For both employers and workers, understanding the true nature of a working relationship—and the enforceable limits of an employment or contractor agreement—is critical. A recent decision from the Supreme Court of British Columbia, Salina v. Investors Group Financial Services Inc.1, serves as an important reminder that simply labeling a worker as an “independent contractor” will not shield a company from common law notice obligations if this does not reflect the reality of the relationship. Importantly, this case also makes it clear that a termination clause which attempts to provide “zero notice” to a dependent contractor may fail to properly rebut the presumption of reasonable notice.
Background
The plaintiff, Sergio Salina, worked as an investment consultant for Investors Group Financial Services Inc. (“Investors Group“) for 27 years. His working relationship was governed by a Consultant’s Agreement which explicitly stated that he was an independent contractor and not an employee.
The agreement included a termination clause that allowed either party to terminate the contract “with or without cause and with or without notice or any compensation in lieu of notice”.
On May 23, 2018, Investors Group terminated Mr. Salina’s contract. Mr. Salina subsequently brought a claim for wrongful dismissal, arguing that he was owed damages representing a common law reasonable notice period. Investors Group maintained that even if he was entitled to notice, the termination provision was enforceable and permitted them to terminate him with zero notice.
The Decision
The Court was tasked with determining, among other things, the true nature of Mr. Salina’s employment status and whether the termination provision could be relied upon to deny him a notice period.
Employee, Dependent Contractor or Independent Contractor?
Despite the contract explicitly labeling Mr. Salina as an independent contractor, the Court looked past the label to examine the functional realities of the relationship. The Court found that while some factors suggested that Mr. Salina was an independent contractor (in particular the parties’ mutual intention and how the relationship was characterized for tax purposes), there were also many factors that weighed in favour of finding that he was an employee. The Court focused on the fact that Investors Group:
- exercised a substantial degree of control over Mr. Salina’s day-to-day activities,
- heavily restricted what products he could sell, and
- deeply integrated his activities into their business.
Consequently, the Court found that the relationship fell “between that of an employee and an independent contractor”, and determined that he was a dependent contractor. As a result, in the absence of just cause or an enforceable termination clause that said otherwise, Mr. Salina was entitled to reasonable notice on dismissal.
Was the Termination Clause Enforceable?
As our readers will know, many termination clauses fail because they do not properly account for the minimum requirements of the applicable employment standards legislation. As a dependent contractor, the British Columbia Employment Standards Act2 did not apply to Mr. Salina and there was no statutory minimum notice required. However, the clause still had to clearly rebut the presumption at common law that the contract was terminable only on reasonable notice by specifying “some other period of notice” that was required.
Mr. Salina argued that the termination provision failed to do this as no “other period of notice” was specified. Investors Group argued that the termination provision clearly specified some other period of notice – namely, zero notice.
The Court agreed with Mr. Salina, finding that “no notice” or “zero notice” is fundamentally incompatible with the concept of “some other period of notice” or a “shorter period of notice”, which implies that some amount of time must be provided. In this case, because Mr. Salina was not entitled to statutory notice under the Employment Standards Act, the Court noted this could have been “any amount of time, even one day.” Since the termination provision did not clearly specify any other period of notice, the Court found that it did not rebut the common law presumption of reasonable notice.
Interestingly, the Court noted that it would not have enforced the termination provision in any event because it was ambiguous. The phrasing “with or without notice” meant that Mr. Salina might receive notice or he might not. To be sufficiently clear and unambiguous to strip a worker of their common law rights, the Court noted that the provision would have needed to state definitively that Mr. Salina was not entitled to any notice upon termination.
Key Takeaways
There are several important takeaways from this decision for both employers and workers.
Labels in a contract do not dictate the legal reality of a working relationship.
Courts will look at the practical reality of the relationship to determine its true nature. If the employer exercises significant control over the worker and integrates them into the business, a court is likely to find they are a dependent contractor, or employee, entitled to reasonable notice.
Drafting enforceable termination clauses remains a highly technical exercise.
Employers cannot rely on vague language if their intention is to limit a worker’s entitlements entirely. Furthermore, attempting to contract for “zero notice” to bypass common law obligations is an inherently risky strategy that courts may reject outright.
Employers must ensure their employment and contractor agreements are well drafted and regularly reviewed to keep pace with changing judicial interpretations. Conversely, dependent contractors and employees should never assume a termination clause is valid simply because they signed it; it is always in a worker’s best interest to have their contract and severance package reviewed by legal counsel before accepting an employer’s initial offer (or lack thereof).
We frequently work with both employers and employees to draft, negotiate, and review employment and contractor agreements. If you are an employer looking to update your termination clauses, or a worker who has been presented with a new contract or who wants to understand your severance entitlements, we can help—contact us today.
Endnotes
- Salina v Investors Group Financial Services Inc., 2026 BCSC 1168 (CanLII), <https://canlii.ca/t/klp4r>
- Employment Standards Act, RSBC 1996, c 113 <https://canlii.ca/t/56ph8>
The post Case Law Update: “Zero Notice” Termination Clause for Dependent Contractor Unenforceable appeared first on Rudner Law – Employment Lawyers.