Post-Termination Commission Entitlements
Updated: May 29, 2020
Written by Kelli Day
Black & Associates
In today’s workforce, employers compensate their employees in many different ways. Some employees are paid on an hourly basis, some receive a basic salary, some are entitled to share in the profits that they generate, some receive commissions, and some are compensated based on a combination of these models.
An interesting question arises when an employee who is compensated on the basis of a profit-sharing or commission-based model leaves their job prior to receiving all outstanding monies that are due and owing to them pursuant to their particular compensation agreement.
Consider the following scenario:
A commission salesperson is required to sell advertisements for publication in their employer’s newspaper. The salesperson’s employment contract states that they will be entitled to their commission for the advertisements that they solicit once the advertisements are actually printed. The salesperson secures several advertisements during the month of June which are to be printed throughout the months of July and August but leaves the company to pursue another opportunity before those advertisements are published. In such a case, the case law indicates that the employee would be entitled to receive payment for any orders they obtained while they were still employed.
The rationale for this is simple: the employee performed their obligations under the employment contract by securing advertisements on behalf of the employer and for the employer’s benefit. The employer is therefore required to uphold its end of the contract by paying the employee for the work done prior to their departure.
This example highlights the importance of a properly drafted contract from the perspective of both employers and employees alike.
If you have questions about your entitlement to unpaid commissions or your obligations to a past employee, please contact one of our lawyers. We are experienced in providing employment law advice to both employers and employees and would be pleased to help you enforce your right to be paid.
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