With royal assent on June 20, 2024, the Canada Labour Code was amended with “presumption of employment” provisions. Parts I, II, III of the Code have been endowed with virtually identical clauses that shift the onus of proving an employer-employee relationship onto the employer.
The Amended sections. 6.1(1) and 6.2 under Part I (Industrial Relations) read as follows:
6.1 (1) A person — other than a person who performs management functions or is employed in a confidential capacity in matters relating to industrial relations — who is paid remuneration by an employer is presumed to be their employee unless the contrary is proved by the employer.
…
6.2 If, in any proceeding under this Part other than a prosecution, an employer alleges that a person is not their employee, the burden of proof is on the employer.[1]
Identical presumption of employment provisions also appear in Parts II and III of the Code:
A person who is paid remuneration by an employer is presumed to be their employee unless the contrary is proved by the employer.[2]
The changes invert the traditional onus of proof, from the employee to the employer.[3] While this does not necessarily alter the legal tests that the courts will apply to distinguish between employees and independent contractors,[4] it nonetheless poses a risk of unfavorable classifications for employers. For instance, gig workers in federally regulated industries now have the same Code protections as conventional employees.[5] The simple remuneration requirement is poised to capture a larger number of workers under the definition of employee rather than agent or independent contractor.
For employers, the common law tests used to distinguish employment, such as the control test, fourfold test, and integration test are still operative. Yet the presumption of employment establishes a new starting point for common law employment tests that immediately puts the employer on the defensive. Federally regulated employers may wish to review employment contracts at their own peril. At best, employers are now saddled with the administrative initiative of carefully re-visiting existing employment contracts. At worst, employers may run the risk of committing lapses in their statutory duties.
Unpredictability abounds where an ambiguous employment relationship can cause a failure to give proper notice of termination or where an employer is unknowingly at risk of vicarious liability.[6] In contrast, provincially regulated employers within Ontario can breathe a sigh of relief since the Code and its amended provisions do not apply to them. There is no analogous presumption of employment section in the Employment Standards Act. While similar presumption of employment sections surfaced briefly in Ontario in late 2017 with Bill 148’s amendment of the Employment Standards Act, these were promptly repealed in November 21, 2018.[7] For now, Ontario is free from the uncertainty that ss 6.1 and 6.2 of the Code introduces to the workplace.
-AK
[1] Canada Labour Code, R.S.C., 1985, c. L-2. Ss. 6.1(1) and 6.2.
[2] Ibid., ss. 123.2(1) and 167.01(1).
[3] See Jordan Kirkness, “June 2024 brings many changes to federal employment laws.” (28 June 2024), online (blog) [https://www.nortonrosefulbright.com/en-ca/knowledge/publications/526fdec6/june-2024-brings-many-changes-to-federal-employment-law] and see Deborah Cushing “For Federally Regulated Employers New Changes to Canada Labour Code: Presumption of Employee Status and Disconnecting from Work Policy.” (12 July 2024), online (blog) [https://www.lawsonlundell.com/labour-and-employment-law-blog/for-federally-regulated-employers-new-changes-to-the-canada-labour-code-presumption-of-employee-status-and-disconnecting-from-work-policy#:~:text=The%20Code%20now%20includes%20a,some%20other%20type%20of%20relationship.]
[4] CED 4th, Employment Law (Ontario) “Independent Contractor” at § 10 (April 2024). Established tests referred to here include the control test, the fourfold entrepreneurial test, and the organization/integration test.
[5] Canada, Employment and Social Development. "Study on the Misclassification of Employees in the Trucking Industry." Employment and Social Development Canada, last modified September 5, 2024. Online: https://www.canada.ca/en/employment-social-development/corporate/portfolio/labour/programs/labour-standards/reports/misclassification-trucking.html [Accessed October 8, 2024].
[6] 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, 2001 CSC 59, 2001 CarswellOnt 3357. Case provides best illustration of vicarious liability within context of employee misclassification.
[7] See “Whose Burden Is It? The Yo-Yoing Responsibility of Proving Whether Someone Is An Employee or an Independent Contractor.” Online (blog) [https://www.debousquet.com/blog/2019/10/17/whose-burden-is-it-the-yo-yoing-responsibility-of-proving-whether-someone-is-an-employee-or-an-independent-contractor/#:~:text=Now%2C%20the%20'reverse%20onus',rather%20than%20an%20independent%20contractor.]
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