Many employees in Toronto receive commissions and bonus. In the recent case of Kraft v. Firepower Financial Corp., the Court awarded an exceptional commission for a sale crystallizing post-termination during the notice period but used an average of bonus pool compensation in the two years pre-termination to determine pay in lieu of notice. If the post-termination commissions were discoverable and quantifiable at the time of trial then it seems likely that the post-termination bonus pool was also. Was the bonus pool and the plaintiff’s participation substantially greater during the notice period upon the closure of the plaintiff’s exceptional sale then it was in prior years? It is not hard to see how these forward (commissions from the notice period) and backward (average of the preceding two years’ bonus pool payments) calculations might seem arbitrary to the employer writing the cheque.
How can employers know with any certainty how to calculate pay in lieu of notice? Do they look forward through the anticipated notice period? Do they look to past earnings? In an era where origination and creativity are increasingly part of the employee’s contribution how can employees be certain that they will be paid fairly for same? The answer is right in the decision: “…There is no language in the employment agreement between the Plaintiff and the Defendant that would alter or eliminate this common law right…”.
Employers are increasingly seeking comprehensive employment agreements from their employees and employees in certain industries now enjoy more leverage in negotiations with their employer than in past. Employer over-reaching can and often does void such agreements. Employees signing and hoping for the best are setting themselves up for difficulty in a foreseeable down cycle. The solution?
Get excellent advice before presenting or signing an employment agreement.