Employers can’t hold a gun to their employees’ head and force them to make “life-altering decisions” about whether to accept changes to their terms of employment, Ontario’s highest court has ruled, saying workers must be given time to see if they can live with the new regime.
The decision is a victory for nine veteran insurance agents, who were fired after refusing to sign a new contract that would have drastically cut their commissions. “It’s not often the little guy can take on the big guy and come out with the win,” said Donald MacDonald,. MacDonald was one of nine commissioned sales representatives for the Liberty Insurance Co. of Canada. In 1999, Liberty provided them with a new employment agreement, which they were instructed to sign or be fired.
The agreement imposed fresh sales quotas at levels only a third of what its salespeople had been achieving. While this was later scrapped, the new contract also substantially reduced commissions, in some cases by 40 per cent. When the agents refused to sign and return the agreement as requested, the company terminated their employment.
The nine – some of whom had worked for the company and its predecessor, Prudential, for as long as 35 years – took their case to court. Two years ago, Madam Justice Tamarin Dunnet sided with their employer. Since Liberty had the right to change their contract, it also had an implied right to insist employees acknowledge the changes and their failure to sign the documents justified dismissal, the Ontario Superior Court judge said.
But in a 3-0 decision this week, the Ontario Court of Appeal disagreed, ruling the salesmen were wrongfully dismissed.
The nine were put in an “unenviable” Catch-22 when the company placed the documents in front of them, the court said. “They said ‘Take it or leave it.’ That was it,” recalls Donald Robbins.
Confronted with the unilateral changes, Robbins and the other agents believed they were being forced out of their jobs or constructively dismissed. In that situation, their
“vulnerability” as employees and the difficulty of making the life-altering decisions they faced – stay, sue, look for a new job – must be recognized, the court said.
“The employees’ predicament in such a situation is unenviable,” said Mr. Justice Russell Juriansz, writing for a three-judge panel, which included Mr. Justice Stephen Goudge
and Madam Justice Janet Simmons. “If they leave their employment claiming constructive
dismissal, they will face the immediate loss of job and income. They will not know when, or even if, they will find replacement employment. They will have to finance an action in an expensive legal system.”
The court said that “should the matter proceed to trial, they will bear the burden of proving they have been constructively dismissed. Years may pass before the dispute reaches trial, and when it does, the court may not agree with the position they have taken. From the beginning they face the prospect of paying the employer’s legal costs. “On the other hand, if the employees acknowledge an employer’s changes and continue to work, they will be taken to have condoned the changes and will no longer be able to claim constructive dismissal if they are dissatisfied with the new terms and conditions of employment.”
The trial judge’s decision, the court said, failed to acknowledge an evolving body of law, which describes work as a defining feature of people’s lives and recognizes employees as vulnerable people, never more so as when they lose their jobs. Courts have also said the law should encourage conduct that minimizes damage from dismissal.
“Allowing employees reasonable time to assess the new terms before they are forced to take an irrevocable legal position not only addresses their vulnerability, but also promotes stability and harmonious relations in the workplace,” Juriansz said. Thomas Gorsky, a Toronto employment lawyer who represented the agents, said the decision means “employees now have the assurance that they don’t have to sign whatever their employer puts in front of them, and that they have a reasonable amount of time to evaluate any changes unilaterally imposed on them by their employer.”
In an interview, Robbins said many of his fellow agents, who had mortgages and young children, felt pressure to accept the new contract instead of risking all through legal action. But even for the established agents, a lawsuit was no small thing. “It can be very daunting taking on a company the size of this one,” MacDonald said. “They’ve got all these lawyers and billions of dollars behind them.”
The appeal court awarded the agents severance pay ranging from seven to 20 months of property and casualty insurance earnings. The trial judge reasoned they weren’t entitled to severance, even if wrongfully dismissed, because they continued to sell life insurance for another company, which mitigated their losses.
While the appeal court offered no guidance as to what constitutes a “reasonable” time for assessing changes, Gorsky suggested four to five months might have been appropriate in this case and that subtle changes might require more time.
This article was produced by Tracy Tyler �Toronto Star, and submitted, with permission, by Harvey Blake, Insurance Placement Specialist, Quality Choice Consultants which has been placing insurance individuals for over 18 years. Due to the amazing demand for qualified professionals, we chose to use our experiences to find the best positions for candidates who entrust us with their future.