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Many employers attempt to save costs by incorrectly labeling employees as independent contractors. This practice is illegal and deprives workers of fundamental rights, including overtime, vacation pay, statutory holidays, and — most critically — severance pay. If you’ve been misclassified, you could be owed significant, retroactive damages covering your entire tenure.
Courts use the Sagaz test — established by the Supreme Court of Canada — to determine the true nature of your working relationship, asking one central question: “whose business is it, truly?” The answer sorts workers into three categories:
|
Worker Type |
Description |
Termination Rights |
|---|---|---|
| Employee | High degree of employer control, integration into the business, and fixed wages. | Full common law severance (Bardal factors). |
| Dependent Contractor | High economic reliance on one client (e.g., deriving 67% or more of income). | Full common law severance (Bardal factors). |
| Independent Contractor | Truly runs their own business, controls their work, owns tools, and assumes profit/loss risk. | As per the contract, if any. |
A key area of protection is the dependent contractor category. If you work primarily for one client — often 67% or more of your income — but are labeled a contractor, Canadian common law views you as economically vulnerable and entitles you to reasonable notice or severance upon termination, just like an employee.
The invoice you sent doesn’t cancel the rights you earned. Companies label people contractors to avoid paying severance and vacation pay, but if you looked and worked like an employee — or depended on one client for your livelihood — the courts usually treat you like one.
our services
Workplace challenges can be difficult to navigate alone. Our firm is committed to helping employees understand their rights and find the right path forward.
We review your working relationship against the Sagaz test to determine your true legal status — employee, dependent contractor, or genuine independent contractor — regardless of what your contract calls you.
We specialize in challenging misclassification, successfully litigating these disputes and securing full entitlements for misclassified workers, as demonstrated by our success in cases like Mazanek v. Bill & Son Towing.
testimonials
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Employment Law Advocates made a stressful situation so much easier to navigate. Their team was responsive, knowledgeable, and fought hard to secure the outcome I deserved.
Employment Law Advocates made a stressful situation so much easier to navigate. Their team was responsive, knowledgeable, and fought hard to secure the outcome I deserved.
We work with employees from all backgrounds who need trusted legal guidance during difficult workplace situations, including severance package reviews and wrongful dismissal claims.
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