Elected Municipal Councillor Was Not an Employee: No Violation of Employment Standards
Written by Christina Catenaci, BA, LLB, LLM, PhD, Content Editor, published by First Reference Inc.,
In April 2024, the New Brunswick Labour and Employment Board confirmed the decision of the Director of Employment Standards that an elected municipal councillor with a local government governed by the Local Governance Act was not an employee. He claimed that his six-month suspension was a violation of the Employment Standards Act and that he was owed damages. The Board concluded that the councillor did not meet the definition of “employee.” Therefore, the Board dismissed the councillor’s claim.
What happened?
The councillor had his pay suspended for six months after an issue regarding an alleged Code of Conduct violation.
As a councillor, he was paid monthly (not every 21 days), he was paying income tax and CPP contributions (but not Employment Insurance premiums) and he did not earn wages (he earned the same amount every month).
Additionally, the councillor referred to himself as being hired by the people of the municipality, not the municipality itself. With respect to control, the councillor received tools and supplies to do his work by the municipality (he did not use his own tools and supplies). He also received a T4 and not a T4A. Yet, the municipality lacked the control over the councillor’s work (the work of the councillors was controlled by the Council and not the municipal government).
Furthermore, the Local Governance Act prohibited a member of Council from being employed by the local government. The control of the councillor’s work was in the hands of the Council.
The municipality had four employees (Clerk, Assistant Clerk, Recreation Director and Receptionist), a mayor and eight councillors (representing individual wards). The councillors were elected, had to be a Canadian citizen, and had to be over 18 years old. On the other hand, the employees had to apply to a job posting, and they had to be evaluated by a committee consisting of the Mayor and the Chief Administrative Officer (CAO). The employees were assessed based on their resumes and performance following a job interview.
Further, the councillors passed bylaws and the employees prepared and administered the budget. The Council was the decision-maker. The councillors’ pay was determined pursuant to a remuneration bylaw. The Mayor and councillors did not have employment contracts. The councillors were paid, whereas the employees were paid a salary biweekly.
All of the employees had to work 37.5 hours per week, and the councillors did not have these required hours (they had to attend four meetings per year and had no other requirements on how they spent their time).
The councillors could access the municipality’s office space and received a laptop, but did not receive paid vacation or holidays. Contrastingly, the employees got three week’s paid vacation and paid statutory holidays.
Interestingly, the councillors were subject to discipline according to the Code of Conduct bylaw. By contrast, discipline involving the employees were managed by the CAO, the Mayor and the Deputy Mayor.
What did the Director decide?
The Director conducted an investigation and found that there was no violation of the Employment Standards Act. This was because the councillor was not an employee of the municipality. What’s more, the Director affirmed that it did not have jurisdiction to hear the matter since the Act only applied to provincially regulated employers.
In response, the councillor requested that the Director refer the matter to the Board.
What did the Board decide?
The Board examined the Employment Standards Act and pointed out that an “employee” was defined as a person who performed work for or supplied services to an employer for wages; however, it did not include an independent contractor.
Also, an “employer” was defined as a person, firm, corporation, agent, manager, representative, contractor or subcontractor having control of, direction of, or being directly or indirectly responsible for the employment of one or more persons.
The Board noted that the purpose of the ESA was to provide minimum employment standards to protect employees. Employees have been acknowledged to be in a vulnerable position compared to the employer.
The Board noted that in Ontario, cases have stood for the proposition that a councillor was not an employee and could not allege wrongful dismissal against the municipality. Essentially, it was concluded that a councillor was not hired or fired by the municipality (contrary to employees). It also seemed to the Board that councillors were prohibited from being employees.
When considering the control test (control, ownership of tools, chance of profit and risk of loss), the Board found that the councillor was not an employee given the aspects of the councillor’s work. That is, one of the hallmarks of employment was that there was a lack of independence and the work environment was dictated by the employer. The employer decided who to hire and fire-this was the central factor when thinking about the employment relationship. In this situation, there was no employment relationship since the councillor had a different arrangement.
The councillor was not a subordinate and was a part of the decision concerning the remuneration bylaw. In fact, the councillor enjoyed considerable independence. This was true regardless of the sharing of office space, the T4s and the provision of resources. He was not like a manager who had some autonomy but was still an employee who earned wages.
In fact, there was no difference between the municipality and its Council. The councillor was in business on his own account, and as such, he was not an employee. Consequently, the councillor’s case was dismissed.
What can we take from this decision?
As can be seen from the above analysis, decision-makers examine each aspect of each particular case to understand the context. They look at the control test and other features of the work situation of the person to decide whether the person is an employee or an independent contractor. In this case, it became clear that the councillor was not an employee and could not claim the Employment Standards Act was violated.
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