Unclear Commission Plans Led to a Costly Wrongful Dismissal Award
Commission and bonus disputes are among the most common and costly forms of litigation between employers and departing employees. A recent Ontario Superior Court decision, Salam v. Ontario Research and Innovation Optical Network (ORION), 2025 ONSC 1839, is a reminder that vague or informal compensation plans can become enforceable and expensive.
For employers, this case shows why it is essential to use clear, finalized compensation plans and enforceable termination clauses to avoid unexpected liability.
As Christopher Achkar, employment lawyer and founder of Achkar Law, explains:
“Employers often underestimate how quickly unclear bonus or commission promises can become legal obligations. If your contracts and compensation plans aren’t airtight, you risk turning every performance bonus or discretionary commission into a legal entitlement and a major liability during terminations.”
The Case at a Glance
Mr. Salam worked for the Toronto-based ORION as a Director-level employee for just over two years. He earned a six-figure salary and alleged he was also entitled to commissions based on a draft incentive plan he had received during his employment.
When ORION terminated his employment without cause, it provided only Employment Standards Act (ESA) minimums plus 2.5 weeks’ extra pay.
Mr. Salam sued for:
- Over $600,000 in unpaid commissions
- Wrongful dismissal damages
The Court ruled that:
- The draft commission plan was never formally implemented, but
- ORION’s emails, letters, and payment history created a reasonable expectation that Mr. Salam would earn commissions of up to 15% of base salary
- Because ORION’s termination clause was not enforced, Mr. Salam was entitled to six months’ common law reasonable notice
- Post-termination earnings from his new job after four months were subtracted from damages
This still resulted in a significant award for a short-service employee.
Key Lessons for Employers
This case highlights the legal risks when compensation plans are unclear or inconsistently applied.
Employers can avoid similar disputes by:
- Use Written, Finalized Compensation Plans
Never rely on draft commission or bonus plans. If a plan is not approved or finalized, make that clear in writing and do not pay for it until it is finalized. - Keep Contracts and Termination Clauses Updated
If termination clauses are unenforceable, employees are entitled to common law reasonable notice, which can be months of pay, even for short-service senior employees. - Align Conduct with Contracts
The Court looked at ORION’s emails and payment history to decide what was owed. If your communications contradict the written contract, the Court may rely on your conduct instead. - Track Post-Termination Mitigation
Courts will reduce damages if an employee earns income during the notice period, but employers must have evidence of that income to rely on mitigation.
Protect Your Business from Compensation Disputes
The Salam v. ORION decision is a cautionary tale: even short-service employees can win significant wrongful dismissal and commission awards when employers use unclear contracts and informal pay practices.
At Achkar Law, we help employers:
- Draft and update enforceable employment contracts and termination clauses
- Create clear and legally compliant commission and bonus plans
- Reduce legal risk during dismissals and restructuring
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation.