Court of Appeal for Ontario says company founder, shareholder and independent contractor was employee
n Pringle v. Zenova Group PLC, the Court of Appeal for Ontario held that a company founder, shareholder, and independent contractor was, in substance, an employee under the Employment Standards Act, 2000 (ESA).
As a result, the court declared the employment agreement's exclusive English forum selection clause void and permitted the wrongful dismissal action to proceed in Ontario.
In 2018, the appellant, together with two others, co-founded a fire-safety business. When the company sought outside investment, it wanted to demonstrate that it had an established management team under contract. In 2021, the appellant was offered the role of director of product development at 80,000 per year and elected to be retained as an independent contractor for tax purposes.
The parties signed a three-year “Product Development Consultant Contract for Services.” The appellant worked full-time from Ontario. In September 2022, the respondents terminated the agreement for alleged cause. The appellant sued in Ontario for wrongful dismissal. The respondents moved to stay the action, relying on a clause giving exclusive jurisdiction to the English and Welsh courts.
Applying the five Belton factors, the motion judge concluded the appellant was an independent contractor. She treated his founder and shareholder status as highly relevant to a risk of loss or an expectation of profit and gave...
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