Employee Status in Common law Contract

The common law contract of employment only applies to employees. Independent contractors are not subject to the common law protections of the common law contract of employment (because it is believed that independent contractors are better situated economically to protect their own interests). Thus the first threshold question is often to determine if the plaintiff is an employee. The leading test to distinguish employees from independent contractors is the Montreal v. Montreal Locomotive Works Test:

    • 1. Who is in control? – If you have a boss who can discipline or promote you then you are likely an employee. If no such person exists, you are likely an independent contractor. This is the most important of the tests.
    • 2. Who owns the tools? For example, who owns the store, its merchandise, the taxi cab, etc.
    • 3. Does the employer possess the chance of profit? When merchandise is sold, whose pocket does it go into.
    • 4. Does the employer bear the risk of loss? For example, who bears liability if some merchandise is lost?

There are, however, several examples of recent cases that rely instead on a “purposive approach”, first discussed in Hearst. As per this test, the court takes a “flexible and generous” interpretation to determine whether the actor in question is subject to the evils the law (i.e. common law or statute) wishes to eradicate. If so, then the actor should be entitled to the protection of the law. This approach was endorsed in recent cases such as, United Independent Operators 2011 ON CA, Fasken Martineau 2010 BC Human Rights Tribunal, and in Justice Fraser’s dissent in RE Becker Milk, 1973.