By Barry W. Kwasniewski and Martin U. Wissmath

The Ontario Labour Relations Board (the “Board”) has ruled that a chef working at a restaurant was an employee under the Employment Standards Act, 2000 (“ESA”) and entitled to termination pay, vacation pay, and public holiday pay, despite the restaurant’s claim that he was an independent contractor. The January 13, 2025 decision in 11541722 Canada Inc. v. Jcyk Josefsberg, highlights the legal and financial risks of worker misclassification, an issue of particular relevance to Ontario charities and not-for-profits that rely on flexible staffing arrangements.

The applicant, 11541722 Canada Inc. (the “Employer”), operated a restaurant where Jcyk Josefsberg (the “Employee”) worked as a chef. Following his termination on July 17, 2023, the Employee filed a complaint under the ESA, claiming that he was entitled to termination pay and other statutory payments. The Employer argued that the Employee was an independent contractor, pointing to the lack of a written employment contract and the fact that he was paid by e-transfer without statutory deductions.

The Board applied the established test for distinguishing between employees and independent contractors, focusing on factors, such as control, financial risk, and economic dependence. The Employee testified that he never considered himself an independent contractor, did not invoice the Employer, did not have an HST number, and was under the Employer’s direct supervision. The Board found that the Employee did not exhibit the “hallmarks of being in business of his own account,” noting that he had no financial risk, no control over business operations, and no ability to subcontract his work.

While the Employee played a role in menu development, promotions, and staff training, the Board found that these activities were consistent with a managerial employee rather than an independent contractor. It stated as the owner, the Employer “clearly had ultimate authority respecting the operations of the Company and relied upon [the Employee’s] input as one would rely upon an employee who occupied the role of supervisor or manager.”

The Employer also claimed that the Employee was dismissed for cause due to alleged workplace misconduct, citing complaints about his behaviour toward customers and financial irregularities. Witnesses alleged that the Employee pocketed cash payments from customers instead of processing them through the restaurant’s payment system, refused to accept debit or credit card transactions, and provided free meals to acquaintances without authorization. The Employer further alleged that the Employee used restaurant funds for personal expenses, including a payment that was allegedly used to purchase car tires.

However, the Board found that the Employer failed to substantiate these allegations with credible evidence or a record of progressive discipline. The decision noted that the Employer “could not resist the tug of self-interest,” and that there was no clear evidence linking the alleged misconduct to the Employee’s termination. “It cannot be said that [the Employee] committed some culminating incident which justified his employment termination,” the Board concluded, “or that he engaged in any one incident which justified his summary dismissal.”

The Board affirmed that the Employee was entitled to ESA protections and awarded $10,898.80 in termination pay, public holiday pay, and vacation pay.

For charities and not-for-profits, this decision serves as a reminder that independent contractor relationships must reflect genuine independence in practice, and meet the legal tests established by law. Organizations that misclassify workers may face significant financial liability and legal consequences.

​Read the March 2025 Charity & NFP Law Update