An Ontario court has handed down a split decision in a dispute over compensation between an insurance brokerage and a former employee.
In the case, both the firm and the employee claimed damages from the other for breach of contract.
The pivotal issue, according to the decision from Ontario’s Superior Court of Justice released February 16, is whether or not the plaintiff, Dan Lawrie Insurance Brokers Ltd., was entitled to deduct unpaid premiums on policies of insurance sold by the defendant, Monica White, from her earnings; where the firm had advanced the premium amount to the insurer.
White was hired by the firm in mid-January 2004 as a producer to help build its trucking insurance portfolio. She testified that it was never her understanding that she would have to pay a client’s unpaid premiums, and she objected to it, and on one occasion in 2005 tendered her resignation over this issue. But she was persuaded to stay on at the firm, with assurances that assistance in collecting premiums would be provided.
Eventually, White did leave the firm in January 2007. Up to that point, the decision says the brokerage “took advantage of its superior bargaining position. It imposed the requirement unilaterally and then assumed a take it or leave it attitude with White. This serves to underscore the inequality in bargaining positions and the unfairness inherent in such an arrangement.”
And, ultimately, the court concludes that the imposition of the charge back policy in this case “amounted to a breach of contract” by the firm.
After she left the firm, White was hired by a competing brokerage called Hargraft Schofield LP, and 13 of her clients followed her there. She denies that she solicited those clients, while the firm claims that she did in contravention of her contract.
The court found that White did not solicit her former clients. However, it notes that she did violate the employment agreement by taking on those clients, and she did receive commissions as a result, so the firm has a “valid and enforceable claim in damages” for the commission payments received by her from her new firm upon the transfer of that business, it says.
Ultimately, the court found that both sides breached the employment agreement. The firm must reimburse the defendant the total of the amounts charged to her account for unpaid premiums over the term of her employment, $42,281. And, she must disgorge to the firm the commission payments received by her from her new firm as a result of former clients transferring their business, which amounts to $34,289.