B.C. swimming coach loses wrongful dismissal suit

Former head coach of the Victoria Amateur Swimming Club was an independent contractor, not an employee, says the British Columbia Supreme Court
|employmentlawtoday.com

The former head coach of the Victoria Amateur Swimming Club has been denied damages for wrongful dismissal by the British Columbia Supreme Court.

Ron Jacks started working for the club as the head coach in 1984. His initial contract was a verbal one, replaced after about four years with a series of written contracts. The final contract between Jacks and the club started Sept. 1, 2000, and ended Aug. 31, 2002.

In January 2002 Jacks received a letter from the club stating it did not intend to renew his contract. Based on the wording of the letter, and the subsequent actions of the parties, Jacks said he did not receive clear and unequivocal notice that his employment was to be terminated.

The club advertised for a new head coach in March 2002 and hired one to start on Sept. 1, 2002, at which time Jacks’ employment with the club ceased.

In addition to working for the Victoria club, Jacks also worked as director of swimming for the Juan de Fuca Coho Swim Club, a job he started in June 1992. On April 2, 2002, he received a letter from the president of the Coho club stating they could not renegotiate a contract with him because they had started a recruitment process to attract new candidates. His position with Coho was effectively terminated Sept. 1, 2002.

He launched a wrongful dismissal suit against the Victoria club and the Coho club.

Independent contractor or employee?

Damages for wrongful dismissal are generally only available to workers in an employer-employee relationship, said Justice Jacqueline Dorgan of the B.C. Supreme Court. Independent contractors usually have no claim to such damages.

She said the long history of case law in which various tests have been formulated to determine whether the individual is an employee was summarized in

Doyle v. London Life Insurance Co.

, a 1984 decision by the B.C. Supreme Court. Essentially the tests are:

•whether or not the individual was limited exclusively to the service of the principal;

•whether or not the individual is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold;

•whether or not the individual has an investment or interest in what are characterized as the “tools” relating to his service;

•whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission; and

•whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it?

’Dependent’ contractors

Even where an individual is not found to be an employee, courts have found that entitlement to reasonable notice may still be owed, arising out of the length, exclusivity and dependence of the relationship between the parties.

“These are sometimes referred to as ‘intermediate’ cases, where the service provider is neither a free agent nor a fully traditional employee,” said Justice Dorgan.

A variety of factors must be weighed to determine if reasonable notice is warranted in these intermediate cases, including the specific terms of the contracts, she said.

Marbry Distributors Ltd. v. Avrecan International Inc.

, a 1999 B.C. Court of Appeal decision, summarized the key factors as follows:

Duration/permanency of the relationship.

The longer the duration of the relationship or the more permanent it is militates in favour of a reasonable notice requirement.

Degree of reliance/closeness of the relationship.

As these two interrelated sub-factors are increased the more likely it is that the relationship falls on the employer/employee side of the continuum. Included in this factor is whether the sale of the defendant’s products amounted to a significant percentage of the plaintiff’s revenues; and

Degree of exclusivity.

An exclusive relationship favours the employer-employee classification.

In

Marbry

the court said that “none of these factors are by themselves conclusive and not every factor need be present in order to classify a relationship as one requiring notice to terminate.”

Swim coach not an employee

Under the test summarized in

Doyle

above, the evidence strongly suggests Jacks was not an employee of either the Victoria club or the Coho club. Justice Dorgan based her opinion on the following:

•He was not limited to the service of either clubs. This is particularly true of Coho, from which Jacks derived only about 15 per cent of his overall income. Evidence seems to indicate Jacks had contracts with at least four other organizations during the period he worked for Victoria and Coho.

•His salaries for the relevant time, with both Coho ($15,000) and Victoria ($76,000) were calculated at a flat rate per year or season, plus GST. This is suggestive of the status of a contractor.

•In his tax returns, his income is categorized as business rather than employment income.

•Although in practice Jacks was in charge of hiring other coaches, technically he made recommendations to the board and the board hired the coaches. Thus, he did not hire staff directly and in that respect, he acted as any regular senior management employee might.

•Jacks had no investment or interests in the “tools” relating to his service, including the office equipment he used in his administrative duties, the swimming pools, or any of the athletic equipment. But he did have a direct relationship with some of the elite swimmers he coached. When he ceased working for Victoria and Coho, most of the swimmers continued working with Jacks. This suggests he had a direct client relationship with these swimmers and this was not strictly an employee of the defendants.

•In his 2000, 2001 and 2002 income tax returns, Jacks claimed deductions of $10,000 to $20,000 each year for business expenses related to “salaries, wages and benefits.” He testified the money was paid to his wife for secretarial services. This is an indicator of an independent contractor status as employees traditionally do not subcontract such services.

•Jacks was subject to some risk of profit or loss through his services, in that he stood to earn more money through endorsement contracts if the swimmers he coached won competitions. He said parties other than Victoria and Coho paid him performance bonuses for medal winners, an indicator of broader financial ties than those of a traditional employee.

•The evidence shows that sometime in late 2001 or early 2002, Jacks and others began to organize a new swimming club, Pacific Coast Swimming. Among other things, Pacific Coast Swimming was to cater to and provide services to some Victoria club athletes. This indicates Jacks, in his previous relationship with Victoria and Coho, did have a “business-like” interest in the elite swimmers he worked with which went beyond that of a typical employee.

Further, in 2001, the Victoria club expressly confirmed they wanted their coaches to be independent contractors rather than employees in order to avoid liability and responsibility for withholding taxes and seeing to other payroll deductions.

Jacks not a ‘dependant’ contractor

After ruling he was not an employee, Justice Dorgan then turned her attention to whether Jacks was a “dependent” contractor.

In applying the

Marbry

test, she said his employment did not fit within the “intermediate” category of dependent contractors because:

•Jacks contracted his services to other organizations;

•there was no persuasive evidence of how much time Jacks devoted to the different organizations he contracted with — during the relevant times he also coached at the University of Victoria, for the National Coaching Institute and some national teams;

•the evidence showed Jacks was driven to contract not by the organization itself but rather by the opportunities to coach elite athletes as those opportunities presented themselves;

•when away providing coaching services to other parties he arranged for someone else to fill his contractual obligations; and

•Jacks made about 15 per cent of his income from Coho, meaning that although the Victoria club was a significant source of income, it was not the only source.

Not an indefinite contract

The court said it was satisfied that his contract with the Victoria club was a fixed-term contract.

In some cases where employees have worked continuously for a long period under a series of fixed-term contracts, courts have held that such contracts are indefinite and that such employees are entitled to reasonable notice upon dismissal.

In

Ceccol v. Ontario Gymnastics Federation

, a 2001 decision by the Ontario Court of Appeal, the court said:

“A court should be particularly vigilant when an employee works for several years under a series of allegedly fixed-term contracts. Employers should not be able to evade the traditional protections of the (

Employment Standards Act

) and the common law by resorting to the label of ‘fixed-term contract’ when the underlying reality of the employment relationship is something quite different, namely, continuous service by the employee for many years coupled with verbal representations and conduct on the part of the employer that clearly signal an indefinite term relationship.”

But Justice Dorgan said the facts in

Jacks

do not support a finding that fixed-term contracts were used to avoid statutory or common law notice requirements. She said the court in

Ceccol

found the termination provisions in the contract were ambiguous and that the plaintiff understood her employment was permanent.

“The termination provisions in Mr. Jacks’ contract with (the Victoria club) are not ambiguous,” she said. “He had access to both an advocate and legal advice when he signed the contract.”

The final contract he signed with the Victoria club was for two years, something that was contentious at the time because he had been given four-year contracts in the past.

“There is clear evidence that Mr. Jacks understood he was signing a two-year contract and that he understood the consequences of doing so,” said Justice Dorgan.

His claim for wrongful dismissal was dismissed.

For more information see:

Jacks v. Victoria Amateur Swimming Club

, 2005 CarswellBC 1286, 2005 BCSC 778 (B.C. S.C.)

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