Commissions — Ontario Employment Law
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About Commissions
In Ontario, commissions are a common form of performance-based pay, particularly in sales roles. Unlike a fixed salary, commissions are variable and tied directly to specific outcomes, such as closing a deal or hitting a sales target. Legally, commissions are considered 'wages' under Ontario's Employment Standards Act, 2000 (ESA). This classification is crucial because it means they are subject to the same protections as regular salary, including rules around timely payment and deductions.
The most frequent legal disputes over commissions arise when an employment relationship ends. A common question is: are you entitled to commissions after you've been terminated? The general principle under common law is that during a period of reasonable notice for a without-cause dismissal, an employee is entitled to all the compensation they would have earned had they continued working. This includes the commissions they likely would have generated during that notice period. Many employers try to limit this obligation through clauses in employment contracts or commission plans that state commissions are only payable to 'actively employed' staff. However, courts often scrutinize this language very carefully. For such a clause to be enforceable, it must be exceptionally clear and unambiguous in its intent to remove an employee's common law right to damages for lost commissions during the notice period. Any ambiguity is typically resolved in the employee's favour. The specifics of your commission plan and employment agreement are paramount in these situations, as they dictate when a commission is truly 'earned' and payable. Because these agreements can be complex and the financial stakes high, understanding your specific rights often requires a detailed review of your documents and the circumstances of your departure.
Frequently Asked Questions
Are commissions legally considered 'wages' in Ontario?
Yes. Under the Employment Standards Act, 2000 (ESA), commissions are included in the definition of 'wages'. This means your employer must pay them in accordance with the ESA's rules, and they are protected from unauthorized deductions.
My employer cut my commission rate without telling me. Is this allowed?
No, a significant, unilateral change to your commission structure that negatively impacts your earnings could be considered constructive dismissal. You may have the right to resign and claim damages as if you were terminated without cause.
Am I entitled to commissions on deals that close after I've been terminated?
Generally, yes. If you were terminated without cause, you are entitled to the compensation you would have earned during the reasonable notice period, including commissions. This right can only be removed by very clear and specific language in your employment contract.
What's the difference between a commission and a bonus?
A commission is typically a non-discretionary payment earned for achieving a specific, formulaic target (e.g., 5% of a sale). A bonus is often discretionary, meaning the employer has some choice in whether to pay it and how much to pay, and it may be tied to broader company or individual performance goals.
Is there a time limit to sue for unpaid commissions in Ontario?
Yes. For a claim under the Employment Standards Act, you generally have two years to file. For a civil lawsuit, such as a wrongful dismissal claim that includes lost commissions, the basic limitation period is also two years from the date the claim was discovered.
My contract says I must be 'actively employed' to receive my commission. Does this mean I get nothing after being fired?
Not necessarily. Ontario courts have often found that this type of general language is not specific enough to prevent an employee from claiming damages for lost commissions during their reasonable notice period. You should have a lawyer review the exact wording of your contract to understand its enforceability.
Common Scenarios
- A real estate agent is terminated without cause but is denied commission on a property that goes firm and closes two weeks after her last day of employment.
- A software salesperson is laid off and her employer argues she is not entitled to commissions from annual subscription renewals that occur during her severance period.
- An account manager's commission plan is changed from a percentage of total sales to a more complex structure based on profit margin, resulting in a 30% pay cut.
- A recruiter is terminated and the employer refuses to pay the commission portion tied to a candidate successfully completing their 90-day probation period, which ends after the recruiter's termination date.
What You Should Know
- Always keep a copy of your employment agreement and any written commission plans or policies. These documents are the primary evidence of your entitlements.
- Maintain your own records of sales, client interactions, and potential deals in your pipeline. This documentation can be vital for calculating lost commissions if you are terminated.
- If your employer attempts to change your commission structure, do not immediately agree. Document the proposed change in writing and seek legal advice, as it may constitute constructive dismissal.
- Never sign a severance offer or release without having an employment lawyer review it. You may be signing away your right to significant commission payments you would have earned during your notice period.
- Be aware that if your commission plan is ambiguous about payment after termination, courts in Ontario will generally interpret the ambiguity in your favour.
Featured Cases
W., W. v. P.
2026 ONCA 417 (CanLII) · 2026-06-15Post-Termination Commission & Unjust Enrichment Appeal
This is an appeal from a trial decision concerning a former employee's entitlement to post-termination compensation for fees billed and collected after departure, as well as claims for unjust enrichment and damages for breach of the duty of good faith. The Court of Appeal allowed the appeal in part, finding that the obligation to pay for files settled prior to departure survived termination, but denied entitlement for unbilled work in progress and dismissed the claim for unjust enrichment. The appeal was dismissed regarding the finding that the employee did not breach the duty of good faith, and the employer's damages claim was dismissed due to lack of evidence.
F. v. Yorkwest Plumbing Supply Inc.
2025 ONSC 5408 (CanLII) · 2025-09-23Wrongful Dismissal: 47-Year-Old Employee Awarded 6 Months Notice
This is a wrongful dismissal case where the plaintiff, a 47-year-old employee with 1.4 years of service, obtained a default judgment against the employer. The court awarded $170,415.42 in damages, which included $60,000 in unpaid commissions and damages calculated based on a six-month notice period. The court determined that a six-month notice period was appropriate given the employee's age, length of service, and applicable case law.
S. v. GoSecure Inc.
2025 ONSC 49 (CanLII) · 2025-01-02Wrongful Dismissal: VP of Sales Awarded 6 Months Notice
This wrongful dismissal case involved a 51-year-old Vice President of Sales who was terminated without cause after 10 months of employment. The court applied the Bardal factors to determine a reasonable notice period of 6 months, rejecting the defendant's argument for 2-4 months and the plaintiff's claim for 12 months. Additionally, the court awarded damages for sales commissions during the notice period, using average monthly earnings to calculate the amount.
K. v. Firepower Financial Corp.
2021 ONSC 4962 (CanLII) · 2021-07-15Wrongful Dismissal: 5.5-Year Employee Awarded 10 Months Notice
This wrongful dismissal case addressed the reasonable notice period for a plaintiff terminated after 5.5 years of service, applying the Bardal factors. The court awarded 10 months’ pay in lieu of notice, including base salary, benefits, and vacation pay, while also determining entitlement to commissions and bonus pool shares based on the notice period timeframe.
J. v. Dependable Mechanical Systems Inc.
2019 ONCA 923 (CanLII) · 2019-11-22J. v. Dependable Mechanical: Commission Appeal
The Court of Appeal for Ontario dismissed an appeal from a partial summary judgment that declared the appellant was not entitled to commissions or increased compensation under his employment contract. The court upheld the motion judge's decision, finding no error in granting partial summary judgment and refusing to entertain a new quantum meruit claim on appeal due to lack of pleading and evidentiary record. The appeal was dismissed with costs fixed to the respondents.
D. v. Brunel International Inc. (ITECC Consulting)
2019 ONCA 339 (CanLII) · 2019-04-26Wrongful Dismissal: Restoration of Action for Delay
This is a procedural appeal regarding the restoration of a wrongful dismissal action to the trial list after it had been struck for delay. The appellant, who claimed entitlement to commissions, sought to restore the action despite delays in obtaining necessary documents from a third party, arguing readiness for trial.
O. v. Imax Corporation
2019 ONSC 342 (CanLII) · 2019-01-25Wrongful Dismissal: 22-Year Executive Awarded 24 Months Notice
This wrongful dismissal case involved a senior executive with 22 years of service who was terminated without cause. The court applied the Bardal factors to determine a reasonable notice period of 24 months, finding no exceptional circumstances to extend it further. The plaintiff was awarded full commissions for pre-termination sales, damages for lost commissions during the notice period based on 2015 income, and damages for lost equity and pension contributions.
B. v. Global Credit & Collection Inc.
2017 ONCA 548 (CanLII) · 2017-06-30Debt Collectors Commission Appeal: B. v. Global Credit
This is an appeal to the Court of Appeal from a motion judge's decision regarding a class action for unpaid commissions. The appellant debt collector sued his former employer, Global Credit & Collection Inc., claiming that laid-off employees were owed commissions on a settlement the employer received from a client. The motion judge granted summary judgment for the employer and dismissed the class action, finding that employees had to exceed a breakeven financial target to earn commissions. The Court of Appeal dismissed the appeal because laid-off employees could not meet this condition since they were not actively collecting payments. The summary judgment dismissing the class action stands.
G. v. Newcom Business Media Inc.
2016 ONCA 898 (CanLII) · 2016-11-29Appeal allowed in part on bonus damages
This is an appeal from a wrongful dismissal damages ruling concerning the calculation of commissions and bonuses during the notice period. The Court of Appeal dismissed the appeal regarding the continuation of CARS advertising commissions but allowed the appeal on the bonus issue, finding a misapprehension of evidence by the motion judge. The court also varied the costs order based on an offer to settle.
B. v Global Credit
2016 ONSC 4610 (CanLII) · 2016-11-10Class Action Dismissed: Commission Entitlement Under ESA
This is a class action proceeding addressing whether former employees were entitled to commissions on post-dated collections returned to a third party after layoffs. The court analyzed the contractual commission structure, the Employment Standards Act, 2000, and a settlement agreement, ultimately finding no contractual or statutory obligation to pay commissions as the breakeven requirement was not exceeded. The class action was dismissed with no basis for aggravated or punitive damages.
H. v. Hostopia Inc.
2015 ONCA 762 (CanLII) · 2015-11-10H. v. Hostopia: 8 Months Notice Upheld
This appeal concerned the enforceability of a termination provision in an employment agreement signed after the employee commenced work and the calculation of damages for wrongful dismissal. The Court of Appeal upheld the trial judge's determination of an eight-month notice period and ruled that the employee was entitled to commissions earned during the notice period, subject to mitigation.
K. v Dufferin Communications Inc. c.o.b. as Evanov Radio Group
2015 ONSC 6610 (CanLII) · 2015-10-23Vacation Pay in Commissions: CLC Compliance
This is a judicial review or appeal concerning an employee's claim for unpaid vacation pay under the Canada Labour Code. The central issue was whether the employer could satisfy its statutory vacation pay obligations by including such pay within commission payments without explicit evidence or adjustment. The court addressed whether the employment agreement could override statutory minimums and whether the claim was statute-barred under the Limitations Act, 2002.
W. v. K.
2014 ONSC 4710 (CanLII) · 2014-08-14Independent Contractor: Commission Dispute & Termination
This case addresses whether the plaintiff was an independent or dependent contractor entitled to notice of termination under an oral agreement involving commission structures. The court found the plaintiff to be an independent contractor, meaning no notice of termination was required, but awarded unpaid commissions and interest for breach of the agreement.
Infinium Capital Corporation v. AB2000 Software Corporation
2013 ONSC 5022 (CanLII) · 2013-07-29Contractor Status & Just Cause Termination
This case addresses whether the plaintiff was an employee or an independent contractor under service agreements and whether a mutual release precluded claims under a prior agreement. The court applied the Sagaz test to determine the relationship, found the mutual release binding, and determined the plaintiff was not entitled to commissions. Additionally, the court found that the plaintiff's termination was for just cause due to the insertion of malicious code and breach of trust.
D. v. JCB Excavators Limited
2011 ONSC 6848 (CanLII) · 2011-11-23Wrongful Dismissal: 14.5-Year Manager Awarded 17 Months Notice
This wrongful dismissal case involved a senior manager with 14.5 years of service who was terminated and provided with 14 months' notice. The court determined that the reasonable notice period was 17 months, applying the Bardal factors including age, position, and availability of comparable employment. The plaintiff was awarded compensation for unpaid commissions, pension contributions during the notice period, but no damages for bad faith dismissal.
Weyerhaeuser Company Ltd. v. Ontario Human Rights Commission
2006 CanLII 35005 (ON SCDC) · 2006-10-10This is a judicial review proceeding concerning the jurisdiction of the Ontario Human Rights Commission to hear complaints. The Divisional Court addressed whether the Commission had the authority to proceed with the complaints in question.
B. v. La-Z-Boy Canada Ltd.
2006 CanLII 23254 (ON SC) · 2006-07-05Employment Commission Dispute: B. v. La-Z-Boy
This is an employment law case concerning whether an employer and employee relationship existed between the parties entitling the plaintiff to reasonable notice of termination.
S. v. Church's Flooring
2005 CanLII 46744 (ON SC) · 2005-12-13Employment Commission Dispute
An employment law case concerning the payment of commissions to an employee. The decision addresses procedural aspects of the claim.
Hobbs v. TDI Canada Ltd.
2004 CanLII 44783 (ON CA) · 2004-12-01Hobbs v. TDI Canada Ltd: Post-Hiring Agreement Enforceability
This is an appeal concerning the enforceability of a post-hiring Solicitor’s Agreement and the employee's entitlement to unpaid commissions. The Court of Appeal found the agreement unenforceable due to lack of valid consideration, as continued employment did not suffice. Consequently, the appellant was awarded $52,778.81 in unpaid commissions based on agreed rates.
L. v. M.
2003 CanLII 64212 (ON SC) · 2003-07-09L. v. M.: Commission Dispute
This is a legal dispute concerning employment remuneration, specifically focusing on the payment of commissions. The case touches upon both labour law and commercial law aspects of employment contracts.