How is commission income addressed when calculating severance under Ontario employment law?
In Shelp v. GoSecure Inc., 2025 ONSC 49, the Honourable Justice Charles T. Hackland of the Ontario Superior Court of Justice sitting in Ottawa affirmed that “it is common practice in the case law for courts to estimate a terminated employee’s commission income based on averaging pre-termination earnings.”
In making this observation, Justice Hackland referenced the court’s earlier decision in O’Reilly v. Imax Corporation, 2019 ONSC 342.
In O’Reilly, aff’d 2019 ONCA 991, Justice Faieta provided the following statement of law concerning awards of damages for a lost opportunity to earn commissions:
[43] The award of damages for a lost opportunity to earn commissions should reflect the amount of commissions that the employee would likely have received during the reasonable notice period. Often the measure of such lost opportunity is the employee’s average annual earnings in the three-year period prior to dismissal. However, if the employee’s commission income was increasing or decreasing in the period prior to dismissal, the court may find that it is appropriate to take into account only the employee’s most recent earnings.
Justice Faieta’s authority for such statement of law was the 2008 decision of the Court of Appeal for Ontario in Clark v. BMO Nesbitt Burns Inc., 2008 ONCA 663, especially at paragraphs 35-37.
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Sean Bawden is Experience. At Work.
I am an experienced employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, which is based in Ottawa. I have appeared, in-person, in courtrooms all across Ontario from Stratford, to L’Orignal, to Thunder Bay.
For 2.5 years I was in-house legal counsel providing employment law advice to one of Canada’s largest corporations and appeared in labour courts and tribunals literally the world over.
I have also been a part-time professor at Algonquin College and have taught Employment Law, Trial Advocacy for Paralegals, and Small Claims Court Practice.
I can be reached by email at [email protected] or by phone at 613.238.6321 x233.
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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.