An Ontario court decision confirms that withholding unpaid commissions after termination, including commissions owed during the statutory notice period, can justify punitive damages.
In C. v. Oracle Canada ULC, 2025 ONSC 4889 (CanLII), the court awarded an employee 12 months of reasonable notice plus $57,740.55 in punitive damages after the employer failed to pay commissions owed during the statutory notice period and delayed payment for eight months without an explanation that “withstands scrutiny” (paras 2(e), 59–63, 71–75).
What Happened in This Case
The employee worked as a senior sales executive for a large corporation for three years and seven months. Despite the relatively short length of service, the court found the role was specialized and very highly compensated (paras 5–10).
Key facts included:
- Specialized role: The employee worked exclusively on a single major client account and was responsible for sales leadership, account management, and growth (para 5).
- High earnings: The employee had a $180,000 base salary and earned substantial commissions, with annual income exceeding $700,000 in some years (paras 6–7).
The employee’s position was eliminated as part of a restructuring. After termination, the employee brought a wrongful dismissal claim (paras 1, 10).
Unpaid Commissions After Termination Were the Central Issue
The employee claimed that commissions totalling $57,740.55 were not paid during the statutory notice period as required, and were only paid eight months later (paras 59–61).
The court’s key findings included:
- Payment was delayed: The commissions were not paid during the statutory notice period and were remitted eight months later (paras 59–61).
- No persuasive explanation: The employer suggested it lacked information to calculate the commissions, but its undertaking response indicated it had the information and simply failed to account for the commissions as part of ESA notice, without explaining the eight-month delay (paras 60–63).
- “Legally untenable” position: The employer maintained a position that it owed only statutory entitlements under a termination clause, even though a similarly worded clause had already been found unenforceable in another case, and the court found the position “legally untenable” (para 63–64).
The court concluded that failing to pay statutory entitlements when due without explanation, and maintaining the untenable position without explanation, amounted to breaches of the duty of good faith in contractual performance and warranted punitive damages (para 71).
Mitigation Arguments Did Not Succeed
The employer argued the employee failed to mitigate by not applying for internal roles during a working notice period. The court rejected that argument because the employer did not provide specific, affirmative evidence of available comparable roles or the terms of those roles (paras 22–29).
The court also noted that while the employee found new work after eight months, the new role relied on commissions and the employee’s commissions were materially lower in the initial months. The court accepted that a sales role can involve a ramp-up period before earnings become comparable (paras 34–36).
The Employment Letter Worked Against the Employer
The employer provided a basic employment confirmation letter listing only the employee’s role, dates of employment, and base salary. The court found the letter was “damning” in the impression it would give to a reader and that it undermined the employee’s job search (paras 30–33).
Damages Awarded
The court awarded:
- 12 months of common law reasonable notice (para 34);
- base salary plus commissions, with commissions calculated using a three-year average (paras 37–43);
- benefits (calculated at 10% of base salary) (paras 53–55);
- RRSP matching (calculated at 6% of base salary) (paras 56–58); and
- $57,740.55 in punitive damages, equal to the improperly withheld commissions (paras 71–75, 79).
The court denied the claim for lost restricted stock units because the plan language unambiguously barred a damages claim for RSUs on termination (paras 44–52).
Key Takeaways for Employees
- Unpaid commissions after termination can be legally significant. If commissions are owed during the statutory notice period, delay or non-payment may expose an employer to additional damages (paras 59–63, 71–75).
- Punitive damages require an independent actionable wrong. In this case, the court treated breaches of the duty of good faith as that independent wrong (para 71).
- Severance (reasonable notice) depends on the full context. The court considered the employee’s specialized role, high compensation, age, and job market realities (paras 5–9, 14–21, 34–36).
- Employers must prove mitigation with real evidence. Vague assertions about internal opportunities were not enough (paras 22–29).
- Documents given at termination matter. The court criticized an employment letter that could reasonably be read as negative or “damning” (paras 30–33).
If your employer has withheld commissions, bonus, or other pay after termination, it may be worth getting legal advice before signing any release or finalizing a severance arrangement.