CITATION: Kinch v. Dufferin Communications Inc., 2015 ONSC 1742
COURT FILE NO.: CV-14-504781-000
DATE: 20150319
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Karen Kinch
Plaintiff
– and –
Dufferin Communications Inc. carrying on business as Evanov Radio Group
Defendant
Kevin Fisher and Reshma Kishnani, for the Plaintiff
Judy Joo, for the Defendant
HEARD: March 16, 2015
WHITAKER J.
[1] This is a dispute concerning entitlement to vacation pay pursuant to the provisions of the Canada Labour Code, R.S.C., 1985, c. L-2 s. 183 (“CLC”). Both parties agree that the matter may be disposed of by way of summary judgment.
[2] At the beginning of the hearing the Defendant indicated that it did not oppose the Plaintiff’s request to file a Supplementary Factum. The Defendant also agreed that vacation pay was included in the term “wage” for purposes of the CLC.
[3] Pursuant to the provisions of the CLC, employers who fall within the federal jurisdiction are obliged to pay employees vacation pay, calculated on an employee’s annual income, in the amount of 4%, or 6%, after six years of employment with that employer. Vacation pay is to be paid to an employee in addition to receiving vacation time.
[4] The Defendant agrees with the assertion that it is obligated to pay 4% or after 6 years, 6% based on an employee’s annual wages. The Defendant takes the position that the calculation of vacation pay is based only on the Plaintiff’s commissions as this is in accordance with the agreement of the parties.
[5] There is very little in dispute between the parties, they agree that:
(i) ERG is an employer subject to the CLC;
(ii) the Plaintiff was employed by the Defendant in June of 2002 as a contract commission sales person;
(iii) on September 1, 2006, the defendant required that the Plaintiff execute a contract as a full-time commission sales person;
(iv) the Plaintiff executed another employment agreement dated August 30, 2010;
(v) the Plaintiff continued in the same role from her start date on September 1, 2006 to the date she resigned.
(vi) the Plaintiff’s remuneration was entirely commission sales.
[6] The issue which remains to be decided is whether there is an enforceable agreement between the parties which as the Defendant concedes means that vacation may be drawn off of commission sales or for that matter – any form of wage.
[7] The provisions of s. 184 and 185 if the CLC indicate that there is an obligation on the employer in the federal sector to grant annual vacation with pay. Section 188(a) contemplates that the employer may defer payment of vacation pay so that there may be a balance outstanding as of the date of termination of employment. There is nothing in the CLC which would indicate that the employer is precluded from agreeing with the employee that vacation is appropriately payable out of commission wages. Indeed, wages are expressly considered to include income from commission sales. There would be nothing unlawful about an agreement between the parties which had the effect of paying the Plaintiff only and exclusively on the basis of commission sales.
[8] In this case all of the Plaintiff’s compensation consists of income from commission sales. Compliance with the CLC must mean that payment of vacation will come from the employee’s sales. If the parties wished to come to another arrangement, it was open to them to do that as long as the formula for payment is 4% or 6% of total yearly compensation
[9] In the decision of referee E. Sloan at paragraph 25, Latham v. Brown & Morrissey Trucking, 2006 CarswellNat 6710, he notes, “In the absence of a consistent and transparent practice in which the appellants were clearly aware, permitting the employer to satisfy his vacation pay obligations in this way, the employer is bound to do as the Canada Labour Code (and provincial legislation) dictates”. Vacation pay is to be accumulated, held in trust or a trust-like arrangement and paid to the employee annually, or perhaps less often by mutual agreement. “
[10] The referee acknowledged that there would be nothing inappropriate about the parties coming to an agreement themselves at the outset of the employment relationship which had the effect of paying wages from commission sales obtained by the Plaintiff during employment and before termination.
[11] In summary, the CLC obliges employers to pay vacation pay at either 4% or 6% per year and there is nothing inappropriate about an agreement between the Defendant and the Plaintiff which permits the Defendant to satisfy its obligation to pay vacation wages by taking the vacation pay out of the collective commission sales.
[12] It is not necessary to deal with the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
[13] The Action is dismissed.
Costs
[14] At the conclusion of the hearing I heard the parties’ cost submissions. Costs should reflect a consideration of the factors set out in Rule 57 as well as the notion of proportionality and the reasonable expectations of the unsuccessful party. The Defendant is entitled to its costs inclusive of taxes and disbursements, fixed at $20,000 payable forthwith.
Whitaker J.
Released: March 19, 2015
CITATION: Kinch v. Dufferin Communications Inc., 2015 ONSC 1742
COURT FILE NO.: CV-14-504781-000
DATE: 20150319
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Karen Kinch
Plaintiff
– and –
Dufferin Communications Inc. carrying on business as Evanov Radio Group
Defendant
REASONS FOR JUDGMENT
Whitaker J.
Released: March 19, 2015