an image of Santa's independent contractor or elf with arms raised to shoulder level indicating confusion

Santa has been working hard lately making toys for all the children around the world. Because of an unexpected increase in demand, however, as well as some supply disruption due to trade disputes, his team of elves hasn’t been able to make enough toys this year for all the children on his list. The elves are currently working around the clock, but Santa knows they cannot meet the demand in time for Christmas.

Faced with this unfortunate situation – and a deadline quickly looming – he turns on his Windows 95 PC (Santa doesn’t use technology very often), opens up his Netscape internet browser, and begins to type into the yahoo search bar “help making toys”.

3 search results pop up:

  1. Ingleton’s Elf Workshop
  2. Sam’s Gift Productions
  3. Terry’s Tailored Toys

The first two companies Santa calls are completely booked up for the holiday season, and he anxiously places a call to Terry’s Tailored Toys. What luck! Terry has no work planned for the entire holiday season and can contribute 100% of his time to Santa’s toy-making endeavours. Terry is a sole proprietor of the business and is eager to help with Santa’s needs.

Santa – overjoyed – sits down at his workshop table, pulls out his carbonless contract forms and begins setting out the details:

  • Work for 500 toys must be completed by December 24th, 10AM

Santa is a man of few words.

On December 18th, he meets with Terry and they sign the contract. Terry explains that, while he does have his own toy-making tools, they are rusty from misuse and his drill press and table saw have both broken down. Terry explains that there was no hope of getting them repaired in time for use on this project. Due to the time crunch, Santa advises Terry that he can do his work in the workshop using Santa’s tools. He provides Terry with a spare elf outfit and sets him up at an empty table in the workshop, alongside the other elves.

Santa, being the perfectionist he is, then starts watching Terry build a wooden train for littleTimmy of Prince George, BC. Although the building technique is acceptable, Santa notices a few ways that Terry could improve and make Timmy’s train even better. Santa gives Terry access to the elf toy-making video created for onboarding new elves, and Terry picks up a few new tips to improve his technique.

On December 24th, Terry completes the work agreed upon in the contract, and Santa’s deliveries go off without a hitch.

Santa, pleased with Terry’s work and cognizant of the advancing age of nearly 50% of his current elf team, extends Terry’s contract to February 14th to better prepare for next year. The contract amendment for the extension converts the contract to an ‘evergreen’ arrangement that can be continually renewed by Santa, as need dictates.

Due to some unfortunate shenanigans at the annual New Year’s Eve North Pole Bash Santa decides to terminate Terry’s contract and begin a major elf recruitment initiative, to ramp up capacity for next year.

Terry is shocked by the contract termination and is now claiming severance and benefits for the time he worked for Santa. In Terry’s view, he is clearly an employee of Santa’s Workshop Inc. and has been improperly terminated. If Santa doesn’t meet his demands, Terry threatens go to CRA for ruling.

What do you think? Is Terry an employee elf, or an independent contractor? You Be the Judge.

Let us know what you think in the comments below!

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.

Employee Vs. Independent Contractor Checklist

If you’re not 100% sure what the answer is, feel free to use the employee vs independent contractor checklist below to help determine your answer.

This important topic is explored in greater detail in our PSPP 201 Planning course starting January 13th, 2020, and will help you determine the actual status of the relationships you have with your independent contractors.

Reveal Checklist for Employee vs. Independent Contractor Relationship
  • Is the position permanent?

  • Does the person receive benefits in addition to money from the company?

  • Is the person required to wear a company uniform?

  • Does the person use a company vehicle?

  • Does the person have any tools, business cards, equipment, etc. provided by the company?

  • Does the company insure the person?

  • Does the company control the manner, method, time and location of the person’s operations?

  • Does the company coordinate or supervise the person’s work?

  • Are fees set by the company?

  • Can the person only or primarily work for the company?

  • Does the company arrange for a substitute if the person is ill/unable to work?

  • Does the company control the hiring of the person’s employees?

  • Is a substantial amount of timer per week devoted to working for the company?

  • Does the company have to be informed of any other job the person might do?

  • Does the company have to consent to the work being subcontracted?

  • Does the company control/set the person’s hours of work?

  • Does the person perform the same work as employees of the company?

  • Does the company have disciplinary powers over the person (e.g. for bad performance, absenteeism, etc.)?

  • Does the company reimburse for expenses?

  • Is there no chance of profit or risk of loss?

  • Is the person’s activity part of regular company activities?

  • Is the person an individual or sole proprietorship?

  • Has the person been refused a business license?

No single “Yes Answer” will decide the matter. However, a majority of “Yes Answers” indicates the person is an employee!