The Gig Economy and Employment Law: Why Reviewing Contracts Matters

In recent years, the gig economy has become a significant part of Canada’s workforce. According to Statistics Canada, in the fourth quarter of 2022, approximately 2.4 million people engaged in some form of gig work over the previous 12 months. Of these, 624,000 were self-employed workers whose main job had characteristics of gig work, and 247,000 were employees in similar situations.

One of the most crucial distinctions for both employers and workers is understanding the nature of these relationships. For instance, in the third quarter of 2022, one million self-employed individuals relied on a single business relationship for at least half of their commercial activity. Even more telling, 588,000 of these workers had limited control over essential aspects of their work, such as their schedule, access to tools, or pricing.

From an employment law perspective, these workers may be considered dependent contractors rather than independent contractors. This distinction is critical because dependent contractors can be entitled to many of the same rights and benefits as employees, including up to 24 months of severance pay upon termination.

For employers, this underscores the importance of carefully drafting employment contracts and consulting with an employment lawyer before engaging in these relationships. Without proper legal guidance, an employer who believes they have hired an independent contractor could find themselves facing significant financial liabilities if the relationship ends.

For workers, understanding your status and rights is equally important. If you’re working as a contractor but have limited control over your work, you may have significant entitlements that you might not be aware of. Consulting with an employment lawyer can help you determine if you are, in fact, a dependent contractor and ensure that you do not miss out on entitlements that could amount to many months of severance pay.

In the evolving landscape of gig work, it’s crucial for both employers and workers to stay informed and seek legal advice when needed. Whether you’re drafting contracts or considering your rights as a worker, understanding the fine line between independent and dependent contracting can make all the difference.

Employment Lawyer - Contract Review