Bill 88, the Working for Workers Act, 2022 came into force on April 11, 2022. It amended the Employment Standards Act, 2000 (“ESA”) to introduce exceptions to the application of the ESA to business consultants and information technology consultants, effective January 1, 2023.
A “business consultant” is defined as “an individual who provides advice or services to a business or organization in respect of its performance, including advice or services in respect of the operations, profitability, management, structure, processes, finances, accounting, procurements, human resources, environmental impacts, marketing, risk management, compliance or strategy of the business or organization.”
An “information technology consultant” is defined as “an individual who provides advice or services to a business or organization in respect of its information technology systems, including advice about or services in respect of planning, designing, analyzing, documenting, configuring, developing, testing and installing the business or organization’s information technology systems.”
The ESA does not apply to these consultants if the following requirements are met:
- The business consultant or information technology consultant provides services through:
i. A corporation of which the consultant is either a director or a shareholder who is a party to a unanimous shareholder agreement; or
ii. A sole proprietorship of which the consultant is the sole proprietor, if the services are provided under a business name of the sole proprietorship that is registered under the Business Names Act.
- There is an agreement for the consultant’s services that sets out when the consultant will be paid and the amount the consultant will be paid, which must be equal to or greater than $60 per hour, excluding bonuses, commissions, expenses, travelling allowances and benefits, or such other amount as may be prescribed, and must be expressed as an hourly rate.
- The consultant is paid the amount set out in the agreement as required above.
- Such other requirements as may be prescribed.
In Our View
The Ministry of Labour has updated its online document, Your Guide to the Employment Standards Act (the “Guide”), with respect to business and information technology consultants. While the Guide is not law, it does provide insight as to how the Ministry interprets the legislation. The Guide states the following about the application of the new exception:
This exception applies to individuals who would otherwise be covered by the ESA and does not affect whether someone meets the definition of “employee” under the ESA. For example, where the individual is an independent contractor, the ESA does not apply, and the consultant exception is not relevant. See the Employee Status chapter of this guide for more information about determining who is an employee.
In light of these changes and the Ministry’s guidance, employers are encouraged to review existing arrangements with individuals currently considered to be consultants or independent contractors. Employers should determine their status under the ESA and whether such status is impacted by these new amendments.
In doing so, employers may wish to take a two-step approach to those who meet the business or information technology consultant definitions. Firstly, employers should determine whether the ESA would otherwise apply to the individual. In other words, is this a true independent contractor arrangement or would the consultant be an employee for the purposes of the ESA? If the ESA would apply, employers should then determine whether the four requirements are met to exclude the individual from the application of the ESA.
Employers should keep these provisions in mind in order to appropriately structure future consultant or independent contractor arrangements.
Employers should also consider that these ESA amendments may not conclusively determine employment status for business or information technology consultants in other contexts, such as at common law. For example, it remains to be seen how these ESA amendments may impact a court’s determination of whether such an individual is an employee, a dependent contractor, or an independent contractor.
Employers with questions about existing or new consultant or independent contractor arrangements are encouraged to seek legal advice about the impact of these changes.