Court of Appeal approves 26 months' notice for contractors
Last week, Ontario’s highest appellate court dismissed an appeal by Canac Kitchens of a decision awarding two of its contractors each 26 months’ notice. Canac Kitchens has become a notorious litigant for having provided employees with only their minimum statutory entitlements on the closure of its business and having now lost over a dozen cases on what constitutes reasonable notice.
In this particular case, Canac Kitchens provided no notice or pay in lieu of notice whatsoever when it advised two long-term contractors of the termination of their relationship. The contractors, a married couple, had worked for Canac Kitchens installing and then supervising the installation of cabinets for 32 and 25 years. They were 63 and 61 years old. Both of their relationships with Canac Kitchens had started out as employment until, approximately 20 years prior to termination, Canac Kitchens decided that they would be treated at independent contractors going forward. In the last couple of years of their relationship, the contractors had picked up a little work from other cabinet companies, but were otherwise exclusive to and dependent on Canac Kitchens.
The Court of Appeal determined that the additional work performed by the contractors for companies other than Canac Kitchens, in the context of a lengthy relationship of exclusivity, did not change their status as dependent contractors. The Court of Appeal also determined that the original award of 26 months’ notice was appropriate given the ages, lengths of service and positions performed. These circumstances were found to justify an award in excess of 24 months’ notice.
The take-away for employers from the latest Canac Kitchens decision are: (1) reasonable notice is required on the termination of dependent contractors and should be calculated using the same method used for employees; (2) dependent contractors need not be entirely exclusive for the duration of their relationship as the overall context will be considered; and (3) a finding of “exceptional circumstances” is not essential to support an award in excess of 24 months’ notice. Perhaps the greatest lesson of all is that a strategy of flouting common law obligations to employees and contractors means an employer will spend a great deal of money on both its legal fees and those of its employees.