was reviewed in Federal Court which is reported. 2

Dieter had been hired as a water hauler and entered into a contract which described his status as an “independent contractor” and that he was not “deemed to be an employee”.

In the first hearing, the adjudicator found that the reality of his circumstance was that of a “dependent contractor”, rather the independent variety, as stated in the contract. Part I of the Code defines such a dependent contractor as an employee. By analogy, the adjudicator wrote, the complainant was hence an employee for the unjust dismissal remedy.

In the review of this first decision, the Federal Court deferred to the finding that the complainant was a dependent contractor. However, the court concluded that there could not be a natural extension of the definition in Part I to be applied to Part III. The Federal Court of Appeal had previously decided that the definition of “employee” in Part I, which deals with industrial relations, had no application to Part III, dealing with employment standards and unjust dismissal. 3

Barnes J. ordered that the claim be returned to the adjudicator to consider whether a dependent contractor was entitled to the unjust dismissal remedy.

The case did do so. The adjudicator's decision was thus limited to whether a dependent contractor had the right to make an unjust dismissal complaint. The adjudicator found that the intent of the legislation was intended to cover such a context:

The Adjudicator noted that Mr. Dieter “[o]n an organizational test…was integral to a core service provided by the band,” and that he was closer to the employee end of the “independent contractor – employee continuum.” The Adjudicator noted that Mr. Dieter was responsible for delivering water to 44 residences 5 days a week. In doing so, Mr. Dieter agreed to comply “with the acts, protocol, codes of ethics, rules and customs pertaining to work practices and as adopted by Peepeekisis Cree Nation….”

The Federal Court agreed with the adjudicator’s second review of Part I and Part III which held that the Code should be interpreted as a whole and hence the term “employee” should not be read in isolation, particularly given the overall purpose of the Code.

The adjudicator referred to and applied, in this analysis, to a passage from Wilson: 4

[44] The references in the statement to the right of employees to “fundamental” protection from arbitrary dismissal and to the fact that such protection was “already a part of all collective agreements” make it difficult, with respect, to draw any inference other than that Parliament intended to expand the dismissal rights of non-unionized federal employees in a way that, if not identically, then certainly analogously matched those held by unionized employees (emphasis added).


[46] And this, in fact, is how the new provisions have been interpreted by labour law scholars and almost all the adjudicators appointed to apply them, namely, that the purpose of the 1978 provisions in ss.240 to 246 was to offer a statutory alternative to the common law of dismissals and to conceptually align the protections from unjust dismissals for non-unionized federal employees with those available to unionized employees…

The reviewing court agreed with this analogy as reasonable:

The decision in Wilson deals with the same provisions of the CLC albeit within a different factual context. The Adjudicator relied upon Wilson to conclude that Part III of the CLC should be interpreted analogously to Part I. In so doing, the Adjudicator did not directly import Part I of the CLC into Part III, rather, he undertook the analysis which Justice Barnes found was lacking in the First Decision. He concluded that a dependent contractor could be covered by s.240, based on Wilson, and based on the fact that Mr. Dieter was closer to the employee end of the “independent contractor- employee” continuum. This analysis is the proper approach for the Adjudicator to take, and is consistent with a contextual interpretation of the CLC.

The same court agreed that the common law determination of a “dependent contractor” as set out in the Ontario Court of Appeal decision of McKee v Heritage  was fair to use for this purpose. This case looked to the test of “those non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity”.

The adjudicator had also referred to prior administrative decisions dealing with this entry issue in unjust dismissal jurisprudence, particularly in reference to one decision of the Federal Court of Appeal which held that the term “person” in the operative section carries with it a wider meaning than “employee”. 5

The decision under review was hence seen as reasonable.

The cases generally are very much fact driven as to the contractor is independent or dependent. Two recent decisions found that the complainant was an independent contractor and not entitled to make the complaint of unjust dismissal. 6