In a recent court decision, an Ontario employer was effectively ordered to pay a former employee certain commissions twice, due to the employer’s delay in paying the commissions. In Caroll v. Oracle Canada ULC, the court awarded the employee $57,000 in punitive damages, due to the employer failing to pay him over $57,000 in commissions for approximately eight months after the employee’s dismissal. In addition to being a cautionary tale of the risks of failing to provide employees with their statutory termination entitlements on time, Carroll is also notable in that the employee was awarded wrongful dismissal damages based upon a reasonable notice period that was disproportionate to his length of service, which was due in part to the employer’s refusal to provide him with a positive letter of recommendation.
Background
Mr. Carroll was employed by Oracle Canada ULC (“Oracle”) as a specialized and highly paid salesman for approximately three years and seven months when he was dismissed without cause as part of a restructuring in June 2023. He held the title of Global Strategic Client Executive and worked exclusively on increasing Oracle’s revenues with TD Canada Trust.
Mr. Carroll earned a base salary of $180,000, but he also earned a substantial amount in commissions, in addition to receiving other benefits. Indeed, he earned more than $700,000 in commissions each year in the final three years of his employment.
Oracle provided Mr. Carroll with four weeks of working notice upon his dismissal, which was inclusive of his statutory entitlement of three weeks’ notice. However, Oracle did not provide Mr. Carroll with the $57,000 in commissions that he earned during the three-week statutory notice period within seven days following his dismissal or by the company’s next regularly scheduled payday. Instead, the Company made the payment approximately eight months later than required.
Mr. Carroll commenced a wrongful dismissal action against Oracle, claiming 12 months of wrongful dismissal damages and punitive damages. The lawsuit was resolved by summary judgement.
The Decision
The court awarded Mr. Carroll 12 months pay in lieu of reasonable notice (less certain amounts), along with $57,000 in punitive damages for Oracle’s delay in paying his commissions.
The court found that 12 months of reasonable notice was appropriate despite that Mr. Caroll had less than four years of service. In reaching this conclusion, it held that “short service employees are often entitled to a proportionately longer period of notice”, and that length of service “must not be given disproportionate weight”.
Moreover, the court rejected Oracle’s argument that Mr. Carroll being a salesperson weighed in favour of him receiving a lesser notice period due to the relative ease of him securing new employment. In this case, the court found that Mr. Carroll’s specialization in the financial services industry and high-income level “put him into a more rarefied category of employment”. This weighed in favour of a longer notice period, as did Mr. Caroll’s advanced age of 61.
Furthermore, the court found that a longer notice period was also justified due to Oracle not providing Mr. Carroll with a positive letter of recommendation to aid his job search. Oracle only provided him with a letter of employment confirming his role, salary, and tenure. Notably, Oracle had a policy not to provide letters of recommendation to any employee. Despite this policy, the court found that Oracle not providing a letter of recommendation to Mr. Carroll warranted a longer notice period, finding that the letter that was provided was “the sort of letter that an employer would write for a mediocre or problematic employee in respect of whom an employer did not want to say anything proactively negative”, despite that Mr. Carroll “earned above target for overachievement”. As a result, the court ultimately awarded him 12 months of reasonable notice (less mitigation income earned, the one month of working notice, and the commissions paid for the statutory notice period).
The court also awarded Mr. Carroll $57,000 in punitive damages for the eight-month delay in paying the commissions that he earned during the three-week statutory notice period. In doing so, the court rejected Oracle’s assertion that the delay was due to not having the information necessary to make the payment. The court ruled that, “in the absence of any true reason for depriving the plaintiff of his commission entitlements at the time of his life when he most needs them”, Oracle’s delay breached its duty of good faith and warranted punitive damages. Moreover, the court awarded $57,000 in punitive damages because it found that awarding an amount “equal to approximately 100% of the amount at issue provides an adequate level of denunciation and disincentive to deter others from engaging in such conduct in the future”.
In conclusion, the court awarded Mr. Carroll twelve months of pay in lieu of notice based upon his base salary and the average annual commissions he earned in the past three years (less certain amounts earned/received), amounts for lost benefits, and $57,000 in punitive damages.
The Bottom Line
Carroll illustrates that employers can face substantial monetary consequences for failing to provide employees with their statutory termination entitlements within the time limits required by employment standards legislation, which includes commission income for the statutory notice period. Further, this decision is a good reminder for employers that employees can be entitled to a substantial amount of reasonable notice even where they have a relatively short length of service, especially where they are highly paid, specialized, and/or of advanced age. Finally, it is notable that the court in Carroll lengthened the employee’s notice period due to Oracle’s refusal to provide him with a letter of recommendation. Accordingly, employers facing potential wrongful dismissal lawsuits should consider providing letters of recommendation, even where they have a policy against doing so, or they may face increased wrongful dismissal liability.
If you require assistance with minimizing your business’ potential liability when ending employment relationships, please do not hesitate to contact us for expert legal advice and guidance.
