Quebec court rejects constructive dismissal class action

Allstate changed conditions of employment for agents across Canada; Ontario court earlier dismissed class action in that province

The Quebec Superior Court has denied a class action claim of constructive dismissal by insurance agents, following a similar decision in Ontario.

In July 2007, Allstate Insurance Company of Canada provided all of its agents across the country with advance notice of the implementation of a new business model. The changes included office relocations, office expenses now paid by Allstate, and a new compensation structure to be effective as of Sept. 1, 2009.

All of Allstate’s agents were given an individual letter with respect to the terms and conditions of their ongoing employment and a further provision of notice of pending changes for each individual agent, including the implementation of a minimum guaranteed income for a period of 24 months.

Allstate’s new business model included the establishment of insurance agencies and the identification of roles for Allstate’s agents to continue to offer, sell and manage Allstate’s insurance policies and other business of Allstate.

A group of agents resigned their employment and sought to certify a class action in various jurisdictions against Allstate, alleging the company had made “unilateral and fundamental” changes to their employment contracts, including a new system of compensation, resulting in their constructive dismissal. All-State employed 90 agents in Quebec, including Franck Agostino, who became the representative for the class action in Quebec.

In April 2011, the Ontario Superior Court denied certification of a class action in that province, finding the elements that contribute to constructive dismissal — a fundamental change in employment, reasonable notice of the change, and the employee’s mitigation efforts — are all contextual and must be analyzed on an individual basis.

Recently, the Quebec Superior Court reached the same conclusion as its Ontario counterpart in evaluation Agostino’s case — constructive dismissal claims must be evaluated on the basis of how the employer’s changes affect the individual employee’s employment contract and conditions, which eliminates the possibility of looking at many employees’ situations as similar.

“A claim for constructive dismissal is ultimately an individual claim,” said the court. “An assessment and examination of the actual terms and conditions of the individual's contract of employment marks the beginning of the court's inquiry.”

The court also found the two years’ notice was “substantial” and Allstate had the right to modify working conditions as part of his employment agreement and its agent procedure manual. In addition, Agostino resigned before the changes came into effect and therefore never experienced their effects. There was no prima facie case of constructive dismissal established, said the court.

For more information see:

Agostino v. Allstate du Canada, cie d'assurance, 2013 CarswellQue 6551 (Que. S.C.).
Kafka v. Allstate Insurance Co. of Canada, 2011 ONSC 2305 (Ont. C.J.).

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