Court awards punitive damages, calls employers actions ‘gross misconduct’

Strangis v. Hub International Ltd., 2005 CarswellOnt 930 (Ont. S.C.J.)

An insurance executive was awarded $249,000 after an Ontario court found he had been constructively dismissed.

Gino Strangis worked for Hub International Ltd. from July 1995 to August 2003. For the last three years he was a commercial account executive selling commercial insurance.

In November 2000 the company made a decision to pay its sales executives entirely on commission. In early 2002 Strangis was asked to sign an employment agreement to that effect. The terms of the new agreement were less generous than the old, and Strangis did not sign. On four subsequent occasions he refused or did nothing when asked to sign a new contract.

Shortly thereafter Hub started calculating his commissions and withholding them on the basis that he was not entitled to the commissions until he signed the agreement. There were several such incidents. At least once Strangis was called to a meeting, shown a cheque he was told was for the commissions owed him and told he would receive the cheque if he signed the agreement.

In August 2003 Strangis served a statement of claim on the company for the commission, and the company terminated his employment. Strangis claimed wrongful termination and sought 18 months’ notice, full payment of benefits and general, special and punitive damages.

Hub claimed Strangis was not paid on commission. It relied heavily on a November, 2000 letter stating that, “an annual salary of $90,000 will be guaranteed to you as well as all other benefits you currently have including the vehicle allowance.”

The Ontario Supreme Court of Justice downplayed the importance of the letter. All of the other documents, including income tax returns and Hub’s own payroll records, supported a finding that Strangis was employed on a commission basis. The court also noted that provisions of an employment agreement that are ambiguous or unclear are to be construed in favour of the employee.

Strangis’s refusal to sign the agreement is not a proper basis for refusing to pay him the commissions he earned, said the court. The requirement that he sign it would have been a unilateral variation of their employment agreement, and he had the right to not sign it. The company had continued its relationship with Strangis, and this proves he was a valuable asset to Hub. His income was paid from premiums paid to the company and therefore he did not “cost” the defendants anything, ruled the court.

In calculating notice, the court took into account that Strangis was 39 at the time of his dismissal. He had worked for Hub for eight years and had reached the level of an executive. After being fired Strangis found another job relatively quickly, but the court noted that in the insurance industry it takes time to build up an income. It awarded him 12 months’ salary in lieu of notice.

In addition the court called the company’s action in offering to give Strangis the commission cheque if he signed an agreement “gross misconduct.” The amount withheld was deemed to be $5,450, and the court awarded twice that sum as punitive damages.

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