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Professor Hugh Collins (Oxford) on Redefining Worker Status in Employment Law

Presently, most statutes designed to protect workers apply only to “employees” engaged pursuit to a traditional “employment contract”.

Professor Hugh Collins (Oxford University)

Professor Hugh Collins (Oxford University)

The same is true for most common law protections, such the implied obligation to receive “reasonable notice” of termination of the employment contract, although in recent years Canadian courts have extended the entitlement to notice of termination to “dependent contractors”, workers who in some ways look like independent contractors in business for themselves but who are dependent on a single business for all their work.

The idea that worker protections should be tied to “employment status” dates from the 20th century, when employment law focused on the “standard employment model” (SEM).  The SEM involved relatively long-term employment characterized by stable full time hours, decent pay and benefits, pension plans, and usually deferred compensation systems in which the expectation was that pay and benefits (including for example vacation time) would increase with seniority.   The SEM primarily benefited working men, especially professionals and unionized workers, and employment standards and other employment protection statutes evolved over time to provide basic “minimum” protections for employees, especially those who worked under arrangements other than the SEM, including in jobs that were nonunion and characterized by low pay, variable hours, few benefits, and little job security.

Professor Hugh Collins:   “The concept of employment that was useful in the middle of the twentieth century is now outdated and hard to apply to the various kinds of networks and precarious arrangements through which work is performed. Furthermore, limiting employment protection rights to employees has proved to be an invitation to employers to engage in sham contracts by which they manipulate the terms to present the appearance that the worker is an independent contractor, albeit one that works full-time and only for that particular employer.”

The challenge today is that fewer and fewer people are employed under the SEM model. As I write on page 26 of the The Law of Work text: “Nearly 40 percent of Canadians today work under other types of work arrangements, including precarious part-time or temporary work, or as own account self-employed workers, many of whom struggle to earn enough to live“.  Ccademics and policy makers have for years been debating how employment law should evolve to extend worker protections beyond the SEM to a wider definition of worker that includes “gig” workers and other arrangements in which a worker has some independence and yet remains vulnerable and precarious.

Professor Hugh Collins (now at Oxford) who supervised me at LSE has recently published an interesting  contribution to this debate on the excellent new UK Labour Law Blog entitled “A Missed Opportunity of a United Test for Employment Status“.   Here is the text.   As you read it, think about the extent to which Professor Collins arguments apply to Canadian law as well.

Over the summer the government is contemplating what it should do about the thorniest issue in employment law: employment status. The concept of ‘employment status’ refers to the type of contractual arrangement that a worker must have in order to qualify for employment rights. The government commissioned the independent report, Good Work: The Taylor Review of Working Practices (July 2017). The report concluded, in brief, that the current tripartite division of employment status into independent contractors, employees, and workers functions reasonably well in most cases, but there was so much uncertainty about how the legal tests should apply in borderline cases, especially those provoked by new platform technologies, that the government should consider legislation to clarify the legal tests. Having broadly accepted the recommendations of the Taylor Review, the Department for Business, Energy & Industrial Strategy (BEIS), HM Treasury, and HM Revenue & Customs (HMRC) together launched an Employment Status Consultation in February 2018. The consultation document indicates that the government plans to give greater clarity and certainty to tests of employment status by more detailed legislation that attempts to codify the criteria developed by the courts. Indeed, it is hard to imagine that we cannot improve on the definition of the employment status in the Employment Rights Act 1996 s. 230, which, with a degree of obfuscation worthy of a prime minister, proclaims in effect that ‘Employment means Employment’….

[Continue reading on the UK Labour Law blog...]

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One Response to Professor Hugh Collins (Oxford) on Redefining Worker Status in Employment Law

  1. John O'Grady Reply

    August 7, 2018 at 1:53 pm

    Employment status is especially complex (i.e., ambiguous) in the construction industry. Roughly one quarter of construction workers are nominally self-employed. Of these, 40% also employ helpers, while 60% work on their own account. In construction, a worker can shift between these categories. Many, although not all, self-employed workers are dependent contractors. Their engagement is styled as a common law ‘contract for services’. However, in all relevant respects, their working conditions are those of an employee: hours are specified, materials are provided, major equipment is provided and the worker typically is engaged only by a single employer. Particularly relevant now is the ‘integration test’ as one of the criteria defining a dependent contractor. The Supreme Court added this test in the Sagaz case which CRA now follows when determining a worker’s status.
    There are multiple incentives for a construction employer to engage in the subterfuge of styling employees as contractors: (1) avoiding contributions for EI and CPP and workers’ compensation, (2) avoiding ESA obligations for overtime, holiday and vacation pay, and (3) arguably (though disputably) diminishing responsibility under the Occupational Health and Safety Act. For workers, the incentive is to avoid CRA source deductions and to have the opportunity to under-report income. This, not cash payments, is the dominant form of underground employment in the construction industry.
    There is ambiguity and contradiction in the legal treatment of employment status. In Ontario, a worker may be deemed an ‘independent operator’ (i.e., self-employed) under the Workplace Safety and Insurance Act, but nevertheless treated as an employee under the Labour Relations Act. In fact, this anomalous treatment is widespread in low-rise residential construction.
    The principal weaknesses of applying the common law tests are: (1) the tests must be applied on a case-by-case basis which is cumbersome, costly and effectively an impediment to remedy, and (2) an employer can easily create a misleading ‘paper trail’ that requires detailed investigation to establish the actually reality of the relationship. For unincorporated workers, a possible solution is a legal presumption of employee, rather than contractor, status unless CRA accepts an application. In the UK, independent contractors are subject to source deductions which largely removes the incentive for workers to collaborate in the subterfuge of styling employees as contractors. A similar model could be applied in Canada.

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