First introduction of the concept of a contractor being “Dependent” on the employer.

Posted By | 2017-12-05T17:19:43+00:00 October 30th, 2017|

Belton v. Liberty Insurance Company of Canada 

The plaintiffs were commissioned sales representatives, selling life insurance for London Life and property and casualty insurance for PAGIC. Each plaintiff signed an Agent Agreement with PAGIC which stated that “For all purposes the Agent is an independent contractor and the Contract shall not create any employer/employee relationship between the Company and the Agent” and that changes to the schedule of commissions could be made by PAGIC with 90 days’ notice.

Read the full story

PAGIC was purchased by another insurance company in 1997 and was renamed LICC. The plaintiffs continued to sell life insurance for London Life, and began selling property and casualty insurance for LICC under the terms of their PAGIC agreement. On January 4, 1999, LICC wrote to its agents, enclosing a new LICC agency agreement (“the LICC agreement”) which was to take effect on April 7, 1999 and which changed the commission structure under the PAGIC agreement. None of the plaintiffs provided LICC with a signed LICC agreement. Finally, LICC wrote to the plaintiffs on April 15, 1999, indicating that it had not received a signed copy of the LICC agreement and notifying each of them that their agreement with LICC was terminated, effective April 7, 1999. This lead the plaintiffs to bring an action for wrongful dismissal, claiming that the reduction of their commissions and the introduction of new minimum production levels constituted a fundamental breach of contract amounting to constructive dismissal.

The trial judge identified the following principles to distinguish independent contractors from employees when considering the status of a commissioned agent:

1. Whether or not the agent was limited exclusively to the service of the principal;
2. Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold;
3. Whether or not the agent has an investment or interest in what are characterized as the “tools” relating to his service;
4. Whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission;
5. Whether or not the activity of the agent is part of the business organization of the principal for which he works.

In concluding that the plaintiffs were employees rather than independent contractors, the trial judge observed that the issue of control was an important aspect in the relationship between the plaintiffs and LICC.


Go Back