Severance for Commission and Sales Employees in Ontario
If you earn commission, your severance should reflect your real income, not just your base salary. Here is how lost commissions are valued and what you may be owed.
Key takeaways
- Commissioned employees are owed severance based on their full earnings, not just base salary.
- Your reasonable notice should include the commissions you would have earned over the notice period.
- Lost commissions are usually valued using your historical average earnings.
- Trailing commissions on deals already closed may be owed on top.
- An offer based only on your base salary is almost always too low.
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If a big part of your pay is commission, a severance offer built only on your base salary can badly understate what you are owed. Your real compensation is what the law protects, and for sales professionals that usually means the base plus the commissions you actually earn.
✅Quick answer. Commissioned and sales employees are entitled to severance on their total earnings, including commissions and other variable pay, not just base salary. Your reasonable notice should account for the commissions you would have earned during the notice period, typically valued from your historical average. You may also be owed trailing commissions on deals closed before you left.
Are commissions included in severance?
Yes. Severance is meant to put you in the position you would have been in had you worked through the notice period, so it captures your real earnings, not an artificially low base figure. For someone whose income is mostly commission, ignoring that income would defeat the whole purpose of reasonable notice.
Paid on commission? Do not settle on base salary alone
Your severance is measured on total earnings, commissions included. Estimate your notice range with our free, case-law-calibrated calculator.
How are lost commissions calculated?
Because future commissions cannot be known exactly, courts typically look at your recent history, often an average of your commission earnings over the past year or two, to estimate what you would likely have earned over the notice period. Strong or growing sales records help, and it is why keeping your own earnings records matters.
For sales and manager-level roles, Ontario notice awards commonly land here:
- Ludchen v. Stelcrete Industries (2013 ONSC 7495): a 44-year-old manager with 11 years received 12 months.
- Bernier v. Nygard International (2013 ONSC 4578): a 54-year-old with 13 years was awarded 18 months.
- Lake v. La Presse (2021 ONSC 3506): a 52-year-old with 5.5 years received 6 months, later adjusted on appeal.
What about trailing or pipeline commissions?
Separate from the notice-period value, you may be owed commissions on deals you had already closed or substantially earned before termination, even if they were scheduled to pay out later. As with a bonus, whether the plan can take these away depends on its wording, which courts read strictly.
Does a new sales job affect it?
The usual duty to mitigate applies: income from a comparable new role during the notice period can reduce your common law severance for that overlap. But you only have to seek comparable work, and your ESA minimums are not affected.
What should you do?
- 1.Gather your pay records showing base and commission earnings over recent years.
- 2.Do not accept an offer calculated only on your base salary.
- 3.Check your commission plan for how it treats deals closed before termination.
- 4.Get advice on the full value. A free review accounts for your commissions properly.
Frequently asked questions
Is severance based on my commission income in Ontario?
Yes. Severance for commissioned employees is based on total earnings, including commissions, not just base salary. Your notice should reflect the commissions you would have earned over the notice period.
How are lost commissions valued in a severance claim?
Usually from your historical average, often over the past one to two years, to estimate what you would likely have earned over the notice period. Keeping your own earnings records helps.
Am I owed commissions on deals I closed before being let go?
Often yes. Trailing commissions on deals already closed or substantially earned may be owed, even if they were set to pay out later. Whether the plan can take them away depends on its wording.
My severance offer is only based on my base salary. Is that right?
Almost always too low. If a significant part of your pay is commission, an offer that ignores it understates your entitlement. Get the full value reviewed before signing.
Carmen Reyes
Legal Writer, Mirza Law
Carmen Reyes is a legal writer at Mirza Law in Toronto. She writes about constructive dismissal, workplace changes, and how Ontario employees can protect themselves when their job changes under them.
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