Substance Over Form: Ontario Court Of Appeal Revisits Employee Classification In Pringle v. Zenova Group PLC

In Pringle v. Zenova Group PLC, 2026 ONCA 549, the Ontario Court of Appeal confirmed that the contractual characterization of a worker as an independent contractor is not determinative of the worker’s true legal status. Moreover, a contractual forum selection clause cannot bar a worker who is determined to be an employee from pursuing an employment standards complaint in Ontario, and any such clause will be void and unenforceable.

Background

In 2018, Shawn Pringle co-founded Zenova Ltd., a fire safety and heat management business. Although the company was incorporated and headquartered in England, Mr. Pringle was based in Canada. Between 2018 and 2021, Mr. Pringle worked for Zenova without compensation but became a significant shareholder in the company.

In 2021, Zenova offered Mr. Pringle a position as Director of Product Development. Mr. Pringle was given the option of being an employee or an independent contractor and, for tax reasons, chose to be treated as an independent contractor. His independent contractor agreement contained a forum selection clause confirming that the agreement would be governed by the laws of England and Wales, and that all disputes arising under the agreement were subject to the exclusive jurisdiction of the courts of England and Wales.

Mr. Pringle worked full-time as Zenova’s Director of Product Development until September 2022, at which time Zenova terminated his engagement for cause based on Mr. Pringle providing services to other businesses and not devoting his full time and attention to Zenova. Mr. Pringle then commenced an action in Ontario for wrongful dismissal.

Motion Judge Determines That Mr. Pringle Was an Independent Contractor and Stays Wrongful Dismissal Action

Before delivering a statement of defence, Zenova brought a motion to permanently stay Mr. Pringle’s action based on the forum selection clause in his independent contractor agreement. Mr. Pringle alleged that he was an employee for the purposes of the Employment Standards Act, 2000 (ESA) and that the forum selection clause was therefore void.

The motion judge determined that Mr. Pringle was an independent contractor and, accordingly, the forum selection clause was enforceable. On that basis, she permanently stayed Mr. Pringle’s wrongful dismissal action. In reaching that conclusion, the motion judge reviewed the five-factor test for determining whether a worker is an employee or an independent contractor as outlined in Belton v. Liberty Insurance Co of Canada, 2004 CanLII 6668 (ON CA).

1. exclusivity of service;
2. control;
3. investment in tools;
4. risk/chance of profit distinct from fixed compensation; and
5. whose business the worker’s activity belonged to.

The motion judge focused heavily on the fourth and firth factors and, in particular, the fact that Mr. Pringle was a co-founder and significant shareholder of Zenova who stood to gain from the company’s success. She further attributed significant weight to the wording in the independent contractor agreement, which clearly stated that it was not an employment contract, and the fact that Mr. Pringle has chosen to provide services as an independent contractor to reduce his personal tax liability.

Ontario Court of Appeal Confirms That Mr. Pringle Was an Employee and That Forum Selection Clause Is Void

The Ontario Court of Appeal overturned the motion judge’s decision, confirming that Mr. Pringle was an employee of Zenova and that the forum selection clause in his independent contractor agreement was void and unenforceable.

The Court noted that the motion judge’s focus on Mr. Pringle’s status as a “major shareholder” of Zenova caused her to lose sight of the nature of an independent contractor relationship as compared to an employment relationship. Having shares in a company does not, in itself, determine whether a worker is an independent contractor or an employee of that company. Even a major shareholder with a controlling interest in a company can be an employee of that company.

Considering the Belton factors afresh, the Court confirmed that Mr. Pringle was required to work full-time and exclusively for Zenova. He was expected to comply with Zenova’s rules and policies and was granted vacation days subject to Zenova’s advance approval. Although Zenova had taken a relatively “hands-off” approach to Mr. Pringle’s work, this was to be expected in relation to highly skilled, executive-level employees. Mr. Pringle held a senior-level job title and was a member of Zenova’s management team. He was identified as an employee on Zenova’s website, had a Zenova email address and business cards, and kept a Zenova plaque on the door of his business address. Zenova even listed Mr. Pringle’s business address as its “Canada Office” on its website.

Importantly, Mr. Pringle assumed no risk when he accepted an engagement with the company. He was paid a fixed monthly fee and reimbursed for all his expenses. His only expectation of profit was indirect, through his role as a shareholder, which was not relevant to his expectation of profit in the provision of his services to Zenova.

For all intents and purposes, Mr. Pringle was held out as an employee of Zenova and functioned as one.

The Court of Appeal further held that the motion judge had erred in attributing significant weight to the parties’ characterization of their relationship in the independent contractor agreement, a factor which is not determinative of a worker’s classification. The true substance of the working relationship always trumps the parties’ own characterization of it. In this case, the label the parties had attached to their agreement could not overcome the overwhelming conclusion that Mr. Pringle was employed by Zenova.

Applying Heller v. Uber Technologies, 2019 ONCA 1, the Court further confirmed that an employee’s right to make a complaint to the Ministry of Labour under the ESA is a minimum standard, and any contractual agreement barring an employee from bringing such a complaint will be void. Accordingly, the forum selection clause was void, Ontario had jurisdiction over the dispute, and Mr. Pringle’s wrongful dismissal action was permitted to proceed.

Takeaways

The Ontario Court of Appeal’s decision in Pringle reaffirms that a worker’s classification as an employee or an independent contractor turns on the substance of the parties’ working relationship, rather than the label they have chosen to place on it. This is true even where the worker has expressly requested to be treated as an independent contractor for tax purposes. Accordingly, structuring an engagement through a personal corporation or documenting the relationship as one of independent contracting does not necessarily insulate a company from a subsequent claim that the worker was, in substance, an employee and entitled to employment-related protections upon termination.

Moreover, Pringle confirms the importance of distinguishing between the different capacities in which an individual is involved with a business. The prospect of realizing a profit on a shareholding is distinct from the opportunity for profit arising from the provision of services. Accordingly, an ownership interest in a business does not, in itself, preclude a finding that the individual is also an employee when performing services for the business.

Finally, Pringle highlights an important consideration for foreign companies engaging workers in Canada. Having concluded that Mr. Pringle was an employee for ESA purposes, the Court held that the contractual provision requiring disputes to be adjudicated exclusively in England and Wales was void because it operated to contract out of the minimum employment standards protected by the ESA. The decision therefore illustrates that a foreign choice-of-law or forum-selection clause will not necessarily prevent an Ontario-based worker who is found to be an employee from invoking mandatory protections under Ontario employment standards legislation or pursuing employment-related proceedings in Ontario.