Employed or Self-Employed?

Roller Hire v The Queen (2013). A common battle in the Tax Court of Canada is one between the designation of employee or independent contractor. The case of Roller Hire is a recent example, and Judge Hogan made some interesting comments for the Court.

Following argument from the appellant company that the worker accepted the designation of independent contractor, Judge Hogan reminded legal counsel that the legal determination does not rely on the perceived acceptance of status. What determines the legal relationship between the parties is the factors set out in the 1986 case of Wiebe Door.

According to the principles enunciated in Wiebe Door, to distinguish a contract of employment from a contract for service the traditional essential elements are:

• The degree of supervision and control between the parties
• The method of remuneration for services
• Arrangements for holidays
• Provisions for sick leave
• Opportunities for outside employment
• Provision of medical coverage
• Compensation for work-related travel; and
• The nature of termination clauses

No test is wholly determinative and it all comes down to the specific facts of the situation. The onus is on the individual to establish the nature of his/her particular relationship.

In determining that the worker in Hire Roller was an employee, Judge Hogan commented that "the evidence shows that the employee provided services in person. He did not hire substitutes or replacements. Even if the appellant's witness testified that the worker could do this, he in fact could not. The appellant's witnesses acknowledged that the use of any alternate driver must be approved in advance by the appellant. The worker does not earn enough money to afford to hire substitute drivers or helpers."

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.