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Senior VP at marketing agency awarded $81K in case involving contractor status and unauthorized remote work

by HR Law Canada

A digital marketing agency has been ordered to pay $81,436.46 to its former senior vice-president of sales following a wrongful dismissal claim and a default judgment.

The court found that the SVP, though initially treated as an independent contractor, was in fact a dependent contractor and entitled to damages.

Background and claims

S.C. who served the company from July 2010 until his dismissal in May 2023, argued that he was wrongfully dismissed without notice. His duties included hiring staff, managing the sales team, and leading national sales meetings.

The plaintiff asserted that despite the lack of a written contract, he was promised a monthly salary, benefits, and commissions through an oral agreement. During his tenure, he claimed the company owed him commissions totaling over $47,000 for 2021-2023, which were tracked through a shared Google document.

The conflict escalated when S.C. decided to work remotely from Toronto instead of Vancouver in early May 2023, a move the company did not approve. This led to a series of events culminating in his termination on May 15, 2023. Subsequently, he filed a formal complaint citing the unpaid commissions and a toxic work environment, but received no response from the company.

Court’s analysis

The Supreme Court of British Columbia noted the complexity of the case, particularly around the classification of S.C.’s employment status. The ruling highlighted the distinction between independent and dependent contractors, referencing past cases like McKee v. Reid’s Heritage Homes Ltd. and Pasche v. MDE Enterprises Ltd.

The court acknowledged the mutual intention of both parties to treat the plaintiff as an independent contractor, which was reflected in the tax documents. However, the degree of control exercised by the defendant over the plaintiff’s work, coupled with his economic dependency on the company, led the court to classify him as a dependent contractor.

Damages awarded

The court awarded S.C. a 12-month notice period, slightly reducing the typical notice period for employees due to his dependent contractor status. The awarded amount included:

  • Base salary for 12 months: $78,000
  • Commissions likely to have been earned during the notice period: $30,948.48
  • Dental procedure cost: $941
  • Past unpaid commissions: $46,032.09
  • Costs of $8,960 and disbursements of $645.81

The total was adjusted for mitigation income, as he secured a new position in July 2023.

Conclusion

The ruling underscores the importance of clear contractual agreements and the nuanced understanding of employment relationships. The court emphasized that reasonable notice must be considered based on the specifics of each case, taking into account the employee’s role, age, length of service, and availability of comparable employment.

For HR professionals and employment lawyers, this case serves as a critical reminder of the legal obligations towards dependent contractors and the necessity of accurately classifying workers to avoid costly legal disputes.

For more information, see Cvjetkovich v Breezemax Web (Ca) Ltd., 2024 BCSC 808 (CanLII).

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