Maximum justice: Inlet Law successfully advocated for twelve months’ pay and three years of unpaid commissions for a worker (the “Worker”) in the recent case of S.C. v Breezemax Web (CA) Ltd., 2024 BCSC 808 released in May 2024.
Background
The Worker, a mid-fourties vice president of sales, was employed for a digital marketing agency (the “Company”) between 2010 – 2023, with a brief gap in service. The Worker’s employment was terminated in May 2023, and the Worker brought a claim for, among other things, contractual damages and several years of unpaid commissions.
Court Hearing
The BC Supreme Court reviewed the Worker’s documents, and assessed the nature of the Worker’s working relationship with the Company. In its assessment of the working relationship, the Court found that the Worker was a dependent contractor, not an employee:
[36] Not all contractors are independent. There is a recognized hybrid “dependent” contractor category. The evaluation of whether a contractor is dependent depends on the worker’s reliance on, or exclusivity with, the subject company.
[…]
[37] Applying the test in 1392644 Ontario Inc. (Connor Homes) v. Canada (National Revenue), 2013 FCA 85 and the factors in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 [Sagaz], many of the factors here support a finding that the plaintiff is an employee. However, I find that these are more than counterbalanced by the weight of the objective evidence of the parties’ mutual intention to create a contractor relationship.
[…]
[42] There are additional points that undercut the control evidence proffered by the plaintiff. First, there was no written contract purporting to control his conduct. Second, on the plaintiff’s own evidence as to the terms of the Contract, he was able to perform his work in a completely different province. Third, the plaintiff was not only entitled to a salary, but was also entitled to a share of the firm’s revenues through the various commissions.
[43] That said, given the economic interdependency, exclusivity, longevity, and the relatively degree of control the defendant exercised over the plaintiff, I find that the plaintiff should be treated as a dependent rather than an independent contractor.
The Court then turned to the matter of how much notice of termination the Worker would be entitled to as a dependent contractor:
[44] A dependent contractor is generally entitled to notice of termination. Certain authorities suggest that the amount awarded will be somewhat less than what would be payable to an employee: Pasche at para. 83. But this is not settled law: Liebreich v. Farmers of North America, 2019 BCSC 1074 at paras. 98-106. I adopt the reasoning of Justice Russell in Liebreich, and reject any hard and fast rule. I would say that the notice period ought to reflect where the relationship falls on the continuum between employee and independent contractor, after considering all the factors.
[45] Reasonable notice must be decided on a case-by-case basis, with reference to the employee’s character of employment, age, length of service, availability of alternate comparable employment and any other relevant factors: Ansari v. British Columbia Hydro and Power Authority, 2 B.C.L.R. (2d) 33 at 43, 1986 CanLII 1023 (S.C.); Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 at 145, 1960 CanLII 294 (Ont. H.C.)
[46] Here, while the jointly intended form of the relationship created a contractor structure, the substance brought the situation very close to that of employee/employer. As such, the reasonable notice period ought to be close to that of an employee.
The Court found that the Worker was entitled to damages representing a notice period of twelve months.
Turning to the claim for unpaid commissions, the Court found as follows:
[54] In terms of the past commission claim, although I initially had a concern that the lack of payment of the first few months’ worth of commissions was discoverable, such that such claims may be beyond the limitation period, the plaintiff supplemented the record by confirming that there was a conversation with the defendant that can reasonably be characterized as affirming the cause of action, thereby creating a deferral of the period under s. 24 of the Limitation Act, S.B.C. 2012, c. 13.
Key Takeaways
Companies and their workers should be cognizant of the fact that simply labelling an employee as an independent contractor does not necessarily extinguish the worker’s claim to notice of termination (or pay in lieu).
Prior to making a determination, the court will review the entire context of the working relationship, including, among other things:
- the worker’s degree of exclusivity;
- ownership of tools;
- risk of loss and possibility of profit;
- the worker’s agency and control over their work; and
- the length of the relationship
If the court finds that the worker is a dependent contractor or employee, the worker may be entitled to significant sums for pay in lieu of notice.
Note: This article does not contain legal advice. If you would like advice on your legal matter, please contact Inlet Law at 604 394-6538 (604 39-INLET) or at hello@inletlaw.ca