The Employment Standards Act (ESA) is an important piece of legislation that regulates employment in Ontario. The ESA is designed to safeguard workers’ rights and outlines the minimum standards for employment relationships, covering areas like wages, hours of work, and vacation entitlements.
It’s not always clear whether someone is considered an employee under the Act. Understanding the criteria is essential for both employers and workers because only employees are entitled to the protections set out in the ESA. Misinterpreting these classifications can lead to legal and financial consequences for employers and result in workers not receiving the benefits they’re entitled to.
Determining Employee Status
Whether an individual qualifies as an employee depends on the nature of their relationship with the business or person they are working for.
The ESA defines an “employee” as
An employee includes a person who:
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- performs work for an employer for wages
- supplies services to an employer for wages
- receives training from an employer, if the skill in which the person is being trained is a skill used by the employer’s employees
- is a homeworker
- was an employee
Trial Periods
On March 21, 2024, Ontario’s Bill 149, Working for Workers Four Act, 2024 was officially enacted, introducing several amendments to key employment legislation, including the ESA.
The definition was revised to specify that “training” in the definition of employee includes the performance of work by an employee during a “trial period.” Employees working during a trial period are now entitled to minimum standards under the ESA
Employment Conditions
An individual is likely to be considered an employee if several of the following conditions apply:
- The work performed is integral to the business’s operations.
- The business controls key aspects of the work, like:
- What tasks are performed.
- How much the individual is paid.
- When, where, and how the work is completed.
- The business supplies the tools, equipment, or materials needed for the job.
- The individual is not permitted to subcontract their work to others.
- The business has the authority to suspend, dismiss, or discipline the individual.
Who Isn’t Covered by the ESA?
The ESA does not apply to:
Independent Contractors
Independent contractors operate their own businesses and are generally not covered by the ESA. An individual may be classified as an independent contractor if several of the following conditions are met:
- The business can terminate the contract but cannot discipline the individual.
- The individual:
- Has the potential to earn a profit or incur a loss from the work.
- Controls how, when, and where the work is performed.
- Can subcontract portions of the work to others.
Volunteers
Volunteers are not employees under the ESA. However, the fact that someone is called a “volunteer” does not determine whether that person is an employee and entitled to the protections of the ESA.
The main factors that determine whether someone is a volunteer or an employee are how much:
- the business (or person) benefits from the individual’s services
- the individual views the arrangement as being in pursuit of a living
The fact that no wages were paid does not necessarily mean that someone is a volunteer. The fact that there was some form of payment does not necessarily mean someone is an employee.
Co-op Students
The ESA does not apply to an individual who performs work that is under a program approved by a:
- college of applied arts and technology or a university
- career college registered under the Ontario Career Colleges Act, 2005
It also does not apply to secondary school students who perform work under a work experience program that is authorized by their school board.
Federally Regulated Employees
Employees in federally regulated industries aren’t covered under the ESA. This means that people who work in areas like airlines, banks, shipping, radio or TV, or interprovincial bus lines and railways, are not governed by the Employment Standards Act—instead, federal laws like the Canada Labour Code apply.
Other industries and jobs are not covered under the ESA include:
- police officers (except for the lie detectors provisions of the ESA, which do apply)
- people who hold political, judicial, religious or elected trade union offices
Employment Standards Across Canada
All Canadian provinces and territories have their own employment standards legislation that outlines the minimum rights and responsibilities of employers and employees. Each jurisdiction sets out its own rules regarding minimum wage, hours of work, overtime, vacation, and other employment conditions, although many of the core principles are similar.
While the Canada Labour Code governs employment standards for federally regulated industries, most workers in Canada fall under provincial or territorial jurisdiction.
Federal (for federally regulated employees): Canada Labour Code
Provinces
Alberta: Employment Standards Code
British Columbia: Employment Standards Act
Manitoba: The Employment Standards Code
New Brunswick: Employment Standards Act
Newfoundland and Labrador: Labour Standards Act
Nova Scotia: Labour Standards Code
Ontario: Employment Standards Act, 2000
Prince Edward Island: Employment Standards Act
Quebec: An Act Respecting Labour Standards
Saskatchewan: The Saskatchewan Employment Act
Territories
Northwest Territories: Employment Standards Act
Nunavut: Labour Standards Act
Yukon: Employment Standards Act
Need help navigating Canadian employment regulations? We can help you understand your rights and responsibilities. Contact us today to ensure your organization is protected.
