The recent B.C. Supreme Court decision in Khan v. All-Can Express Ltd. (2014 BCSC 1429) confirms a growing trend across Canada towards finding that contractors who are highly economically dependent on one employer will be entitled to notice of termination similar to that required when terminating an employee.
Khan owned his own courier truck and contracted with All-Can (doing business as “Ace Courier”) to service one of its courier routes. Ace engaged a combination of employees driving company-owned trucks and “owner/operators” like Mr. Khan. The judge found that the owner/operators typically had long term relationships with Ace, were kept busy on a full time basis, were assigned work by Ace and were expected not to work for competitors. They also wore Ace uniforms, had to follow Ace policies and displayed the Ace logo on their trucks. On the other hand, Khan had signed an agreement acknowledging he was an independent contractor, was responsible for his truck and all related expenses and had to hire a replacement driver when he was not available. Khan did not participate in employee benefits or receive pay for vacation time.
The trial judge noted that in a series of recent decisions, including one involving a truck “owner/operator”, the courts have found that contractors in economically dependent relationships like Khan are entitled to reasonable notice of termination similar to that required for employees. Adopting that approach, he awarded Khan 4 months of notice (after 5 years of service) based on consideration of the same factors that apply to employees. In fact, the award is very similar to what a court might have awarded an employee in the same job, despite the fact that some cases have suggested that notice requirements for contractors should be less onerous.
The case serves as a reminder to employers of dependent contractors that their contractor status alone does not mean they can be terminated without reasonable notice. It also underlines the importance of including a termination clause in contractor agreements. Had Ace included such a clause in its contractor agreement, it could have substantially reduced its obligation to provide notice of termination.