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The Legal Concept of Employment: Marginalizing Workers

I.Introduction

The salience of the legal distinction between employees and independent contractors, as well as the definition and scope of these terms, has varied considerably over the past two hundred years. However, by the end of World War II the distinction became the basis for establishing the personal scope of labour protection and social benefit laws, as well employer liabilities and tax obligations. But instead of providing meaningful definitions of the terms “employee” and “employer,” specific statutes, such as collective bargaining legislation for example, simply used terms that were familiar in the common law. Thus, when disputes arose over whether or not a particular person was an employee for the purpose of a particular statute, courts and tribunals invoked the common law tests to determine employee status (England, Christie and Christie 1998, 2.1). But this strategy did not resolve the problem of determining the personal scope of employment and labour legislation; the common law did not have a unified conception of employment nor a coherent method for distinguishing between employees and independent contractors (Kahn-Freund 1951; Rideout 1966; Wedderburn 1986).

The problem of applying the distinction to the range of actually existing contractual relationships for the performance of work grew, especially when some arrangements were entered into precisely for the purpose of evading the rights and obligations associated with employment. However, the contracting parties’ characterization of their relationship is not determinative of their legal status; it is simply one of the factors that a decision maker may consider when determining employment status for legal purposes.[22] Courts, administrative decision-makers, and legislators responded to the problem of the personal scope of employment-related legislation in two principal ways: 1) lessening the salience of the distinction by granting rights and protections to persons not classified as employees (or by deeming them to be employees) and 2) changing the test used to determine who is an employee to allow the category to expand or contract to fit the class of persons who are perceived to need or deserve the benefit of labour law protection. The first strategy typically involved some form of legislative or administrative action, whereas the second often could be achieved through the adjudicative process.

The development of new legal tests for determining employee status has tended to widen its scope, as the emphasis has shifted from direct subordination to include economic dependence as the basis for extending labour protection to working people (England, Christie and Christie 1998, 2.17; Supiot 1999). However, it has not simplified the adjudicative process. A variety of different legal tests of employee status are applied in different legal contexts in which decision-makers consider dozens of factors. In Canada, some scholars suggest that statutory context, or the purpose for drawing the distinction, provides a principled and coherent basis for determining employment status (Carter et al. 2002, 87; Davidov 2002 a, b; England, Christie and Christie 1998, 2.2; Langille and Davidov 1999).

This part examines the relationship between the personal scope of employment-related legislation and law and employee status in four jurisdictions, British Columbia, Ontario, Quebec, and the federal, averting to other jurisdictions that have an innovative or distinctive approach to the issue in a particular legal context. The goal is to provide an indication of the variation in the personal scope of employment legislation and the different techniques for determining coverage both in different jurisdictions and policy contexts. It begins with the common and civil law, since courts and tribunals historically have invoked its concepts and methods when interpreting statutes.

The common law has drawn a distinction between employees and independent contractors for two principal reasons: vicarious liability and wrongful dismissal. Courts have held employers to be vicariously liable to third parties for the negligence of employees but not for independent contractors. In a similar vein, they have held that an implied term of contracts of indefinite hiring is that such contracts can only be terminated by reasonable notice absent cause or binding contractual provision, but they have not generally implied a right to notice in contracts for service. Having made this distinction for these two purposes, courts soon had to grapple with the reality that contracts for the performance of work assumed a range of forms and that it was no easy task to draw the line in the “appropriate” place.

In the context of implied rights to notice, the Ontario Court of Appeal held in 1936 that the legal categories of employee and independent contractor did not completely occupy the broader field of contractual relations for the performance of work. There were, in addition, cases of an “intermediate nature” where the relation of master and servant did not exist but where a notice requirement might be implied. Since then jurisprudence has been developed to identify those cases of non-employment where a right to notice of termination is implied, taking into account factors such as permanency, exclusivity, investment, risk, and business integration.[23]

More generally, however, the courts have focused their attention on the test for distinguishing between employees and independent contractors, rather than on limiting the significance of the distinction itself. In the early twentieth century courts looked primarily at the issue of control over the manner of doing the work, although as was noted in Part Three, the case most frequently cited for this approach, Yewens v. Noakes, was a tax case.[24] In the context of another Canadian tax case the Privy Council pronounced that a more complicated test was necessary to deal with the “more complex conditions of modern industry.” To meet the challenge, it articulated the fourfold test that looked at control, ownership of the tools, chance of profit, and risk of loss.[25] Another approach to the problem was developed by Lord Denning five years later and became known as the “organization test.” The focus of this inquiry is the extent to which the work performed is an integral part of the employer’s business.[26] These tests, along with a few others, sometimes singularly and sometimes in combination, have gained widespread acceptance in Canadian courts (England, Christie and Christie 1998, Chapter 2).

But the development of new tests has not solved the problem of determining the scope of employment-related rights and obligations. Recently the Supreme Court of Canada, having reviewed the jurisprudence in the context of determining employment status for the purpose of vicarious liability, concluded: “there is no one conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor.”[27] Instead, after articulating a multi-factor test, it continued: “It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case.”[28] In short, the Supreme Court’s approach in Sagaz Industries will give judges a great deal of scope to tailor the boundaries of the category of employee to fit their view of the justice and merits of the case. To assist them, the Court also articulated a set of policy justifications for vicarious liability. Whether the Supreme Court of Canada’s purposive, or policy-based, approach to determining employment status will generate greater certainty than the earlier tests remains to be seen.

Unlike the rest of Canada, Quebec civil law is code-based. Until January 1, 1994 the Civil Code of Lower Canada (C.C.L.C.) was in force, when the Civil Code of Quebec (C.C.Q.) replaced it. The C.C.L.C. did not use the term employment, but rather spoke of the “lease and hire of work” as “a contract by which the lessor undertakes to do something for the lessee for a price.”[29] The Code distinguished three different types of work that might be leased: personal services of workmen, servants and others; work by carriers; and builders and others who undertake work by estimate or contract. In the last case, the undertaking party was expected to “either furnish labour and skill, or also furnish materials.”[30] Although the distinction between the first group and third group of workers was not well-developed in the C.C.L.C., or in the codes of other legal systems based on Roman law (Kahn-Freund 1977, 514-6), Quebec courts built-up its significance, primarily in the early twentieth century in the context of workers’ compensation and vicarious liability cases. As a result, the distinction between employees and independent contractors is as deeply embedded in Quebec as it is in common law jurisdictions. Moreover, courts in Quebec, like those in common law jurisdictions, also recognize intermediate categories of persons who are neither employees nor independent contractors but who are entitled to reasonable notice of termination (Audet and Bonhomme 1990, 5).

The Quebec courts initially identified the key distinction between employees and independent contractors as that of subordination and control. In Quebec Asbestos Corp. v. Couture, the Supreme Court of Canada held that under Quebec law, “[t]he contract of lease and hire of work may be distinguished from the ‘contrat d’enterprise’ principally by the subordinate character of the employee in the former contract.”[31] Later Quebec courts also took into account the fourfold test developed in Montreal v. Montreal Locomotive Works, even though the judgement in that case made no reference to the C.C.L.C. Despite the use of the fourfold test, the factor of legal subordination remained predominant.[32]

The emphasis on subordination was further embedded in the Civil Code of Quebec when it replaced the C.C.L.C. in 1994. Article 2085 defines a contract of employment as one in which “the employee undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of…the employer.” This is contrasted with a contract of enterprise or for services in which the provider of the service is able to “choose the means of performing the contract and no relationship of subordination exists between the contractor or provider of services and the client in respect of such performance”.[33]

The language of the C.C.Q. clearly makes subordination the most significant element (Gagnon 1999, 51). However, to determine whether legal subordination is present in marginal cases, courts interpreting the C.C.Q. may consider economic subordination, although economic subordination alone does not allow the court to characterize a contract as one of employment. This approach to the interpretation of subordination allows other factors to be brought in. The uncertain state of the law can be seen in the recent decision of the Federal Court of Appeal in Wolf v. Canada.[34] Although the case dealt with whether a worker was an employee or independent contractor for the purpose of determining liability for income tax, the three Quebec judges agreed that employment status was to be determined according to the C.C.Q. They also agreed that while the provisions of the C.C.Q. were much more detailed than the C.C.L.C., it did not substantially alter the previous state of the law in Quebec. According to Décary J.A., “what fundamentally distinguishes a contract for services from a contract of employment is the absence in former of a ‘relationship of subordination’ between the provider of the services and the client…and the presence in the latter of the right of the employer to ‘direct and control’ the employee…. ” [35] Yet, despite their unanimity on the centrality of subordination, the judges differed over the legal tests to determine its presence. Desjardins J.A. took the view that the distinction between contracts of employment and contracts for services under the C.C.Q. could be considered in light of the tests developed in both civil and common law. On that basis, she endorsed the approach of the Supreme Court of Canada in Sagaz Industries, although in her application of it she failed to discuss the purpose of the taxing statute.[36] Décary J.A. appeared to be less amenable to letting the common law influence the civil code and in particular insisted that: “The test, therefore, is whether, looking at the total relationship of the parties, there is control on the one hand and subordination on the other.” He then added: “I say, with great respect, that courts, in their propensity to create artificial legal categories, have sometimes overlooked the very factor which is the essence of a contractual relationship, i.e. the intention of the parties.”[37] The third judge, Noël J.A., thought that none of the tests was conclusive so that the intent of the parties should prevail.[38]

In sum, the distinction between employees and independent contractors is as salient under the civil law of Quebec as it is under the common law of Canada and as difficult to draw. The most important difference between the two systems is that in Quebec, at least among some judges, greater emphasis is placed on the test of control and subordination than on a more open-ended factor test in which the weight to be given to any particular factor is left unspecified. It is far from clear, however, whether this difference in approach has any appreciable impact on the outcome of cases.

Across Canada and Quebec labour tribunals administer collective bargaining legislation, which provides a mechanism for unions to obtain the exclusive right to represent groups of workers and bargain terms and conditions of employment on their behalf, protects workers who seek to exercise their right to join or participate in a trade union, and regulates the conduct of employers and unions when it comes to labour relations disputes. The goal of this legislation is to provide workers with countervailing power through a scheme that promotes collective representation and it is designed to foster industrial peace (Fudge and Tucker 2001).

By contrast, the Competition Act forbids entrepreneurs from combining to restrict competition. Competition is the guiding principle of commercial policy and law. But “combinations or activities of workmen or employees for their own reasonable protection” are exempted from the Competition Act, as are arrangements pertaining to collective bargaining over terms and conditions of employment.[39] Employment status removes workers and their organizations from the ambit of laws designed to ensure that markets are competitive. Thus, when determining the personal scope of collective bargaining legislation it is also necessary to consider its implications under competition law (Andras 1952; Arthurs 1965; Backhouse 1976; Labour and Employment Law Casebook Group 1998).

The Federal Wartime Labour Relations Regulations, 1944 initiated the practice of confining the scope of the legal protection for collective bargaining to employees without defining the term.[40] Some of the early labour tribunals in Canada, likely influenced by American jurisprudence, emphasized economic dependence for determining employee status (Arthurs 1965, 93). The important question was whether a group of workers would benefit from collective bargaining legislation, not whether they were employees at common law. This approach changed as a result of a decision of the Nova Scotia Court of Appeal that overruled a labour tribunal and held that in the absence of a statutory definition the meaning of the term employee should be “determined by the general law.”[41] Applying the common law test, the Court found that the fishers who owned their own boats were partners not employees for the purposes of collective bargaining law. This case established the precedent of invoking the common law tests of employee status to determine the personal scope of collective bargaining law, which had the effect of narrowing the scope of collective bargaining law (Arthurs 1965).

Initially the majority of labour tribunals resolved challenges to the employment status of workers who sought the benefits of collective bargaining legislation by invoking the common law control test. Ontario led the way in adopting the “fourfold test” which was generally regarded as an improvement by labour law scholars who were critical of the control test (Arthurs 1965, 95; Young 1964, 75-7). The fourfold test placed greater emphasis on the economic reality of the relationship, an important consideration in the context of collective bargaining legislation that was designed to enable the economically dependent to exercise countervailing power. However, it did not help those workers, who Harry Arthurs (1965, 89) described as “‘dependent’ economically, although legally ‘contractors’; according to him, “self-employed truck drivers, peddlers, and taxicab operators, farmers, fishermen, and service station lessees personify the dependent contractor.”

In an influential article published in 1965, Arthurs approached the question of personal scope of collective bargaining legislation from the perspective of competition policy. He argued that a dependent contractor

who sells services doubly disrupts the labour market. On the one hand, he competes with organized employees for viable work; on the other hand, his attempts to organize for collective action, lacking statutory sanction, are often characterized by economic force and legal reprisals.[42]

As part of the solution to labour market unrest caused by dependent contractors, Arthurs (1965, 114-5) recommended that collective bargaining legislation be extended to them. The report of the influential Task Force on Labour Relations, which had been appointed in 1966 by the federal government to report industrial relations in the context of rising labour unrest, focussed attention once again on the plight of the economically dependent self-employed and advocated the extension of collective bargaining legislation to them (Task Force on Labour Relations 1969, 140).[43] Both Arthurs and the Task Force recommended that competition law be amended specifically to exclude collective bargaining by dependent contractors.

Between 1972 and 1977, seven jurisdictions modified their collective bargaining legislation to extend the definition of employee to include dependent contractors (Bendel 1982, 376). British Columbia and Ontario adopted a broad definition.[44] By contrast the definition in the federal Canada Labour Code was (but no longer remains) narrow, limited by industry (joint-venture fishers) and occupation (owner-operators of trucks).[45] However, the actual extent to which the statutory definition of dependent contractor expanded the personal scope of collective bargaining law depended upon how the labour tribunals interpreted and applied it.[46] Labour tribunals across the country have developed lists of factors to assist them in distinguishing dependent from independent contractors (Adams 1995, 6-3 – 6-5; Langille and Davidov 1999, 27-28).[47]

Another technique of extending the personal scope of collective bargaining legislation is to give the labour tribunal the authority to designate workers as employees for the purpose of collective bargaining. Manitoba and Saskatchewan have opted for this solution.[48] The statutes in both jurisdictions state that the concept of employee is not relevant to determining the scope of collective bargaining legislation and that the important question is whether collective bargaining is appropriate. This technique of expanding the coverage of collective bargaining legislation has the advantage of making it clear that the decision to cover a particular group of workers is a policy question and not a matter of adjudicating between competing legal categories, but it is not clear that these differences in approach yield significantly different results. Indeed, even in those jurisdictions that did not enact dependent contractor or deeming provisions, the development of civil and common law tests of employee status has combined with the increased emphasis on a purposive interpretation of key statutory terms to expand the personal scope of collective bargaining legislation (Bendel 1982). In Quebec the term employee has been broadly interpreted by the labour tribunal to include workers who in other jurisdictions would be considered dependent contractors (Bendel 1982, 390-1; Bernstein, Lippel and Lamarche 2001, 130). In the federal jurisdiction where the definition of dependent contractor was limited to specific industries the labour tribunal declared that the definition of employee was wide enough to encompass dependent contractors in other industries.[49]

The development of a broader conception of employment that emphasizes economic dependence may explain why collective bargaining by dependent contractors has not attracted any attention under competition law. Despite the fact that neither the competition legislation nor the Criminal Code were amended to exempt dependent contractors who engaged in collective bargaining, there have been no legal proceedings alleging anti-competitive behaviour by them (Backhouse 1976; Labour and Employment Law Casebook Group 1998, 210).

Economic dependence and control are the key factors distinguishing workers who are granted access to collective bargaining legislation from workers who are not (Davidov 2002 a, b; Langille and Davidov 1999, 28). People who have made a considerable capital investment in the equipment used to perform their work, who provide services to several different firms, and who hire others on a limited basis to help them perform their work have been considered to be either employees or dependent contractors. Such diverse groups as owner-drivers of dump trucks, driver-salesmen employed by dairies, oil-burner servicemen, freelance journalists, homecare workers, and house parents working for welfare agencies are now entitled to the protection of collective bargaining legislation (Carter et al. 2002, 252). However, where a labour tribunal will draw the line between employees, dependent contractors, and entrepreneurs in a particular case is hard to predict. One important question is whether the degree of economic dependence on a particular employer is enough to keep a dependent contractor in the legal category of employee.[50] Another controversial question is whether contractors who hire other workers should be considered to be dependent contractors.[51]

Several jurisdictions provide special rules to deal with potential conflicts of interest over representation and bargaining structure between traditional employees and dependent contractors. The legislation in Ontario specifically provides that dependent contractors be placed in a bargaining unit of their own unless a majority indicate their preference for being assigned to a unit composed of other employees. In British Columbia and the federal jurisdiction dependent contractors are included in units with employees.[52] According to a group of labour law scholars,

including dependent contractors with other employees for collective bargaining purposes may have the effect of eliminating any economic advantage to the employer of continuing the dependent contractor arrangement whereas the provision of separate bargaining units for dependent contractors may serve to entrench the dependent contractor arrangements. As Canadian firms increasingly contract out many of their core functions, this difference of approach assumes greater significance (Labour and Employment Law Casebook Group 1998, 218-9).

The problem is that the line between employees and independent contractors is as slippery as ever and now a new one must be drawn between dependent and independent contractors (Bendel 1982, 400; Langille and Davidov 1999, 29).

Employment or labour standards legislation imposes minimum terms and conditions of employment in most sectors and for the majority of workers. Its origins can be found in early protective legislation such as factory acts that imposed maximum hours of work for women and children in the 1880s and the statutes that imposed minimum wages for women at the end of World War I. After World War II, sex-specific protective legislation was gradually replaced by omnibus statutes that imposed minimum wages and over-time rates, maximum hours of work, annual vacations with pay, statutory holidays, and pregnancy and parental leave as well as termination notice and severance pay. Employment standards legislation recognizes the inequality in the employment relationship and that labour is more than a commodity. According to the Supreme Court of Canada such legislation should be given a large and liberal interpretation in order to better achieve its purposes.[53]

Although all of the employment standards statutes provide a definition of “employee” most of them are not very helpful. [54] Thus adjudicators have invoked the common law to give meaning to the term and they have applied a variety of different tests (England, Christie and Christie 1998, 2.1). Unlike collective bargaining, these tests were never supplemented with a statutory definition of dependent contractor or the power to designate. In Ontario an adjudicator rejected the argument that for the purposes of employment standards the definition of employee includes dependent contractors on the ground that employment standards were not appropriate for dependent contractors (Parry 2002, 1-24). In British Columbia the provincial government ignored the 1994 recommendation of a ministerial commission to amend the legislation to include dependent contractors (Thompson 1995, 31).

However, it is not clear to what extent the absence of a dependent contractor definition has limited the personal scope of employment standards legislation. Increasingly adjudicators emphasize the statutory purpose of employment standards legislation to extend protection to economically dependent workers who would not fit the traditional definition of employee.[55] They have also taken to listing the range of factors that should be considered in determining employee status (England, Christie and Christie 1998, Chapter 2; Parry 2002, 1-21 – 1-24).

The Quebec Labour Standards Act’s definition of employee is the broadest as it includes “a worker who is a party to a contract” who “undertakes to furnish, for the carrying out of the contract, the material, equipment, raw materials or merchandise chosen by that person and to use them in the manner indicated by him.”[56] This provision has been interpreted to include a worker who deducted expenses related to the job for income tax purposes as though an independent contractor and occasionally hired assistants.[57] However, a similar result was also reached by an adjudicator who applied the common law tests in light of the purposes of Part III of the Canada Labour Code, which does not define the term “employee”[58] Thus, it appears that the personal scope of employment standards legislation is expanding to include workers in a position of economic dependence regardless of the precise definition in the statute or their employment status for tax purposes.

Human rights legislation prohibits discrimination against individuals on grounds such as sex, race, religion, disability, and age. Human rights or anti-discrimination statutes were first enacted after World War II, and by 1970 every jurisdiction in Canada had legislation that prohibited discrimination on a range of grounds relating to human dignity in a range of situations. Generally human rights statutes prohibit discrimination in the provision of services, the terms of contracts, accommodation, and employment. Thus, prohibiting discrimination in employment is simply one dimension of the broader goal of human rights legislation, which is to prohibit discrimination broadly, whether it is in the labour market, the realm of commerce, or public services.

Prohibiting discrimination in employment is a crucial dimension of anti-discrimination legislation. Not only is employment crucial to people’s livelihood and well being, employees are vulnerable to exploitation by employers. Human rights statutes have a number of provisions dealing specifically with employment, and they range from matters dealing with hiring, such as advertising and employment agencies, to issues such as sexual harassment and vicarious liability. The actual wording of the prohibitions against discrimination in employment varies from jurisdiction to jurisdiction (Tarnopolsky, Pentney and Gardner 2001, 12-8 – 12-9).

Some statutes provide definitions of the terms “employee” and “employment”. For example, British Columbia defines “employment” as including “the relationship of master and servant, master and apprentice, and principal and agent, if a substantial part of the agent’s services relate to the affairs of one principal; and ‘employ’ has a corresponding meaning.”[59] The fair practices ordinances in the Northwest Territories and the Yukon define an employee as “any person who is in receipt of, or entitled to, compensation for labour or services performed for another, but does not include an independent contractor” (Tarnopolsky, Pentney and Gardner, 2001, 12-11). By contrast, the federal human rights legislation broadly defines “employment” as including “a contractual relationship with an individual for the provision of services personally by the individual.” This definition includes personal services performed by individuals regardless of whether they are employees or independent contractors.[60] Moreover, the definitions in Nova Scotia and Prince Edward Island apply to contracts for services and thus do not distinguish between employees and independent contractors (Tarnopolsky, Pentney and Gardner 2001, 12-11). Ontario, along with several other jurisdictions, does not define either employee or employment in its statute. However, as the leading text on human rights law notes, “although at least half of all the complaints considered by human rights commissions concern employment, there are very few adjudications that have attempted to define these terms” (Tarnopolsky, Pentney and Gardner 2001, 12-11).

While the distinction between employees and independent contractors is a problem “shared in both the anti-discrimination and labour relations fields” (Tarnopolsky, Pentney and Gardiner 2001, 12-13), it is not obvious why it should be a problem for human rights codes, or, if it is, that it ought to be solved in the same way in both fields. Unlike labour relations legislation, human rights protections apply to both employment and commercial relations; refusing to provide people with services or to contract with them on the basis of their race, religion, or sex is prohibited regardless of whether or not the relationship is one of employment or commerce. Employment status should be (and is) irrelevant to the personal scope of human rights. However, it is relevant in determining specific obligations in situations in which people are vulnerable to other people exercising power over them. Employment is a paradigmatic situation in which people are vulnerable.

The few decisions in which employment status has been at issue have adopted an expansive interpretation of employee based on the purpose of human rights legislation. In British Columbia a board of inquiry referred to the extended definition of employee in the statute (it included a principal and agent) and the purpose of the legislation in order to emphasize economic dependence as the critical factor determining employee status. Although developed by expert human rights tribunals in the context of taxi companies and their relations with owner-drivers, the test of economic dependence has been used in other sectors and by the courts (Tarnopolsky, Pentney and Gardner 2001, 12-15 – 12-19). The cases illustrate not only that an expansive definition of employee has been adopted, but also that adjudicators have been able to justify this interpretation in light of the policy of human rights legislation (Tarnopolsky, Pentney and Gardner 2001, 12-19 - 12-20). By endorsing a liberal interpretation that “implies any arrangement in which one person agrees to execute work for another”, the courts have indicated their willingness not to be bound by traditional distinctions between employees and independent contractors in providing human rights protections.[61] The public policy goal of protecting human dignity and guaranteeing that people are treated equally transcends the traditional rationales for distinguishing between employees and independent contractors.

Human rights statutes provide prohibitions against discrimination generally, whereas pay and employment equity legislation provide specific rights and obligations only with respect to employment. Pay equity legislation provides mechanisms for women workers to claim that they are entitled to wages equal to men who perform work of equal value. This legislation can be proactive, imposing positive obligations on employers, or complaints-based. Only Ontario and Quebec place statutory obligations on private sector employers to achieve pay equity. The goal of employment equity is to ensure that groups of people who have historically been disadvantaged in employment are represented throughout the hierarchy of a firm in proportion to the group’s representation in the labour market generally. The only employment equity statute in Canada is in the federal jurisdiction, and it addresses the issue of the representation of four historically disadvantaged groups in employment.[62] Pay and employment equity developed much later than human rights legislation, beginning in the late 1970s, and it is much more controversial (Fudge 1995, 2002).

Pay and employment equity legislation apply only to employees. The Ontario Pay Equity Act[63] does not define the term “employee”. However, the Quebec statute defines “employee” in terms of control by an employer and specifically excludes independent contractors who are in business on their own account and who work for several parties or who work only intermittently.[64] There has been little litigation over the personal scope of pay and equity legislation. This is not surprising given the nature of the legislation and its limited scope of application. Pay equity legislation only tends to be effective if employees are unionized, so the question of whether a worker is an employee is unlikely to arise in the context of pay equity litigation because it has already been resolved for the purposes of collective bargaining (Fudge and McDermott 1991). By contrast, the definition of “employer” is crucial, contentious, and much litigated (Fudge 1991).

The question of the personal scope of employment equity legislation has rarely been raised. Since the Employment Equity Act provides a reporting and monitoring procedure for employers rather than a complaint mechanism for employees the issue of employment status is unlikely to arise. The personal scope of pay and employment legislation simply reflects where the line has been drawn under collective bargaining and employment law.

Occupational health and safety laws impose a duty on employers not to expose workers to unsafe and unhealthy working conditions and gives workers rights to be informed of hazards, to participate in their management, and to refuse unsafe work. These laws have grown from a patchwork of statutes protecting workers in specific industries to omnibus laws applicable to most workers. There is, however, considerable variation among jurisdictions in the treatment of independent contractors. To determine the extent of protection, three questions need to be answered: 1) do employers owe duties to independent contractors; 2) are independent contractors protected in other ways; and 3) how is the distinction between independent contractors and employees drawn.

Ontario provides the greatest protection to independent contractors. Its definition of employer includes a person who contracts for the services of workers and its definition of worker includes a person who performs work for money. According to the Ontario Court of Appeal this wording means that employers owe the same duty to provide a safe work environment to independent contractors that they owe to employees.[65] The distinction between employees and independent contractors, however, is not irrelevant. Self-employed persons are required to comply with some of the statutory obligations imposed on employers, such as the duty to use prescribed protective devices, and may be prosecuted for failing to do so, even though compliance may cause economic hardship.[66] As well, a tribunal has held that independent contractors are not workers for the purposes of participatory rights such as joint health and safety committees because that section of the act refers to workplaces where workers are “employed.” According to this view, participatory rights that are more akin to those associated with collective bargaining than to public rights to protection are to be enjoyed by a narrower segment of the class of workers. The adjudicator adopted the control test and on that basis found that a group of taxi drivers were self-employed. [67]

The situation of independent contractors in British Columbia is similar to Ontario, although the result is achieved by somewhat different and more circuitous means. Part 3 of the Workers’ Compensation Act[68] deals with occupational health and safety. Its definition of employer and worker contemplates that employers only owe duties to workers who are employees. Section 115 of the Act stipulates that employers owe duties to their own workers as well as any other workers present at the workplace. However, given these definitions, “other workers” may have to be some other employers’ employees. A more promising basis for finding statutory protection for independent contractors is section 119, which imposes a duty on owners (who are broadly defined) to maintain workplaces “in a manner that ensures the health and safety of persons at or near the workplace.” If that were all, independent contractors would be poorly protected. However, the Occupational Health and Safety Regulation[69] contemplates much broader application. Section 2.1 stipulates that the regulation applies to employers, workers and “all other persons working in or contributing to production of any industry” covered by the Workers’ Compensation Act. As well, section 2.2 establishes a general requirement that all work be carried out “without undue risk of injury or occupational disease to any person.” As a result, it appears that employers are under a duty to provide a safe work environment for independent contractors at least in circumstances where the work was being carried out in an area under the employers’ control. It is also arguable that independent contractors are required to comply with the regulation insofar as it applies to their work. None of these provisions, however, appear to provide independent contractors with rights to participate in the employer’s internal responsibility system, again mirroring the situation in Ontario. There is no case law on these points however.

Other jurisdictions provide considerably less protection to independent contractors. In the federal jurisdiction, most employers’ obligations arise only in the context of traditional employment relations. However, employers are under a duty to ensure that every person granted access to their workplace is familiar with and uses all prescribed safety materials, equipment, devices, and clothing and that their activities do not endanger the health and safety of employees.[70] Unlike Ontario, employers do not owe statutory health and safety obligations to independent contractors working outside their workplace and there is no duty on self-employed persons to comply with the requirements of the act. Clearly, then, much hinges on the distinction between employees and independent contractors. The two decisions on point both involve truckers and, although they differ in their outcome, they both use a multi-factor test that weighs control, ownership, chance of profit, and risk of loss to determine employment status.[71]

Quebec’s legislation provides even more limited protection to independent contractors. Its definition of employer and worker contemplates a contract of service as the basis for imposing employer duties.[72] As a result, the Act does not impose duties on employers to safeguard independent contractors. It does, however, require self-employed persons who carry out work in a workplace where there are workers to abide by the obligations imposed on workers under the Act and to abide by the obligations imposed on employers in respect of products, processes, equipment, materials, and dangerous substances.[73] In such a regime, much depends on how the individual is classified. Notwithstanding the absence of a specific statutory provision, tribunals have taken the view that dependent contractors will be considered to be workers provided they meet the criteria of economic dependence (Bernstein, Lippel and Lamarch 2001, 77-79).

In sum, although there has been significant movement in some jurisdictions towards abolishing or limiting the salience of the distinction between employees and independent contractors for occupational health and safety purposes, a great deal of variation remains in the treatment of independent contractors under provincial health and safety schemes, as well as in the legal test used to distinguish between independent contractors and employees. Even where independent contractors are given the benefit of direct protections, they are excluded from the right to have and to participate in joint health and safety committees. However, in the absence of statutory duties, employers may nevertheless owe a common law duty of care to independent contractors, especially where the work is performed on the employer’s premises. [74]

Workers’ compensation is a statutory scheme designed to provide economic benefits to workers who suffer disabling or fatal work-related injuries and illnesses (Ison 1989). The general governing principles are the same in all Canadian jurisdictions: covered workers who are injured on the job are entitled to compensation regardless of fault out of a state-administered fund generated from assessments levied on the payroll of covered employers.[75] In exchange for the right to compensation, workers lost their right to sue their employers for damages.

The key question is who is a covered worker? The general principle is that a covered worker is an individual who is either hired under a contract of employment or deemed in law to be a worker. The distinction between employees and independent contractors, however, is an important one because coverage of employees is mandatory with premiums paid by the employer while individual operators are only deemed to be workers if they apply for insurance and pay the applicable premium themselves. In general, all jurisdictions use a multi-factor test of employment status that asks whether in reality the individual can be said to be running a separate enterprise. Each jurisdiction, however, has its own particular rules both for drawing the distinction and, in some cases, for making exceptions.

In Ontario, leaving aside some outworkers and casuals who are completely excluded, the Workplace Safety and Insurance Act establishes three basic categories: 1) workers for whom coverage is mandatory; 2) independent operators and others for whom coverage is optional but who must pay their own premiums; and 3) employers who must pay premiums for their employees.[76] Administrators and adjudicators have struggled to find an appropriate test to distinguish between workers and independent operators. An influential 1989 decision identified the problem and proposed a solution:

The vast spectrum of service relationships lying between a contract of service (“worker”) and a contract for service (“independent operator”) must still be divided into only two areas. Accordingly, it is necessary to have a flexible and highly adaptable test, which will cover the myriad relationships encompassed in this “employment” spectrum from a workers’ compensation perspective.[77]

The panel adopted the “business reality” test involving a non-exhaustive list of eleven factors that it hoped would lead to decisions in accordance with the real merits and justice of the case.[78] The board’s policy manual currently refers to the “organizational test” and directs adjudicators to consider the degree of control, the opportunity to make a profit or suffer a loss, and other applicable criteria. It then goes on to provide more specific criteria for assessing each factor. For some industries, such as construction, logging, taxi cab, and trucking, in which the distinction is very difficult to draw, the board has developed industry-specific questionnaires.[79] Even with these tests and questionnaires, the board still finds the distinction problematic and has raised the matter in a recent consultation paper on coverage (Ontario Workplace Safety and Insurance Board 2002). Because of the way the Workplace Safety and Insurance Board records its data, it cannot accurately estimate the number of independent operators who have opted for coverage.

The British Columbia scheme also distinguishes between workers under a contract of service for whom coverage is compulsory and independent operators who may be deemed to be workers if they opt in and pay their own premiums. It also uses a multi-factor test, but applies it in a way that is sensitive to policy objectives and wary of shamming.[80] Where ambiguity remains after the application of the test, in certain circumstances the board may classify the individual as a “labour contractor.” Labour contractors may register as employers, but if they do not they, and any help they employ, are considered workers of the prime contractor or firm for whom they are contracting.[81] As well, special fishing industry regulations effectively deem all commercial fishers to be workers and commercial fish buyers to be their employers for assessment purposes.[82]

The Quebec scheme differs from those of Ontario and British Columbia in that while the act distinguishes between employees and independent contractors it specifically deems independent contractors to be workers if they perform work for a person who has employees performing similar work provided that they do not work for several persons simultaneously, serially on short-term contracts, or intermittently. The case law drawing these distinctions is contradictory, making it difficult to arrive at clear conclusions about the approach taken by the tribunals that determine these matters.[83] Workers in federally regulated industries are governed by the provincial legislation in force where they are employed. Federal crown employees, however, come under the Government Employees Compensation Act. The definition of a federal crown employee may be narrower than that of a worker. As a result, some individuals working for the federal government who might otherwise have been automatically covered will only obtain coverage if they opt to apply and pay their own premiums.[84]

The Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) are statutory schemes designed to ensure that Canadians retire in security and with dignity. Both are contributory earnings-related programs that provide income to people in retirement and are designed to supplement the Old Age Security Pension (OAS), a universal entitlement financed federally through general revenue, and private employer-sponsored pension plans. The CPP and QPP are financed by employer and employee contributions that cover the costs of benefits and administration.

Under the CPP/QPP, coverage is extended to working persons and contributions are mandatory. However, an important distinction is drawn between employees and independent contractors or the self-employed in relation to contribution formulas. Most important, self-employed persons are required to pay contributions at the full rate[85] while employees are only required to pay half with the other half paid by the employer(s) (CCH Canada 2002, para. 600).[86]

Where there is doubt as to whether an employment relationship exists, Human Resource Development Canada normally instructs a worker or an employer to make application for a ruling on worker status to the Canada Customs and Revenue Agency or a party goes directly to the Canada Customs and Revenue Agency. In deciding such cases, the Agency uses a multi-factor test that emphasizes the dimension of control, but also considers supplemental factors related to the ownership of tools, chance of profit, risk of loss, and integration. Workers are required to fill out a questionnaire designed to provide the Agency with the information that it needs to apply the test. As well, workers are asked to state the reasons why they believe they are employees or self-employed.

If a worker or an employer is dissatisfied with the ruling of the Canada Customs and Revenue Agency, either party may pursue the matter further through the tax court. The 1987 Federal Court of Appeal decision in Wiebe Door Services Ltd. v. M.N.R. is the most influential case in determining the status of the worker under CPP/QPP and Employment Insurance (EI). This case involved the assessment of CPP/QPP and Unemployment Insurance (now EI) contributions against Wiebe Door Services Ltd. for door installers and repairers it treated as independent contractors.[87] After several levels of review through the Canada Customs and Review Agency, the Tax Court held that the workers were employees on the basis of the integration test (CCH Canada 2002, para. 527). Interpreting the integration test from the employer’s perspective, it found that Wiebe Door Services would be out of business without these independent contractors and therefore they were employees (CCH Canada 2002, para. 527). On appeal, the Federal Court of Appeal held that the Tax Court had erred in law in its use of the integration test.[88] It declared that there is only one test – the fourfold test and that the key question is “whose business is it?”[89] More important, as Joanne Magee (1997, 588) observes: “Wiebe Door established the principle that there was no series of individual ‘magic’ tests that could be substituted for an examination of ‘the total relationship’ of the parties to determine ‘whose business is it?’”

Wiebe Door remains the leading authority for determining worker status under CPP/QPP and EI. Since the Federal Court of Appeal heard the case, however, there have been several important cases where the Pension Appeals Board has applied a more expansive understanding of the category “employee.”[90] However, these decisions, which involve beauty technicians, a legal researcher for a law firm, and a secretary for the Ministry of Education were all rendered in the early 1990s and may not be considered persuasive.[91]

Employment Insurance (EI) is a contributory earnings-related social wage program intended to provide unemployed people with income benefits (EI Part I) and active re-employment benefits (EI Part II). It provides income support and employment assistance designed to reinforce work effort.[92] Under EI, coverage is extended to all those with “insurable employment” in Canada. Contributions, called premiums, are mandatory; they cover both the costs of benefits and administration and are normally shared between the employee and the employer. In 2002, the EI premium was 2.2% of the annual insurable earnings to a maximum annual premium of $858.00, which reflected the maximum insurable earnings of $39,000. Owing partly to the wide range of possible inclusions and exclusions, however, the definition of insurable employment is complex. Insurable employment is defined as:

employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece.[93]

Cases involving the issue of employment status for the purposes of levying CPP/QPP and EI contributions are frequently raised together and often resolved at the same time in the Tax Court.[94] However, the question of employment status also arises in relation to determining eligibility to receive benefits and these disputes are resolved by a different set of agencies and tribunals. Where worker status is in question, the Employment Insurance Act instructs the EI Commission to refer the matter to the Canada Customs and Revenue Agency and to defer judgment until a decision of the Minister of National Revenue or, in the case of an appeal, a decision of the Tax Court is received.[95] Wiebe Doors is followed with the result that the fourfold test dominates in determinations of worker status under EI. Determinations of worker status under EI thus follow a similar logic to CPP/QPP, although coverage is narrower and the Canada Customs and Revenue Agency and the Tax Court play more central roles.

In contrast to CPP/QPP, self-employed workers are excluded as a group from coverage under EI. However, because this wholesale exclusion produces politically unacceptable outcomes, the Employment Insurance Act allows the Commission to include, by regulation, certain forms of employment (including those forms covering “persons in business”[96]) that are not governed by a contract of service.[97] In setting the terms for making regulations designed to extend EI coverage to excluded categories of workers, for example, the Act notes that the Governor in Council may make regulations for including in insurable employment:

employment that is not under contract of service if it appears to the Commission that the terms and conditions of service of, and the nature of the work performed by, persons employed in that employment are similar to the terms and conditions of service of, and the nature of the work performed by, persons employed under a contract of service.[98]

At the same time, the Act lists excluded types of employment, including casual employment,[99] and allows for exclusions from the definition of “insurable employment” if it appears that the nature of the work performed is similar to that performed by persons in employment that is not insurable.[100]

Under EI, therefore, most insurable employment is employment carried out under a contract of service. Yet EI coverage is extended by regulation to some groups of workers engaged under a contract for services. These powers have been exercised to create a separate scheme for self-employed fishers. These workers are treated as a special case on account of the character of their occupation and the heavy reliance in specific regions of Canada on fishing as a source of livelihood (Schrank 1998).[101] In practice, EI deems self-employed fishers to be engaged in insurable employment so long as they participate in making a catch, do not fish for sport, and hold a specified interest in an asset used in fishing (Canada Customs and Revenue Agency 2002, 8). It also identifies certain persons or entities as employers for the purpose of making contributions.[102] Fishers’ EI is financed by self-employed fishers and designated employers, each of whom is responsible for half of the full contribution.[103]

Barbers, hairdressers, and manicurists who are not employees and taxi drivers and other drivers of passenger-carrying vehicles who are not employees, nor own or operate the business nor own more than 50 percent of the vehicle but who are provided with facilities and services from the business operator, are also special cases in the EI Regulations.[104] In such cases, the workers are not under a contract of service yet they are deemed to be engaged in insurable employment. The Federal Court of Appeal has justified the regulation including the earnings of drivers of passenger vehicles in the category of insurable employment, created at the request of the taxi industry, on the basis that it helps to protect these drivers against “the risk of unavailability of work and involuntary idleness.”[105] Unlike under CPP/QPP, in each of these cases, contributions are split between the owner or operator of the business and the self-employed person.

Taxes are the most important source of state revenue (Hogg, Magee and Cook 1999, 37). Taxes on income comprise the largest proportion of tax imposed and revenue collected as well as the most progressive (redistributive) tax instrument in Canada. Important tax consequences hinge on the determination of employment status. Employees and independent contractors are treated very differently not only for the purpose of levying payroll taxes such as CPP/QPP and EI, but also for determining liability for income tax (Gaucher 1999; Magee 1997).[106]

Since most questions relating to a worker’s employment status for tax, CPP/QPP, and EI purposes are resolved by the same agencies and courts applying the same legal tests, the answers tend to be the same.[107] Moreover, given that these questions typically arise in the context of determining liability for tax, the interests of the different parties involved tend to be the same in the different contexts. Firms have an incentive to characterize workers as independent contractors for both payroll and income tax purposes, albeit the incentive is much weaker, and mostly administrative, with respect to income tax. Workers share the firms’ interest in avoiding taxes, while the state has an interest in treating workers as employees since payroll taxes are a growing source of revenue and business expenses claimed by independent contractors are hard to police. But what distinguishes the determination of employment status for the purpose of income tax from either CPP/QPP or EI is that with respect to income tax, workers never have an incentive to claim employee status. By contrast, under EI, for example, one of the advantages of being an employee is that an employer is required to make contributions to a scheme that provides benefits to employees who are unemployed. There is no similar incentive under income tax for workers to claim employee status; to the contrary, tax consultants tout self-employment as “the last great tax shelter” (Cestnick 2002).

Section 248 of the Income Tax Act defines the term “employment “ as “the position of an individual in the service of some other person ... and ‘servant’ or ‘employee’ means a person holding such a position....”[108] This definition is treated as referring to the common and civil law distinctions between contracts of service and contracts for service and the common law tests are used to determine employment status. These tests have evolved from simple control to the Wiebe Door “four-in-one test,” which is a variation on the classic fourfold test (control, ownership of tools, chance of profit, and risk of loss) combined with an admonishment to consider all of the facts in order to determine the true nature of the relationship (Gaucher 1999, 50-62; Magee 1997, 584, 587-89). The Tax Court of Canada has accepted Wiebe Door as the leading authority in determining employment status for tax purposes, but it provides little guidance on how to evaluate the factors (Gaucher 1999, 62-63, 71).

To assist taxpayers in determining issues of categorization that have tax implications, Revenue Canada issues interpretation bulletins and pamphlets. While these interpretation bulletins are not binding, they guide taxpayers through the self-reporting system and indicate how Revenue Canada officials are likely to administer the Income Tax Act. Although Revenue Canada has not issued a bulletin dedicated to the specific question of determining a worker’s employment status, this question is discussed in two bulletins, one dealing with business deductions by personal service businesses and the other dealing with performing artists. [109] In each bulletin Revenue Canada lists a number of factors that indicate employee status and these factors reflect those developed in other legal contexts. However, commentators have noted that Revenue Canada’s bulletins tend to emphasize control (Gaucher 1999, 66-7; Magee 1997, 603). A pamphlet designed to assist individuals in determining whether they are employees or independent contractors is also provided by Revenue Canada. It sets out the Wiebe Door test and lists the factors to consider.[110]

While the taxpayer makes the initial determination of employment status, Revenue Canada officials have the power to dispute that categorization. Ultimately the courts resolve disputes over the interpretation and application of the Income Tax Act. Courts have adopted a number of different interpretive approaches to tax statutes. However, adjudicators tend to interpret taxing statutes so as to impose liability on taxpayers only if the wording of the statute clearly requires it (Arnold 2001, 2). This approach contrasts with a remedial interpretive approach that is designed to give a broad and generous interpretation to the terms of a statute in order to achieve the public policy goals of the legislature in enacting the statute.

The courts’ approach to the interpretation of taxing statutes helps to explain why workers are classified as independent contractors for tax purposes at the same time as they are classified as employees for the purposes of employment and labour law despite the fact that the same tests are invoked and similar factors are considered in both legal contexts.[111] A recent case by the Federal Court of Appeal, Wolf v. Canada,[112] not only illustrates the problem of uncertainty that results from this form of adjudicative process, it also highlights the extent to which courts are prepared to defer to individual choice without regard to public policy.

At issue Wolf v. Canada was whether a mechanical engineer who was hired as a consultant by the large airplane manufacturer Bombardier was an employee or independent contractor for the purposes of income tax. Emphasizing the factor of control, the Tax Court upheld Revenue Canada’s decision to disallow certain business deductions claimed by the taxpayer on the ground that he was an employee and not an independent contractor. The three-member appeal court unanimously upheld the taxpayer’s appeal of his status, and ordered the case to be referred back to the Minister for reconsideration and reassessment on the basis of its reasons. Although each judge wrote a separate opinion and applied a different version of the legal test of employee status, the underlying rationale for the decision was the same.

As was discussed in Section I, a great deal of space in two of the three judgements was devoted to determining the appropriate test of employment status under the Civil Code of Quebec since the general law of the province is the basis for determining employment status under the Income Tax Act.[113] Although the judges agreed on the contours of the test under the Civil Code, they differed over their treatment of Sagaz Industries[114] and the influence of the common law. However, they all agreed that the worker and the firm’s choice of employment status should determine the issue of employment status. According to Decary J, “we are dealing here with a type of worker who chooses to offer his services as an independent contractor rather than as an employee and with a type of enterprise that chooses to hire independent contractors rather than employees. The worker deliberately sacrifices security for freedom.”[115] Invoking the freedom of taxpayers to organize their affairs in such lawful way as they wish, the Federal Court of Appeal explicitly stated that the parties’ intention should determine the taxpayer’s employment status in this case.[116]

It is unlikely that Wolf will have much direct impact on the legal tests of employment status in tax law. Not only is the legal reasoning confused, the case deals primarily with the Civil Code, which limits its influence. However, Wolf is significant because it illustrates the extent to which the application of the legal tests depends upon the courts’ prior assessment of the significance of the legal context. According to tax scholar Vern Krishna (1995, 192-3),

Although not openly acknowledged, there is a difference in judicial attitudes in characterizing employment relationships in tax law and other employment related areas. In employment law, there is a trend to characterizing workers as employees to enable them to derive the benefits of legislation intended to protect the economically dependent and vulnerable. In tax law, the advantage lies with the independent contractor and, hence, one may be inclined to view the relationship from a different perspective.

The fact that adjudicators adopt a policy perspective or purposive approach to the interpretation of key concepts is not particularly troubling. In fact, according to the Supreme Court of Canada in Sagaz Industries, this is precisely what adjudicators should do in determining employment status. The problem is that the case law demonstrates that adjudicators, and in particular judges, are not very good at identifying the purpose of statutes or discussing the policy implications of different interpretations. Noticeable by its absence from Wolf is any discussion by the Federal Court of Appeal about the purpose of income taxation and the reasons why employees are treated differently from independent contractors for tax purposes.

In response to the mid-twentieth-century development of collective bargaining, minimum standards, and social wage legislation the distinction between employees and independent contractors took on greater legal significance. While for much of the second half of the twentieth century linking the personal scope of employment and labour legislation to the concept of employee covered the majority of people who performed work for remuneration, it was never entirely satisfactory. Moreover, using the concept of employment to delineate the scope of labour protection and the social wage has become increasingly problematic in the face of the massive growth of self-employment, especially of the own-account variety, in Canada during the 1990s. As the portrait of the self-employed presented in Part Two indicates much of the growth in self-employment has been of a kind that involves little scope for entrepreneurial activity. Consequently, the number of workers located at the margin of the employee/independent contractor distinction has increased, creating even greater difficulties for decision makers required by law to slot workers into categories whose conceptual and sociological foundations are rapidly eroding.

Despite some well-intentioned efforts to respond to the difficulty of imposing legal categories on an increasingly heterogeneous group of workers, legislators and adjudicators have been unable to resolve satisfactorily the difficulties they face. In some areas of the law, efforts have been made to reduce the salience of the distinction between employees and independent contractors by extending coverage to persons who were not traditionally categorized as employees. Many jurisdictions in Canada have extended the personal scope of collective bargaining law to dependent contractors, workers who are not legally subordinated but who are economically dependent. A couple of Canadian jurisdictions have gone so far as to make the distinction between employees and independent contractors irrelevant. This strategy has been adopted for legal regimes in which the distinction has little significance, such as human rights legislation and occupational health and safety standards. However, the more common strategy has been to maintain the distinction between employees and independent contractors but to extend coverage through legislation or regulation to workers who would otherwise fall outside of the definition of employee or to deny it to workers who would otherwise fall inside the definition.

While this piecemeal approach has benefited particular groups of workers for specific purposes (for example, fishers in British Columbia for the purposes of workers’ compensation), it has significant limitations. The most obvious is that the processes of inclusion and exclusion are ad hoc and dependent on contingent circumstances. For example, while most provinces amended their collective bargaining legislation to include dependent contractors in response to industrial strife in a number of industries where the use of contract workers was undermining stable collective bargaining relationships, they did not also give these workers the benefit of minimum standards legislation, notwithstanding that they were persons in an economically dependent position that made them more like employees than independent contractors. Presumably, a major reason for this inaction was the absence of the kind of political pressure that was being brought to reduce industrial conflict. Similarly, the extension of employment insurance to east coast fishers came about both because of their depressed condition and because of the politics of federalism (Schrank 1998; Clement 1986, 56-7). A second problem with this kind of ad hoc incrementalism is that it creates new legal categories such as “dependent contractors” whose rights may be different from those of both traditional employees and independent contractors. As a result, the boundaries of such categories must be defined at two margins. While this approach may allow adjudicators to make the legislation more inclusive in at least some of its dimensions, it creates additional difficulties in drawing lines. In short, a process of adding-on new categories of employees inevitably depends on ad hoc political, executive, and administrative decisions, rather than on a more principled consideration of the appropriate scope of coverage. Thus, this technique for determining the personal scope of labour law is unlikely to diminish and, indeed, may increase the burden on adjudicators of applying legal definitions to complicated and ambiguous facts.

Adjudicators in various settings have attempted to grapple with the challenge posed by the need to draw categorical distinctions in a world in which “most labour market boundaries and categories are heuristic rather than descriptive – conceptual rather than material” (Purcell 2000, 1). In general, adjudicators evince a keen awareness of this difficulty and in response have adopted increasingly elaborate factor tests that emphasize aspects of control, subordination, economic dependency, and integration into another’s business. They have also asserted that the number of factors is not closed and the weight to be given to any given factor is not fixed. In an attempt to produce greater coherence and certainty in the determination of employment status, some adjudicators have held that the application of the factors should be guided by an explicit discussion of the purpose of the legislation that is under consideration. While this technique is marginally better than alternative legal approaches that depend upon fitting workers into fixed legal categories, leaving the problem to be resolved through adjudication is a poor solution for at least three reasons. First, the purposive approach makes little sense conceptually. Indeed, it explodes the conceptual category of “employee” that it is intended to make workable by admitting that it is a cipher whose meaning is to be supplied by adjudicators based on their view of the appropriate class of persons who should be covered by the legislation. In effect, the purposive approach to the application of definitions that determine the scope of coverage is a deeming process thinly disguised as adjudication. It also undermines the conceptual category of employee by making its meanings and boundaries vary depending on the context with the result that the general question, “Are you an employee” cannot be answered without first clarifying the purposes for which the query is being posed. Since the important question under a purposive approach is “should the legislation apply to a person who performs this kind of work” the question of whether or not the person is an employee is irrelevant. Second, this approach assumes that adjudicators are the appropriate personnel to identify the purposes of a legislative scheme and, on that basis, define the class of people covered by it. This assumption is extremely problematic given the diversity of administrative decision-making processes, appointment procedures, and qualifications of adjudicators, let alone the scope for judicial oversight and control. Finally, adjudication, in essence, operates as a system of ex post decision-making that in reality will leave the status of a large number of workers highly unpredictable, notwithstanding that the abstract character of the test may produce an illusion of consistency (Davies 1999, 167).

The determination of the personal scope of employment and labour legislation in Canada is very complex (Langille 2002, 138-9); although the distinction between employees and independent contractors remains crucial, different tests are applied, extended definitions of “employee” have been added, and there has been some ad hoc extensions and exclusions that affect particular groups of workers. As the diagram below indicates, the personal scope of employment and labour legislation differs from jurisdiction to jurisdiction as well as across different legal regimes. Given the transformation in employment relations in the latter part of the twentieth century and the changing nature of self-employment, the current situation not only encourages litigation, it invites the manipulation of contractual arrangements to avoid the incidence of legal regulation. It is time to revise the basis for determining the personal scope of employment and labour legislation.

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