Can contractors in BC get severance pay? A 2025 court ruling confirms that dependent contractors may be entitled to notice of termination like employees.
You might think that only employees get severance pay. Traditionally, this was one of the key differences between an employee and independent contractor, but it is not that simple. Courts will sometimes find a hybrid status of “dependent contractor.” Dependent contractors can be found to be entitled to severance pay in the same way as an employee.
Recently, in Ursic v Country Lumber Ltd., 2025 BCSC 970, the Supreme Court of British Columbia decided that a contractor was entitled to reasonable notice of termination (aka severance pay), despite the fact that the contractor had incorporated. The Court also decided that there is no presumption the amount of severance should be less for a contractor than for an employee. We review this decision below and provide some important takeaways for contractors and businesses alike.
The Facts: Ursic v Country Lumber Ltd. (2025)
Boris Ursic operated Borly Holdings Ltd., a commercial trucking business. The legal claim was made by both Mr. Ursic and Borly. The Defendant, Country Lumber Ltd., sells and delivers construction materials. Country Lumber uses its own fleet of trucks and employee drivers and also contracts with “owner-operators” like Mr. Ursic / Borly to provide its services.
Starting around April 2010, Borly entered into a verbal agreement with Country Lumber for Borly’s commercial trucking services. There was no written contract. In March 2024, Country Lumber terminated Borly’s contract due to a shortage of work. Mr. Ursic, through Borly, provided services exclusively to Country Lumber during the term of the contract. He had no other clients or business for those 24 years.
Mr. Ursic and Borly filed a Notice of Civil Claim against Country Lumber for wrongful dismissal, alleging that Borly was owed severance from Country Lumber. At trial, only Borly pursued a claim.
How Courts Decide If a Contractor Is Dependent
In determining whether Borly was a dependent contractor and thus entitled to severance, the Court analysed the following factors:
- whether Borly was largely limited to the service of Country Lumber;
- whether Borly was subject to the control of Country Lumber, not only as to the product sold but also as to when, where and how it was sold;
- whether Borly had an investment in or interest in the tools necessary to perform its service for Country Lumber;
- whether by performing its duties Borly undertook risk of loss or possibility of profit apart from its fixed-rate fees;
- whether Borly’s activity was part of Country Lumber’s business organization – in other words ‘whose business was it?’;
- whether the relationship was long standing – the more permanent the term of service the more dependent the contractor; and
- whether the parties relied on one another and closely coordinated their conduct.
The Court analysed each factor and found that Borly was a dependant contractor. The Court noted that Country Lumber had a high degree of control over Borly’s operations and that their relationship was tightly-integrated, longstanding, and exclusive. These factors strongly favoured the existence of a dependent contractor relationship. As a result, Borly was entitled to reasonable notice of termination (severance).
Severance Pay for Contractors: The Court’s Remedy
In deciding how much severance to award Borly, the Court rejected the proposition that dependent contractors are automatically entitled to less notice than individual employees. Instead, the Court found that the period of notice should reflect where a relationship falls on the continuum between employee and independent contractor.
The Court awarded Borly 10 months’ notice based on the length of the relationship, the control that Country Lumber exercised over Borly, the commercial nature of Borly, and the tax benefits Borly received as a result of not being a direct employee of Country Lumber.
The Court found that it was Borly’s corporate income, rather than Mr. Ursic’s individual income, that was relevant in determining damages.
Key Takeaways for BC Businesses and Contractors
There are a few key takeaways:
- For businesses using the services of contractors, it is important to ensure that you have a written contract that includes an appropriate termination clause. In this case, the lack of any written contract was a $83,000 mistake.
- For contractors providing services exclusively to one company, this decision may help your case for severance pay, e
This analysis remains highly fact-dependent and there continues to be no “one size fits all” formula in determining if a contractor is a dependent contractor.
For further reading on this topic, check out this 2020 article Severance for a Contractor? What, no way! we explored when and why a contractor might be entitled to severance.
This blog is not legal advice and only provides general information. Every situation must be considered on its own facts.
Contact us [email protected] or 604-535-7063. Our team of employment lawyers in BC and Alberta are ready to answer your questions.
