A 75-year-old former sales rep at Innovation CLIC has been awarded more than $160,000 in damages and costs after an Ontario court concluded he was a dependent contractor who was entitled to 18 months’ reasonable notice.
The plaintiff, D.F., launched the lawsuit in 2015 following his dismissal by Innovation CLIC, a company that took over the business of Presentoirs CLIC Inc. where he had worked since 2002.
D.F. claimed wrongful dismissal after his commission structure was significantly altered, and he was eventually instructed to cease contact with clients, which he perceived as a termination of his employment.
Justice Papageorgiou of the Ontario Superior Court of Justice ruled that D.F. was either an employee or a dependent contractor, noting that Innovation CLIC controlled key aspects of his work, including client interactions and commission structures. This classification was pivotal in determining his entitlement to reasonable notice.
D.F. was awarded an additional $81,447.15 for the period from Aug. 1, 2014, to Oct. 31, 2015, on top of the $79,745.15 previously granted for unpaid commissions during his employment.
The earlier amount, awarded in a partial default judgment on July 8, 2023, covered the period from February 2014 to July 31, 2014, including $16,289.43 for the initial notice period after Foster received the termination letter on April 29, 2014.
Justice Papageorgiou ruled that these payments compensated Foster for the wrongful dismissal and the significant commissions owed to him due to his contributions to the company’s success.
The court also granted costs amounting to $27,120.72.
Key points from the judgment
- Dependent Contractor Status: The court’s analysis, based on the McKee v. Reid’s Heritage Homes Ltd. framework, concluded that D.F.’s role was akin to that of an employee or dependent contractor, given the control and economic dependence characteristic of his relationship with Presentoirs and Innovation CLIC.
- Stitching Employment Periods: The court decided to include his tenure with Presentoirs in calculating the reasonable notice period. Justice Papageorgiou cited the unbroken nature of D.F.’s service and the continuity of business operations between Presentoirs and Innovation CLIC.
- Commission Structure: The ruling affirmed that his commission structure was 10% on all sales, reflecting the terms implicitly agreed upon by Innovation CLIC when it continued his employment under similar conditions to those at Presentoirs.
Lessons from the ruling
The case underscores several critical considerations for HR professionals and employment lawyers:
- Classification Matters: The distinction between employees, dependent contractors, and independent contractors can significantly impact the obligations and liabilities of employers, particularly in terms of reasonable notice and termination.
- Continuity of Service: Employers acquiring businesses must carefully navigate the continuity of employment relationships to avoid implicit novations and unintended liabilities for prior service periods.
- Transparent Commission Agreements: Clear, written agreements regarding commission structures are vital to prevent disputes and ensure that both parties understand their financial obligations and expectations.
This ruling serves as a reminder of the complexities involved in wrongful dismissal cases and the importance of maintaining thorough documentation and clear communication in employment relationships.
For more information see 542491 Ontario Limited v. 8240631 Canada Inc., 2024 ONSC 2769 (CanLII)
