Unpaid Commissions — Ontario Employment Law
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About Unpaid Commissions
Sales professionals and dealmakers invest immense time and effort into building client relationships, making the discovery that an employer is refusing to pay earned commissions deeply frustrating. In Ontario, commissions are legally recognized as "wages" under the Employment Standards Act, 2000 (ESA). Because they hold this legal status, employers are strictly prohibited from withholding them, making unauthorized deductions, or imposing arbitrary technicalities to avoid paying what a worker is rightfully owed.
The most frequent catalyst for an unpaid commission dispute is a disagreement over when the money was actually "earned." Employers often point to complex company policies to argue that a commission isn't payable until a client's invoice is settled or a product is delivered. If an employee is terminated or resigns before that specific milestone occurs, the employer might try to pocket the commission. However, under Ontario common law, if you performed the work required to secure the sale during your active employment, you generally have a right to the resulting commission. While termination clauses sometimes attempt to extinguish these rights upon dismissal, Ontario courts scrutinize these clauses heavily and frequently strike them down if they violate minimum ESA standards.
Another significant issue arises from verbal agreements or "handshake deals" regarding commission structures. Without clear, written contracts, employers sometimes suffer from convenient amnesia regarding the agreed-upon percentage or bonus threshold. In these scenarios, courts will rely on contemporaneous evidence—such as emails, CRM logs, and past pay stubs—or apply the legal principle of quantum meruit, which essentially means "what the job is worth," to ensure the employee is fairly compensated for their successful efforts.
Because commission plans are heavily customized and the documentation surrounding them can be fragmented, figuring out exactly what you are legally entitled to recover requires a meticulous review of your specific situation. Engaging an employment lawyer to examine your contract, your sales history, and the timeline of events is the most effective way to determine whether you have a viable claim for missing payments.
Frequently Asked Questions
Are commissions treated the same as basic salary under Ontario law?
Yes. Under the Employment Standards Act (ESA), commissions are legally defined as wages. This means an employer cannot make unauthorized deductions from your commission cheques to cover things like business losses, stolen property, or unpaid client invoices.
My employer fired me right before a major deal closed. Can I still claim that commission?
In most cases, yes. If you were wrongfully dismissed, you are generally entitled to compensation for all wages—including reasonably anticipated commissions—that you would have earned during your reasonable notice period. Even if you were fired with cause, if you already completed the work to secure the sale before termination, the commission is likely still owed.
We only ever agreed to my commission rate verbally. Is there any way to legally enforce this?
A verbal contract is still a contract, though proving its terms is more challenging. An adjudicator or judge will look at indirect evidence (like emails, text messages, or historical payout patterns) and may apply legal principles like quantum meruit to award you fair compensation for the services you provided.
Can my employer change my commission structure without asking me?
No. A fundamental, unilateral change to how you are paid (such as slashing your commission rate or dramatically increasing your sales quotas to avoid payouts) can be grounds for a constructive dismissal claim. You should have a legal professional evaluate the new plan before deciding to quit or accept the changes.
How long do I have to pursue my employer for unpaid commissions?
Under Ontario's Limitations Act, you generally have exactly two years from the date you discovered (or should have discovered) the commission was not going to be paid to file a lawsuit. Missing this deadline usually means losing the right to recover the money.
When should I consult a lawyer about missing commission payouts?
Reach out to legal counsel as soon as your employer formally denies the payout, attempts to force you to sign a new, less favorable commission agreement, or if you plan to resign because you aren't being paid. Getting advice early helps ensure you secure the right evidence before your access to company systems is cut off.
Common Scenarios
- A software sales executive puts months of work into an enterprise software deal, but is laid off without cause three weeks before the client formally signs the contract, prompting the employer to claim the executive forfeited the massive pending commission.
- A real estate broker verbally agrees to a 60/40 commission split with a new agent, but when a multi-million-dollar commercial property closes, they only pay out 30%, claiming the higher rate was contingent on arbitrary targets that hadn't been documented.
- A manufacturing sales representative notices that their employer has been quietly deducting money from their monthly commission statements to cover the cost of a client who went bankrupt and failed to pay their invoice.
- Following widespread company restructuring, a group of commissioned employees is dismissed, leading to a certified class action lawsuit seeking aggregate damages for unpaid commissions earned by the group during their transition periods.
What You Should Know
- Preserve your paperwork by saving personal copies of commission plans, closed deal sheets, and written approvals from management, as contemporaneous evidence is crucial if an agreement was informal.
- Carefully review the 'trigger' language in your employment contract to understand precisely when a commission is considered legally 'earned' (e.g., upon contract signing versus upon final payment).
- Never agree to unauthorized deductions from your commission payouts to cover bad debts or company mistakes, as the ESA explicitly prohibits employers from downloading these business costs onto employees.
- If your employer attempts to retroactively change your commission structure for a deal that has already closed, seek immediate legal clarification before signing any new internal policies or acknowledgments.
Featured Cases
B. et al. v. Guycan Ltd.
2026 ONSC 5209 (CanLII) · 2026-09-14Wrongful Dismissal: Employee Status and Unpaid Commissions
This is a merits decision in a wrongful dismissal case involving an individual who worked through a personal corporation. The court determined the individual was an employee rather than an independent contractor, rejected the claim of constructive dismissal, and found that the individual had resigned. The court awarded damages for unpaid statutory public holiday pay and commissions, but found no entitlement to pay in lieu of reasonable notice.
M. v. Salesfloor Inc.
2025 ONSC 3739 (CanLII) · 2025-06-24Unpaid Commissions: Resignation & Policy Incorporation
This case concerns a dispute over unpaid commissions owed to a former employee after her resignation. The court determined that the 2020 Commission Policy governed the plaintiff's entitlements because she did not consent to the 2021 policy changes. Applying the principle of contra proferentem to resolve ambiguities in the disbursement clause, the court found the plaintiff was the effective cause of the deals and entitled to the commissions earned before her resignation.
W. v. United Lands Corporation Limited
2019 ONSC 3623 (CanLII) · 2019-06-28Unpaid Commissions: Verbal Agreement & Quantum Meruit
This case concerns a dispute over unpaid commissions and remuneration following the termination of the plaintiff's engagement with the defendants. The plaintiff alleged a verbal agreement for a 2% commission or $220,000 per annum, but the court found no enforceable agreement, deeming the alleged contract fabricated. The court awarded commissions based on a 1.5% industry standard for Phase I work and partial commission for Phase II, applying quantum meruit principles, while dismissing the claim for technical audit work due to a lack of contemporaneous evidence.
Wide Range v S.
2016 ONSC 6314 (CanLII) · 2016-10-14Employee Breach of Fiduciary Duty: Disgorgement and Commissions
This is an appeal from a trial decision involving an employee's breach of fiduciary duties and a dispute over unpaid commissions. The Divisional Court reviewed the issue of disgorgement for income earned through the employee's undisclosed employment and double-dealing, considering the argument that damages were unproven. The court also reviewed the finding that the employee was entitled to unpaid commissions, considering palpable and overriding error in the trial judge's conclusion that the employee had not waived or acquiesced to reduced payments.
M. v Ericsson Canada
2016 ONSC 3908 (CanLII) · 2016-06-21M. v Ericsson: Arbitration Clause Stay
This is an interlocutory motion regarding the enforceability of an arbitration clause within an employment contract. The plaintiff, who resigned and sued for unpaid commissions and wrongful dismissal damages in Ontario, sought to proceed in court, while the defendant sought a stay of proceedings to enforce an arbitration clause requiring disputes to be resolved in Texas. The court held that the arbitration agreement was enforceable despite the plaintiff's arguments regarding inconvenience and expense, and stayed the Ontario action.
B. v Global Credit
2015 ONSC 6842 (CanLII) · 2015-11-13Class Action Certification: Unpaid Commissions After Layoffs
This is a class action certification motion involving employees who were laid off and alleged unpaid commissions. The court certified the class action under the Class Proceedings Act, 1992, addressing claims for breach of contract and unjust enrichment regarding post-dated collections. Costs were fixed at $25,000 payable to the plaintiff following the defendant's summary judgment motion.
D. v. Equity Financial Trust Company
2014 ONSC 5585 (CanLII) · 2014-09-26Wrongful Dismissal: 11-Month Employee Awarded 2 Months Notice
This wrongful dismissal case involved a plaintiff terminated after 11 months of employment who sought 24.4 weeks' notice. The court applied the Bardal factors and awarded two months' reasonable notice, plus six weeks of additional benefits continuation, while dismissing the claim against the holding company and the human rights allegation. A partial judgment for $75,000 in admitted unpaid commissions was granted, with remaining commission disputes reserved for trial.
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.
A. v. O-Two Medical Technologies Inc.
2013 ONCA 733 (CanLII) · 2013-12-05A. v. O-Two Medical: Anticipatory Breach & Limitations
This is an appeal regarding a summary judgment decision on whether a claim for unpaid commissions was statute-barred. The Court of Appeal addressed whether the limitation period began at the time of an anticipatory breach or when performance failed, holding that the claim was not statute-barred because the limitation period began when payment was due and not made.
M.-W. v. Hansler Industries Ltd.
2008 CanLII 57457 (ON SC) · 2008-11-06Wrongful Dismissal: Commission-Based Employee Awarded Notice and Unpaid Commissions
A wrongful dismissal case involving a plaintiff who worked on a commission basis for over two years and was terminated without notice. The court determined the plaintiff was entitled to reasonable notice, which was reduced to two months due to mitigation. The case also addressed whether the plaintiff's contract was indefinite and whether unpaid commissions were owed under the terms of the agreement.
F. v. Holman Exhibits Limited
2008 CanLII 41172 (ON SC) · 2008-08-01Employment Contract Dispute: Summary Judgment Denied Over Unpaid Commissions
A merits decision involving a dispute over unpaid commissions under an employment agreement, where the plaintiff sought summary judgment but it was denied due to unresolved factual disputes and the defendant's set-off claims. The employer alleged breaches of exclusivity and confidentiality, and the court found that these issues required a trial.
S. v. K.
2005 CanLII 7647 (ON CA) · 2005-03-23Director Liability for Unpaid Wages in Wrongful Dismissal
This is an appeal from a trial decision in a wrongful dismissal action where the employee claimed unpaid commissions and damages. The central legal issue was whether directors and officers of the parent company could be held personally liable for the employer's wage debts under the Manitoba Corporations Act, as well as whether they owed fiduciary duties to the employee. The Court of Appeal addressed the application of statutory preconditions for director liability, limitation periods, and the discretionary award of costs to successful defendants.
Atlas Janitorial Services Co. v. G.
1994 CanLII 7522 (ON SC) · 1994-02-18Constructive Dismissal & Fiduciary Duty: Senior Employee Case
This case addresses multiple employment law issues including constructive dismissal, breach of fiduciary duty, and non-solicitation breaches by senior employees. The court found that changes to commission structures did not amount to constructive dismissal due to the employees' acquiescence, but their breach of fiduciary duties justified summary dismissal without notice. Additionally, the court awarded damages for unpaid commissions and punitive damages for contempt of court regarding non-solicitation injunctions.
309925 Ontario Ltd. v. T.
1981 CanLII 2895 (ON SC) · 1981-09-23No Fiduciary Breach; Counterclaim Awarded
A case involving a senior employee who resigned and acquired a business opportunity previously pursued by the plaintiff employer. The court examined whether the employee breached fiduciary duties and whether the plaintiff was entitled to damages for loss of goodwill and commissions. The court found no breach of fiduciary duty and awarded the defendant $6,287.95 on their counterclaim for unpaid commissions.