Dependent Contractor Law in Western Canada
It is a common misconception that employees receive severance, whereas those who are characterized as contractors don’t.
Instead, the law is actually as follows: employees and “dependent contractors” are entitled to severance whereas “independent contractors” are not.
Further, if you are one of those people who believed the misconception, and did not immediately bring a claim, all may not be lost: workers have two years from the date of their termination to bring a lawsuit.
Employee Entitlement to severance
Employment agreements include an implied term requiring employers to give employees reasonable notice of termination. While employers can replace this implied term with an express provision reducing or even eliminating an employee’s entitlement to reasonable notice, such provision must satisfy certain requirements to be enforceable, including limiting language that’s clear and unambiguous.
Absent an enforceable and express provision, courts determine an employee’s reasonable notice period based on various factors such as age, length of service, and character of employment—with the rough high end being around 24 months for long service employees.
However, in practice, most employers, for business reasons, terminate employees effective immediately without providing them with notice at all. When this happens, the employer has breached the implied term of reasonable notice and is liable to the employee for the damage that results. This damage is typically everything the employee would have earned had reasonable notice been given. These damages are also called pay in lieu of reasonable notice or severance.
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Eric C. Lam is a partner working in the firm’s Edmonton office. Eric’s experience includes Employment Law matters, general Civil Litigation, Personal Injury, and Family Law matters. Additionally, Eric’s practice incorporates negotiation and alternative dispute resolution.