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Looking Beyond the Label of “Independent Contractor”: A case comment 

by | Feb 26, 2026 | Independent Contractors, Mitigation, Wrongful Dismissal

Saskatoon Minor Basketball Association v MacDonald, 2025 SKCA 42 

Factual Background

Randi MacDonald was engaged by the Saskatoon Minor Basketball Association (SMBA) for over 16 years, eventually serving as its Executive Director. Throughout her tenure, SMBA treated MacDonald as an independent contractor rather than an employee – she worked from home, invoiced SMBA for her services, and filed her taxes as a contractor. SMBA never had a signed long-term employment contract with her; instead, there were unsigned “independent contractor” agreements that purported to limit notice entitlements to minimal periods. Despite the “contractor” label, MacDonald’s role evolved from an entry-level administrative position to a leadership role overseeing the organization’s operations. She was held out to the public as SMBA’s representative and received what was even referred to as a “salary” in some documents, underscoring her integration into the association.

In 2021, facing financial and organizational pressures (exacerbated by the COVID-19 pandemic), SMBA restructured its operations. SMBA presented MacDonald with three options: (1) accept a new three-month contract to continue working for a short term; (2) apply for a newly created position within the reorganized structure (a job for which she was not fully qualified); or (3) accept a severance package of six weeks’ pay. MacDonald chose the three-month contract option but explicitly refused to treat this short-term arrangement as a final settlement of her rights. At the end of the three-month period (after organizational changes in 2021), MacDonald’s employment with SMBA was terminated without any further notice or payment beyond that short contract. 

Believing she had been essentially an employee throughout her 16.5-year tenure, MacDonald commenced a wrongful dismissal claim in the Saskatchewan Court of King’s Bench. She asserted that despite the “independent contractor” label, she was in law an employee and thus entitled to reasonable notice of termination at common law. 

 

Key Issues on Appeal

The Court of Appeal identified several key legal issues raised by SMBA’s appeal. Essentially, the appeal questioned every major aspect of the lower court’s ruling. The core issues before the Court were whether the Chambers judge erred in:

  • Employment Status – Employee vs Contractor: Determining that MacDonald was an employee rather than an independent contractor.
  • Reasonable Notice Period: Determining the length of reasonable notice (22 months) awarded to MacDonald – SMBA argued this was excessive.
  • Mitigation of Damages: Finding that MacDonald had not failed to mitigate her damages (SMBA contended she did not adequately try to reduce her loss, particularly by not pursuing alternative work with SMBA).

 

Arguments of the Parties

  • Independent Contractor Relationship: SMBA contended that MacDonald was a contractor and not an employee. They pointed to the form of the relationship: 
  • MacDonald worked from home on her own schedule, submitted invoices for her services, and handled her own tax remittances as an independent business would. 
  • Over the years, SMBA had drafted contract documents labeling her as an “independent contractor,” and although these were unsigned, SMBA argued they reflected the parties’ intention. SMBA emphasized that MacDonald had agreed to successive fixed-term arrangements and had not been on the regular payroll with standard employee deductions. In SMBA’s view, these facts showed she was in business on her own account, not subject to the organization’s control in the manner of a typical employee.
  • Excessive Notice Period: SMBA argued that even if MacDonald was an employee, the 22-month notice award was far too high under the circumstances. They likely noted that MacDonald’s role, while important, was in a non-profit sports association rather than a large corporate environment, and questioned whether a near two-year notice period was justified. SMBA may have cited the typical range of reasonable notice for long-term employees and argued that 22 months was beyond the acceptable range, perhaps suggesting that MacDonald could find comparable employment in less time. They also pointed to the fact that she had initially been offered a smaller severance (six weeks) or a short contract, implying that 22 months vastly over-compensated her relative to expectations.
  • Failure to Mitigate: SMBA asserted that MacDonald did not adequately mitigate her damages. In particular, at the time of termination, SMBA had given MacDonald opportunities to continue working in some capacity – e.g. suggesting she apply for a new position in the reorganized structure, or the fact that she did accept a 3-month contract extension. SMBA argued that MacDonald should have done more to pursue continued employment either with SMBA or elsewhere. Furthermore, SMBA noted that after termination, it had offered MacDonald a different position within the organization (albeit in a new role) which she declined. By turning down an available job, in SMBA’s view, MacDonald failed to act reasonably to reduce her losses, which by law could cut off or reduce her entitlement to damages.

 

Respondent (MacDonald)’s Arguments

  • Employee Status in Substance: MacDonald argued that despite the “contractor” label, the substance of the relationship was one of employer-employee. She emphasized factors from the well-known Sagaz test (derived from 671122 Ontario Ltd v Sagaz Industries Canada Inc, 2001 SCC 59) for distinguishing employees from independent contractors. MacDonald highlighted that SMBA exercised control over her work and integrated her into their organization:
  • Over 16 years, her responsibilities were defined by the association’s needs, and her role grew with the organization (she did not offer her services broadly to other clients, which suggests she was not running an independent enterprise of her own). 

 

  • Key hallmarks of an independent business – such as owning significant tools/assets, having a chance of profit or risk of loss beyond just salary, or freedom to accept or refuse work – were absent in her case. She was paid a regular remuneration (even called a “salary”) and had little opportunity to profit beyond that or incur business losses.

 

  • MacDonald also pointed out that simply because she invoiced for payment or arranged her taxes as a contractor did not determine her legal status. Labels and form should not override reality. She urged the Court to focus on the actual dynamics of the relationship (who controlled the work and how integrated she was) rather than the terminology used in documents.

 

  • Additionally, MacDonald noted the so-called “Independent Contractor Agreement” was never signed and, even if it had been, it lacked clear language affirming an independent contractor relationship. It did not, for example, give her autonomy consistent with contractor status. Moreover, to the outside world (and even internally) she was held out as part of SMBA’s organization, not an independent service provider. 
  • Reasonable Notice – 22 Months is Justified: MacDonald argued that the 22-month notice period was within the reasonable range given her circumstances. Using the common-law Bardal factors (from Bardal v Globe & Mail, [1960] O.W.H.C.), she emphasized:
  • Long Service: 16.5 years is a lengthy tenure, warranting a high notice period. 
  • Position: As an Executive Director (a senior administrative role) her position was of significant responsibility, and comparable alternative jobs in the nonprofit sports sector would be limited in Saskatchewan.
  • Availability of Similar Employment: Given the specialized nature of her role and the local job market, it would reasonably take many months to find a comparable position. In fact, MacDonald contended that 22 months was not “windfall” but a fair assessment of how long it could take to secure new employment at a similar level. Past case law has often treated ~24 months as the upper end of reasonable notice for long-term employees in exceptional cases, and her award of 22 months (less 3 worked) fit within precedent. She argued the Chambers judge’s decision on notice fell within a reasonable range and was entitled to deference. 
  • Mitigation Efforts Were Reasonable: MacDonald defended her mitigation efforts and her decision not to pursue or accept certain work with SMBA post-termination. She pointed out that one of the options SMBA gave – applying for a new role – was not a guaranteed job and she lacked the qualifications for it, meaning it was not a realistic mitigation path. Furthermore, when SMBA later offered her a different position after termination, the offer came with onerous conditions: it was a role with entirely new duties (for which she had no training) and required her to sign a full and final release of all claims. Accepting that would have meant giving up her legal rights (essentially waiving her wrongful dismissal claim) in exchange for a job not comparable to her old one. MacDonald invoked the principle from Evans v Teamsters Local Union No. 31, 2008 SCC 20, that a dismissed employee is not obligated to mitigate by returning to the same employer in circumstances that would be embarrassing, humiliating, or involve surrendering one’s rights. Given that SMBA’s offer demanded she abandon her lawsuit and take a demoted role, MacDonald argued it was objectively reasonable for her to refuse. She also noted there was no evidence she unreasonably avoided other opportunities; rather, she was actively looking for work, but jobs at her level in the non-profit sports field were scarce.

 

Court of Appeal’s Reasoning

The Saskatchewan Court of Appeal dismissed SMBA’s appeal in its entirety, affirming the decision of the Chambers judge on all points. A unanimous court methodically addressed each issue as follows:

  • Employee vs Independent Contractor: On the pivotal issue of MacDonald’s status, the Court of Appeal agreed that she was an employee, not an independent contractor. The Court endorsed the Chambers judge’s application of the Sagaz test as the proper approach. This test examines multiple factors to decide if a worker is in business on their own account or is effectively part of the employer’s organization. Key factors include: the level of control the payer has over the worker’s activities, whether the worker provides their own equipment or tools, whether the worker hires their own helpers, the degree of financial risk taken by the worker, the worker’s opportunity for profit beyond a fixed fee, and the degree of integration into the payer’s business. 

 

The Court of Appeal observed that in MacDonald’s case, virtually all factors pointed to an employment relationship:

 

  • Control: SMBA directed MacDonald’s work in substance – even if she had some day-to-day autonomy, ultimately she answered to SMBA’s board and worked to fulfill SMBA’s organizational objectives, not as a free agent pursuing business ventures. 
  • Tools & Infrastructure: MacDonald did not have a separate business enterprise with its own tools or clients; her “tools” were essentially her home office and her skills, devoted exclusively to SMBA. She wasn’t holding herself out to the market offering services to multiple clients (which would indicate independent contractor status).
  • Financial Risk/Opportunity: MacDonald had no appreciable chance to make a profit beyond her remuneration from SMBA – she was paid a regular amount (characterized as a salary) and did not make business investment decisions or risk losses. This is indicative of an employee who receives wages, rather than an entrepreneur.
  • Integration: Importantly, MacDonald was fully integrated into SMBA’s operations. The Court noted that her role started modestly but grew to encompass core management of the association, blurring any notion that she was a separate business. Outsiders would naturally view her as part of SMBA (the Executive Director of the association) rather than an independent consultant. 

 

Contract Documents: The presence of an unsigned “Independent Contractor Agreement” did not save SMBA’s position. The Court of Appeal pointed out that simply naming a document as such does not override the reality of the arrangement. In fact, the Court noted there were no clear contractual terms that genuinely established independent contractor status. The label was self-serving, and no consistent conduct supported treating her as a separate business entity. Thus, the Chambers judge’s conclusion that MacDonald was an employee was amply supported by the evidence, and not in error. 

In sum, the Court of Appeal confirmed that the substance over form approach governs employee classification. The Court cited and applied the Sagaz analysis, finding MacDonald “was not in business for herself and was effectively functioning as an employee”. 

  • Reasonable Notice Period: The Court of Appeal upheld the award of 22 months’ reasonable notice (minus the 3-month working notice already given). The Court found that the Chambers judge had properly considered the relevant factors — often referred to as the Bardal factors — in setting the notice period. Specifically, the Court agreed that:
  • MacDonald’s lengthy service (16+ years) and her elevated position (Executive Director of the association) justified a notice period at the high end of the scale. 
  • Her role was sufficiently specialized and senior that finding comparable employment could be challenging, especially in the local market, meaning a longer notice would reasonably be needed. 
  • The Court mentioned MacDonald’s age and lack of similar employment opportunities as supporting a lengthy notice. 
  • SMBA’s argument that 22 months was excessive was rejected. The Court of Appeal noted that the notice duration fell “within a reasonable range based on similar cases”. In other words, precedent supported that long-term employees in important roles can receive upwards of 20–24 months of notice. There was no palpable error in the Chambers judge choosing 22 months in MacDonald’s case, so the appellate court would not disturb it.
  • Mitigation of Damages: The Court of Appeal also agreed that MacDonald had not breached her duty to mitigate. The Court closely examined the mitigation issue in light of the Supreme Court’s guidance in Evans, which deals with when a dismissed employee must consider re-employment with the dismissing employer. The Court made several important findings:
  • Offer of Alternate Position: SMBA had offered MacDonald some form of alternate position after her termination (or as part of the termination process), but the Court noted this position involved new duties for which MacDonald was untrained and, critically, required her to sign a full and final release of claims against SMBA. This meant accepting the job would force MacDonald to abandon her wrongful dismissal claim.
  • Reasonableness of Refusal: Citing Evans, the Court of Appeal emphasized that an employee is not obligated to mitigate by returning to or continuing with the same employer if doing so would be unreasonable. Scenarios that make re-employment unreasonable include situations where the work would be demeaning, where trust is broken, or where the offer requires the employee to surrender legal rights. In MacDonald’s case, requiring her to sign away her claim to get the job was inherently unreasonable. The Court underscored that mitigation does not oblige an employee to forsake her rights or work in an atmosphere of humiliation. Even if SMBA’s conduct was not found to be in bad faith (the Court did not characterize SMBA’s actions as malicious or intending to humiliate), the very condition of a release and the non-comparable nature of the job justified MacDonald’s refusal. Thus, she acted reasonably in mitigation.

 

Apart from the offered position, the Court likely accepted that MacDonald had made other reasonable efforts (though details are scant in the summary). The key point was that SMBA failed to prove MacDonald avoided any opportunities a reasonable person in her situation would have pursued. Therefore, the Chambers judge correctly did not deduct any amount for failure to mitigate.

 

Outcome of the Appeal

The Saskatchewan Court of Appeal’s decision resulted in a complete victory for MacDonald. The appeal was dismissed on all grounds, meaning the original summary judgment was affirmed in full. Consequently, MacDonald retained her award of 22 months’ reasonable notice (minus the 3 months already given) for a net of 19 months’ salary in damages. The Court of Appeal’s dismissal solidified MacDonald’s status as an employee wrongfully dismissed after 16.5 years of service.

 

Legal Significance and Implications

The Saskatoon Minor Basketball Association v MacDonald decision is significant for several reasons:

  • Reaffirmation of Employee vs Contractor Tests: The case reinforces that Canadian courts will look beyond contractual labels to the reality of a working relationship. Even if a worker is called an “independent contractor” and treats themselves as such for tax purposes, courts will apply the Sagaz factors to determine the true status. Here, the Court of Appeal confirmed that long-term integration into an organization, working exclusively for one entity, and taking direction in that role strongly indicate an employment relationship, regardless of how the parties papered the arrangement. This serves as a caution to employers (including non-profits) that misclassifying employees as contractors can lead to significant liability for reasonable notice and other employment obligations. The decision underscores the principle that substance prevails over form in employment law. 
  • Fixed-Term Contracts and Continuous Service: The circumstances of MacDonald’s termination highlight how successive contracts or a late-stage fixed-term contract won’t reset an individual’s length of service if the reality is continuous employment. SMBA’s offer of a short-term contract at the end of MacDonald’s tenure did not prevent the court from considering her total 16.5 years of service when calculating notice.
  • Reasonable Notice for Long-Term Non-Profit Employees: The 22-month notice period (19 months after credit for working notice) is noteworthy, as it sits near the upper end of notice awards. This illustrates that employees of non-profit organizations or small associations can still be entitled to substantial notice periods similar to those in the private sector. MacDonald’s role as an Executive Director of a sports association, though not a traditional corporate executive, was treated as an important, specialized position warranting high reasonable notice. The decision may influence future cases involving long-serving employees in niche or specialized roles (even in smaller organizations) by confirming that lengthy notice can be appropriate, especially if re-employment prospects are limited.
  • Mitigation Principles – Limits on Re-Employment with the Same Employer: The Court of Appeal’s discussion of mitigation is an important application of Evans. It clarifies that an employer’s offer of alternate employment to a dismissed employee must be reasonable in substance. An employee cannot be forced to mitigate by working under significantly different terms or by giving up legal claims against the employer. Future cases will likely cite this decision for the proposition that a requirement to sign a release or accept a role one is not qualified for renders an offer of re-employment unreasonable. This is particularly relevant in wrongful dismissal scenarios where an employer tries to get a loyal employee to stay on in a lesser capacity to reduce notice obligations – such offers must be made with caution. The case upholds the dignity and rights of employees in the mitigation context, aligning with the broader principle that mitigation should not compel self-sacrifice of one’s legal entitlements.

In conclusion, Saskatoon Minor Basketball Association v MacDonald, 2025 SKCA 42 is a significant appellate decision in employment law. It confirms that the courts will look past labels to the reality of employment relationships, ensure long-term loyal service is rewarded with appropriate notice, and protect employees’ rights in mitigation scenarios. The ruling serves as a precedent for classifying workers correctly and treating staff fairly at termination. Employers, including non-profit sports organizations, should heed the lessons from this case to avoid similar legal pitfalls. 

 

*Always seek legal advice. The above is for information purposes only.

Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018 and Evolution Legal in 2026.