0018-01-ES The Outsourcing Connection, The Creditrace Corporation, Applicant v. Karen Stevenson, and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 30-014778
3772-00-ES Karen Stevenson, Applicant v. The Outsourcing Connection, The Creditrace Connection, and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 30-014778
BEFORE: David A. McKee, Vice-Chair.
APPEARANCES: Dan McDonald for the employer; Cecil Norman and Karen Stevenson for Karen Stevenson; Karen Northey for the Ministry of Labour.
DECISION OF THE BOARD; August 29, 2001
1These applications both seek a review of a decision of an employment standards officer pursuant to section 68 of the Employment Standards Act, R.S.O. 1990 ch. E-14 ("the Act"). An Order to Pay was issued on February 15, 2001 requiring The Outsourcing Connection Inc. and The Creditrace Corporation (the “Employer”) to pay to Karen Stevenson the sum of $1764.00. Karen Stevenson sought a review saying the amount was too low; the Employer sought a review saying the amount was excessive.
2The hearing commenced on August 23, 2001. After the hearing of some evidence the parties adjourned the proceedings to determine if some of the issues in dispute could be resolved. In fact, all but two of them were. The parties entered into Minutes of Settlement on August 24, 2001 which provide as follows:
O.L.R.B. Files 3772-00-ES
0018-01-ES
BETWEEN:
KAREN STEVENSON
“Applicant”
- and -
THE OUTSOURCING CONNECTION INC.
THE CREDITRACE CORPORATION
“Responding Party”
Whereas the above parties to the above-noted OLRB Files have reached agreement on certain matters in dispute between them, while other matters remain in dispute, the parties agree that:
A. The following amounts are due and owing to the applicant from the Responding Party and request that they be incorporated in appropriate orders of the OLRB. The matters and amounts agreed upon are as follows:
Public Holiday Pay $ 76.92
Outstanding wages (or salary) $ 321.19
[3] Outstanding Commissions $1,156.21
on Temporary Placements
[4] Vacation Pay outstanding $ 274.50
(including vacation pay on the above items)
TOTAL $1,828.82
The parties agree that appropriate statutory deductions are to be deducted from the above sum.
B. The parties agree that the only issues remaining in dispute between them with respect to the above noted OLRB files are the question of whether the Applicant is entitled to the sum of $384.00 as outstanding commissions on permanent placements and whether the Applicant is entitled to one week’s termination pay in the sum of $384.62. The parties acknowledge that if the above amounts for outstanding commissions on permanent placements and termination pay are granted to the Applicant by decision of the Ontario Labour Relations Board, then vacation pay of 4% and appropriate statutory deductions would also be applicable to these amounts.
C. The parties agree to adjourn the hearing scheduled for Aug. 24, 2001 to a future date to be established by the Registrar.
Signed at Toronto, Ontario this 24th day of August, 2001
“Karen Stevenson” “Dan McDonald”
‘the Applicant’ ‘the Responding Party’
3As part of its application for review, the Employer paid to the Director in trust the sum of $1,764.00 less $543.97 in respect of statutory deductions, plus the $176.40 statutory administration costs. The sum the parties have agreed is owing is in excess of $1,764.00. Accordingly there is no reason not to direct the Director of Employment Standards to release the monies held in trust, and I do so as set out below.
4The first of the remaining two issues is the entitlement of Karen Stevenson to commissions on three “permanent” (i.e., full-time, permanent employee placements) employees placed with a related corporation to the Employer. The Employer is a personnel placement agency. Sales representatives such as Ms. Stevenson earn commissions in two ways: by obtaining an agreement from client employers to accept referrals of employees for employment with the client and by referring persons to employment with these clients. Commissions are paid on the basis of the fees charged by the Employer to client employers for the persons referred to them for employment. The parties agreed that the relevant portion of the employment contract governing these commissions is as follows:
III. Recruiting – Permanent – Commission
Ten percent (10%) of revenue on any permanent placements that you generate as a direct result of your applicant interviewing, assessment and referral to clients. This includes screening, interviewing, all required testing, reference and credit checks, assessment, referral to clients, scheduling of interviews with clients and securing placements of applicants with clients. An additional Ten percent (10%) will be paid on all revenue generated as a direct result of your sales efforts, after satisfying the above criteria.
5Mr. McDonald’s evidence was that the Employer’s standard manner of operating was to charge a commission for all employees who were permanently placed in positions with a client. There was a 90 day “guarantee” period. If the employee referred by the Employer proved unsatisfactory, then no fee was payable to the Employer. In this case, none of the three employees was kept on after the 90 day guarantee period. Hence there was no “revenue” and no commissions payable on the placement.
6Ms. Stevenson testified that she did not believe that this was the industry practice, based on her employment with a similar company. However, she did agree that the specific facts of these examples had not arisen in her former employment. She did question the fact that no documentation, or contract with the client was produced. Mr. McDonald testified that the client was a related corporation. It was the practice of the Employer to charge only an amount which was equal to what a sales representative such as Ms. Stevenson would earn on the usual fee. That is, the revenue was notional, for the purposes of calculating the commission owing to the sales representative only. No formal contract was entered into and book entries, rather than a more conventional method of payment, was used.
7These facts do constitute an explanation for the lack of formal contract. While I understand, in the context of a litigated process, Ms. Stevenson’s mistrust of this explanation, it appears to be logical and reasonable, and there is no evidence to contradict it.
8The contract calls for payment of commissions only on revenue earned by the Employer. If the Employer earned no revenue, then there is no commission payable. In this case the revenue would be notional, for the purposes of calculating commission only. Since the employees referred by Ms. Stevenson apparently did not remain employed beyond the 90 day guarantee period no revenue (notional or otherwise) was generated, and no commissions were payable. Therefore I do not uphold this claim by Ms. Stevenson. Provided the Employer produces to the Board on the next day of hearing proof that the three employees were not employed by the client for more than 90 days, there will be no order in this respect.
9The final issue relates to a claim for termination pay. I heard very little evidence about this issue, and nothing from the Employer. It will be necessary to schedule another day of hearing to deal with this claim for $384.62 plus $15.38 vacation pay. As I understand the issue, the Employer states that no termination pay is owing as Ms. Stevenson resigned. Ms. Stevenson’s position is that she was “forced to leave” because of constant deductions from her pay cheque.
10It is possible for an employee to resign, but nonetheless claim that she or he has been “constructively dismissed”. Constructive dismissal has been defined as “behaviour on the part of the employer that amounts to a fundamental alteration in the terms of employment.” (Smith v. Viking Helicopters Ltd. (1989) 1989 CanLII 4368 (ON CA), 68 O.R. (2d) 228 at 229 (O.C.A.)) or “where the employer has repudiated the contract of employment by a breach sufficiently serious to be repudiatory” (I. Christie, Employment Law, cited in Card Estate v. John A. Robertson Mechanical, Contractors (1985) Ltd. (1989) 26 C.C.E.L. 294 at 307 (O.H.C.). Whether Ms. Stevenson was constructively dismissed or simply resigned is a question to be determined by the Board on the next day of hearing. However, I would note that as a result of the Minutes of Settlement, it is beyond argument that the Employer deducted monies from Ms. Stevenson’s paycheque that it had no right to deduct. Whether this is grounds for an employee to treat the contract as one fundamentally breached or repudiated by the Employer will be determined by the Board.
Partial Disposition
11For the reasons given above, I make the following declarations and orders:
(a) The Director of Employment Standards is directed to release from the monies held in trust the sum of $1,396.43 to Karen Stevenson and to pay the remaining $176.40 into the Consolidated Revenue Fund;
(b) Since I have found the Order to Pay was in fact less than the minimum amount of money owing to Karen Stevenson, the application in Board File No. 0018-01-ES is dismissed;
(c) The Employer is directed to pay to Karen Stevenson the sum of $64.00 less statutory deductions on the $64.00 only (since the statutory deductions in respect of the initial order of $1,764.00 were made at the time the monies were paid to the Director in trust);
(d) The Registrar is directed to set one day of hearing to deal with the issue of whether the Employer owes $384.62 (plus $15.38 vacation pay) as termination pay for having constructively dismissed Karen Stevenson without notice.
12I am seized of this matter.
“David A. McKee”
for the Board