An Ontario appeal court has backed a group of insurance agents who argued that their refusal to go along with changes to their commission grid didn’t justify their dismissal.

The case involved nine former agents for Liberty Insurance Co. of Canada appealing a lower court decision dismissing their action for wrongful dismissal. They sought to set aside the trial judge’s findings that their refusal to acknowledge Liberty’s right to amend their commission schedule was a repudiation of an essential term of their employment contract justifying termination, and that they failed to mitigate their damages.

The company also cross-appealed the trial judge’s finding that the agents were its employees and not independent contractors.

On Tuesday, the court allowed the agents’ appeal and dismissed the company’s cross-appeal. The court ordered that the agents are entitled to judgment according to the notice periods assessed by the trial judge running from Jan. 4, 1999. The amount of each appellant’s judgment shall be calculated using the average of his property and casualty earnings during the years 1996-1998, it ruled.

“The vulnerability of employees who believe they may have been constructively dismissed and the difficulty of making the life-altering decisions they face must be recognized,” the court said. “In this context, it is understandable that such employees may wish to try to adjust to the new terms and conditions without affirming the employer’s right to make these changes and before taking the radical step of advancing a constructive dismissal claim. Allowing employees reasonable time to assess the new terms before they are forced to take an irrevocable legal position not only addresses their vulnerability, but also promotes stability and harmonious relations in the workplace.”

On this basis, it ruled that the agents had no obligation to acknowledge Liberty’s right to change the compensation schedule, and that their failure to do so did not constitute a repudiation of their agreement with the firm. “Even if LICC’s action is characterized as simply amending the compensation plan … I would find that the appellants’ refusal to acknowledge LICC’s right to make these changes to the compensation plan did not justify their dismissal and that they are entitled to reasonable notice.”