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The Legal Concept of Employment: Marginalizing Workers

This report has examined the use of the legal concept of employment for determining the personal scope of labour protection. The focus has been on the distinction between employment and self-employment, and several disciplinary lenses have been brought to the analysis. The report demonstrated that although there is some overlap between the conceptual, legal, and statistical definitions of these terms, they are not coterminous. In particular, there are large gaps between the sociological concept of entrepreneurship, the legal category of independent contractor, and the statistical measure of self-employment. The statistical portrait of the self-employed in OECD countries in general, and Canada in particular, reveals that the self-employed do not constitute a homogeneous category. In Canada few of the self-employed conform to the ideal type of entrepreneurship as most are economically dependent upon the sale of their labour. Thus, it is not accurate to assume that all of the self-employed are entrepreneurs. In fact, the majority of the self-employed in Canada resemble employees more than they do entrepreneurs.

Despite the social and economic situation of the majority of self-employed in Canada, most of them are treated for legal purposes as independent entrepreneurs. Although the legal distinction between employment and independent contracting was neither straightforward nor well established historically, it has come to be the touchstone of the scope of labour protection. The complex history of the legal concept of employee may help to account for the diversity in the contemporary landscape of the scope of labour protection. Currently the legal determination of employment status is extremely complex and very uncertain and increasingly it is out of tempo with the reality of employment relations.

The key question ought to be “to whom should labour law apply” not “is that person an employee?” Whether someone is working under a contract of service or a contract for services is not a good basis for determining the scope of labour protection. Even though most independent contractors are not under the control of, nor economically dependent upon, a particular employer, most lack many, if not all, of the distinctive features of entrepreneurship – ownership, autonomy, or control over production. Instead of attempting to draw a new line between employment and independent contracting for the purpose of determining the scope of labour protection, we recommend that all workers dependent on the sale of their capacity to work be covered, unless there are compelling public policy reasons for a narrower definition. This recommendation conforms to the ILO’s goal of developing a policy framework for decent work, a central element of which is “a universal ‘floor of rights’ – a set of minimum rights to which everyone is entitled, regardless of status in employment” (Egger 2002, 166). The technical challenge is to develop mechanisms and institutions for making labour protection effective for all people who work for a living.