Contractors May Be Entitled to Reasonable Notice of Termination


Khan v. All-Can Express Ltd., 2014 BCSC 1429

By Naomi Rozenberg, Associate
Phone: 604-685-3911

A recent BC Supreme Court decision confirms that contractors who are in an economically dependent relationship are entitled to reasonable notice of termination or pay in lieu of notice.

Khan v. All-Can Express Ltd., 2014 BCSC 1429 involved a company in the business of transporting freight and parcels known as Ace Courier. The majority of courier drivers, including Mr. Khan, own or lease their own trucks. Ace Courier “hires” the drivers to service customers on a particular route.

The typical “owner/operator” driver has a long-term, exclusive contractual relationship with Ace Courier. He is expected to be loyal to Ace and follows Ace’s policies. He wears an Ace uniform and displays the Ace logo on his truck. On the other hand, the driver signs an agreement acknowledging his status as an independent contractor. He is responsible for his truck and all related expenses. He must hire a replacement driver when he was not available. He does not participate in employee benefits or receives vacation pay. The driver also files his income taxes as a self-employed contractor.

One such owner/operate driver, Mr. Khan, was terminated without just cause after 5 years of service. Based on the above factors, the Court concluded that Mr. Khan was a “dependent contractor”. He was awarded 4 months’ notice of termination.

This case demonstrates that the common law has evolved into a more nuanced state, where service arrangements, depending upon their particular features, can fall at different points along a continuum, ranging from pure employer-employee situations to classic independent contractor relationships. The fact that an agreement stipulates that the service provider is an independent contractor is not determinative and does not mean that he can be terminated without just cause or reasonable notice.

This case reminds employers to include a termination clause in all service agreements and to give both employees and contractors a reasonable opportunity to obtain legal advice prior to entering into any such agreement.

Posted:  2015

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied on upon without independent legal advice.