An Ontario engineer who was described as an “employee” in letters prepared for U.S. immigration purposes has lost his claim for termination pay after the Ontario Labour Relations Board found that he was an independent contractor.
The Fiyinfolu Tokode v. S&T Automation Controls Ltd. decision, released on August 17, 2026, shows how an employee vs. independent contractor dispute in Ontario is decided when the paperwork and the real working relationship point in different directions. A title used in a letter or agreement can be relevant, but it does not settle the question.
The distinction has real financial consequences. Employees covered by Ontario’s Employment Standards Act (ESA) can have rights to minimum wage, overtime, vacation pay, public holidays and notice of termination or termination pay. Independent contractors generally do not receive those protections under the ESA.
The worker invoiced through his own corporation
Tokode began providing engineering services to S&T Automation Controls in 2021. According to Canadian HR Reporter’s September 11 report on the decision, he was paid $51 an hour. His corporation invoiced S&T monthly and charged HST and expenses.
The arrangement did not begin with a written agreement defining him as either an employee or an independent contractor. When the working relationship ended in December 2023, Tokode pursued termination pay.
Before the board could decide whether the end of the relationship entitled him to termination pay, it first had to answer a more fundamental question: was he an employee covered by the ESA?
The board concluded that he was not.
The company’s own letters called him an employee
There was evidence that appeared to point in the other direction. Letters prepared for U.S. border and immigration purposes described Tokode as an employee.
The board did not treat those letters as decisive. It accepted that the employee wording had been used to help facilitate the U.S. work authorization he needed, then considered the broader relationship.
In assessing that relationship, the board applied the approach established by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. Factors including Tokode’s ability to take other clients, his corporation’s invoicing arrangement and the way the work was organized supported independent contractor status.
Ontario’s Employment Standards Act policy manual describes the same underlying principle. There is no single universal test. The central question is whether the person providing the services is operating a business on their own account, and the entire relationship must be considered.
Because the board found Tokode to have been an independent contractor, his ESA termination claim failed. It did not need to determine whether the December 2023 events would otherwise have constituted a termination under the ESA.
A contract saying “independent contractor” does not settle it either
The lesson works in both directions.
Being described as an employee did not make Tokode an employee. Putting “independent contractor” into an agreement does not automatically make someone a contractor either.
Ontario’s official employee status guidance says that status depends on the relationship between the individual and the business. Someone can potentially be an employee even when both sides have agreed, verbally or in writing, that the person is an independent contractor.
Ontario gives a straightforward example. A customer service representative works Monday to Friday from 9 a.m. to 5 p.m. at the company’s office. She uses company computers and phones, receives an hourly wage and can be disciplined for poor performance. Her agreement nevertheless says she is an independent contractor and therefore does not receive overtime, vacation or public holiday pay.
In Ontario’s example, an employment standards officer determines that she is an employee. The label in the contract does not override the reality of the relationship.
How Ontario distinguishes an employee from an independent contractor
There is no checklist where passing three out of five questions automatically makes someone a contractor. The overall relationship has to be considered.
Ontario says factors that can point toward employee status include the business deciding:
- what work the individual performs
- how much the individual is paid
- where and when the work is done
- whether the individual can subcontract the work
- whether the individual can be disciplined or dismissed
The business providing the worker’s tools and equipment can also point toward employment.
Independent contractors look more like people operating businesses of their own. They may decide how, when or where the work is performed, have the ability to subcontract work, face a genuine risk of losing money and have an opportunity to increase their profit.
The Supreme Court framework discussed in Ontario’s policy manual also considers control, ownership of equipment, use of helpers, financial risk, investment and management responsibility, and opportunity for profit. No individual factor is conclusive.
That is why two people who both call themselves contractors can end up with different legal classifications.
Charging HST does not automatically make you a contractor
This distinction is particularly relevant for workers who invoice companies instead of receiving regular payroll deposits.
Ontario identifies several common misconceptions. A person can potentially still be an employee even if they:
- charge HST
- submit invoices
- use their own vehicle
- have agreed to be called an independent contractor
- have no income tax, Canada Pension Plan (CPP) or Employment Insurance (EI) deductions taken from their payments
Incorporation does not automatically answer the question either. Ontario’s policy manual says that when someone incorporates and provides their own services through that corporation, incorporation by itself does not prevent that person from being found to be an employee for ESA purposes.
That makes the Tokode decision particularly useful. His corporation, invoicing and HST were relevant facts, but the board did not apply a simple rule that “incorporated equals contractor.” It considered the relationship as a whole.
Why employee status can be worth real money
For someone who is genuinely an independent contractor, many of the minimum protections available to an employee under the ESA do not apply.
Ontario lists potential employee entitlements including minimum wage, overtime pay, public holiday entitlements, vacation with pay and notice of termination or termination pay. PaycheckGuru’s vacation pay guide explains how the minimum entitlement varies across Canada.
Consider vacation pay alone. An employee covered by the ESA generally earns minimum vacation pay based on wages. A genuine independent contractor does not receive an ESA vacation pay entitlement simply because they perform work for the same company for years.
The same basic distinction applies to ESA overtime and termination protections.
That does not mean contractors have no rights when a business relationship ends. Their rights may depend on their services agreement, whether another legal classification such as dependent contractor applies, and other applicable law. It does mean they cannot assume the ESA’s employee protections apply.
Businesses cannot simply choose the cheaper classification. Ontario’s ESA prohibits an employer from treating someone who is actually an employee as though that person were not an employee. Misclassification can lead to enforcement action.
Employment status for tax purposes is a separate question
This Ontario decision concerns whether a worker was an employee for purposes of the Ontario Employment Standards Act. That is not necessarily the same determination made for income tax, CPP or EI purposes.
Ontario notes that a person could potentially be considered an employee under the ESA even if another government agency, such as the Canada Revenue Agency (CRA), reaches a different conclusion under the legislation it administers.
The CRA uses its own process to decide whether a worker is an employee or self-employed for CPP and EI purposes. Its Employee or Self-employed guide explains the factors it considers and how either party can request a CPP/EI ruling.
The tax consequences can also be substantially different. Employees generally have income tax, CPP contributions and EI premiums withheld through payroll. Self-employed individuals generally handle their own income tax obligations and pay both portions of CPP contributions on applicable self-employment earnings.
Those tax differences should not be used as a shortcut for deciding whether someone is legally an employee under Ontario employment standards legislation.
What to check if you are called an independent contractor
Start with what happens in practice rather than the heading on your contract.
Consider who decides when and where you work. Look at whether you can genuinely take other clients, negotiate your rates, hire someone else to perform the work and decide how the job gets done.
Then look at the business side of the arrangement. Do you invest in equipment? Can better decisions increase your profit? Can a job leave you with a financial loss? Are you building an independent business with multiple customers, or are you effectively working as part of one company’s operation?
No single answer decides the issue.
Ontario’s Employment Standards Information Centre can provide general information about employee status, although the ministry cannot provide individual legal advice. A worker or business facing a significant claim should consider advice from an Ontario employment lawyer.
The new ruling reinforces an existing rule
The Tokode decision does not introduce a new Ontario contractor test. Its value is in showing how the existing test works when the paperwork and the working relationship point in different directions.
Letters describing the engineer as an employee were not enough to establish employee status when the board concluded that the substance of the relationship showed he was operating as an independent contractor.
The opposite can also happen. Someone who invoices a company, charges HST and has signed an independent contractor agreement can still potentially be an employee if the underlying relationship supports that conclusion.
For workers and businesses, the most useful question is not simply, “What does the contract call me?”
It is, “How does this working relationship operate in practice?”
The answer can determine whether vacation pay, overtime and termination entitlements are potentially at stake.
Sources: Fiyinfolu Tokode v. S&T Automation Controls Ltd., 2026 CanLII 92961 (ON LRB); Ontario Ministry of Labour, Immigration, Training and Skills Development, Employee status; Ontario Employment Standards Act Policy and Interpretation Manual; Canada Revenue Agency, Employee or Self-employed; Canadian HR Reporter coverage published September 11, 2026. Sources verified September 13, 2026.