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                   professional development
or contractor? Mischaracterizations can be costly
Increased awareness
of labour law could lead
to more litigation regarding employment contracts for financial advisors
by Fiona Collie
Moving up the ranks of a company is generally viewed
as a good thing. For investment advisors, this could mean starting out as a rookie, moving to a senior advisor position and eventually into management. Such a route, however, can have its drawbacks, particularly if the person leaves the com- pany on less-than-friendly terms.
Such was the case for two former advisors of Winnipeg-based Investors Group Financial Services
who are suing the company for wrongful dismissal, and asking for more than $10 million, after working at the firm for almost 20 years. The suit, which focuses on how the ex-advisors’ job descriptions as independent contractors are a “mischaracterization in law,” is one in a string of cases outlining the changing dynamics of work — both in the evolving world of financial services and more broadly.
“This conundrum — whether somebody is an employee or independent contractor — has been perme- ating in the legal community for many, many years, and the tests have been well established,” says Nancy Shapiro, a partner with Toronto-based Koskie Minsky, and legal counsel for the plaintiffs.
“It boils down to who has control over the working relationship,” she says. That is, who defines the work — the individual or the company?
   IThe franchise question
n the Investors Group case, lawyer Nancy Shapiro suggests the plain- tiffs may have been operating as a
franchise. As regional directors, the plaintiffs participated in the Regional Director Assured Value Program, which mandated that they “buy in” to their regions based on what Investors Group determined to be its “assured value,” which is determined based
on the regional director’s annual net income and asset income.
The plaintiffs paid 240 semi- monthly installments as regional directors. If the value of their regions increased, the plaintiffs were told they would be paid the difference over a 10-year period after leaving Investors Group. That 10-year per- iod was changed to 15 and, to ensure
payment, the plaintiffs have to follow a number of rules, such as not seeking employment in the financial services industry for 15 years following their departure from the company.
The plaintiffs effectively “bought a business; they bought a region,” Shapiro says. If they were operating an IG franchise, “there would be a whole different rulebook for that.”
That “rulebook” comes from
the Arthur Wishart Act (Franchise Disclosure), which came into effect in Ontario in 2000. The act requires franchisors to provide prospective franchisees with a disclosure docu- ment outlining details, including fees and conditions of termination.
Investors Group said in an emailed statement that it disagrees with the plaintiffs’ position and would “vigor- ously” defend the action.

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