Labour Standards

It should be pointed out that this definition is much broader than that found in the Labour Code; it therefore encompasses a very large number of workers. More specifically, even managerial personnel are considered to be employees within the meaning of the Act.

The definition of the word "employee" includes two major elements. The first establishes that an employee is a person who carries out work for an employer and who is entitled to a wage; this is a contract between a natural person who hires out his services and another person (natural or legal) who accepts such hiring of services in consideration of pay. One notes in this relationship the presence of the following elements: existence of a position of authority, establishment of a work context, economic dependence related to the source of income (legal subordination). The contract may be written or verbal. This is the understanding of a classic employee.

There cannot be a contract of employment without consideration, a remuneration that the employer undertakes to pay. In this sense, the contract of employment differs from voluntary work. Moreover, the Act respecting labour standards does not deny the existence of voluntary work. This point is dealt with at greater length in the interpretation of section 40 ALS.

Jurisprudence has established that commissions are a method of remuneration that falls within the framework of the definition of wages within the meaning of the Act respecting labour standards and that the effect of this method of remuneration is not to exclude a worker thus paid from the definition of employee.

The second part of the definition refers to the worker who is party to a contract of employment including the elements listed in subparagraphs i, ii, iii, namely a person who presents the degree of autonomy of a dependent contractor. A dependent contractor is someone who, although benefiting from a legal subordination that is not as close as that of a classic employee, remains closely linked to an employer in that he is directly dependent economically on the employer.

To determine whether or not we are in the presence of an employee, we must see if the contract in question is a contract of employment or a contract for services. A contract of employment must include elements of hire of services and pay agreed upon, whereas a contract for services is mainly identified by its independent nature regarding the performance of the work and by the notions of profits and losses in the performance of the contract. In fact, in order for there to be a contract for services, there must be no legal subordination relationship within the meaning of the aforementioned elements.

When the conditions of the contract of employment (verbal or written) are such that a worker can incur financial losses or make profits, the application of the notion of profits and losses elaborated by the jurisprudence becomes decisive. Indeed, if the financial risk for the worker is real, he is a self-employed worker and, from that point on, is not subject to the Act. 

A worker may benefit from the advantages of certain laws (income tax) as a self-employed worker or otherwise and be considered an employee under the Act respecting labour standards.

Employee who is incorporated or having registered a business name
To determine the status of a worker who incorporates or who registers a business name, certain additional criteria specific to this situation will have to be taken into account:

• Did the employer make this approach obligatory?
• What benefit does the employer obtain from this?
• What benefit does the employee obtain from this?
• To what end is this status useful for the worker?
• Was the worker aware of the implications of incorporation or the registration of the business name?
• Did all workers of the enterprise proceed in like manner?

The Court of Appeal has had to rule on this question on a few occasions, in particular in the following cases:

• Dazé vs. Messageries dynamiques D.T.E. 90T-538 (C.A.)
• Lalande vs. Provigo Distribution inc. D.T.E. 98T-1059 (C.A.)
• Leduc vs. Habitabec inc. D.T.E. 94T-1240 (C.A.)
• Services financiers F.B.N. inc. v. Chaumont, [2003] R.J.D.T. 17 (C.A.)

Since May 1, 2003 section 86.1 ALS has stipulated that an employee is entitled to retain the status of employee where the changes made by the employer to the mode of operation of the enterprise do not change that status into that of a contractor without employee status (see the interpretation of section 86.1 ALS on this subject).