Terminating a Salesperson in Ontario: What You Actually Owe (Notice, Commission, and the One Clause That Can Undo It All)
Wouldn't it be great if the government handed us a simple five-step process for ending an employment agreement... one that was fair to the employee and the employer, where you just pay the number, no questions, no lawyers? You would follow the steps, cut the cheque, and everyone would move on.
Unfortunately, like most things in life, we take what could be a simple process and make it really hard. Terminating a salesperson in Ontario is a perfect example. The number in your head is almost never the number you owe, and the reasons never show up on the letter your template spits out.
So let me take the three things owners get wrong most often, in the order they usually blow up.
What does the Employment Standards Act actually require when you terminate a salesperson in Ontario?
Start with the floor, because you do owe it no matter what.
Under Ontario's Employment Standards Act, an employee terminated without cause is entitled to statutory notice (or pay in lieu) on a sliding scale by length of service: one week for three months to under a year, two weeks at one to three years, and one more week per year after that, capping out at eight weeks for eight years or more (Ontario Ministry of Labour, n.d.-a).
Then there is statutory severance pay, which is separate and which a lot of owners miss entirely. It is owed when the employee has five or more years of service and the employer has a global payroll of at least $2.5 million (or is severing 50 or more employees in a six-month period). It is calculated as one week of regular wages per year of service, including partial years, up to a maximum of 26 weeks (Ontario Ministry of Labour, n.d.-b).
Notice and severance are two different obligations. A ten-year rep at a company over the payroll threshold can be owed eight weeks of termination pay and up to another ten weeks of severance. That is the statutory picture, and it is the smallest version of the bill.
And honestly, I wish it stopped there. If the ESA floor were the whole story, a termination would be a payroll calculation and this article would be one paragraph long. It is not.
Why the ESA minimum is a floor, not the real number
Here is the part that catches people. The ESA figure is a minimum, not a cap. Unless a valid, enforceable termination clause in the contract limits the employee to the statutory floor, what they are actually owed is common-law reasonable notice, which is measured in months, not weeks, and has no fixed ceiling (Ontario Ministry of Labour, n.d.-a).
Offer only the statutory floor when common-law notice actually applies, and you have handed the employee a wrongful dismissal claim for the difference. Courts calculate reasonable notice using the factors from a 1960 case, Bardal v. The Globe and Mail Ltd.: the character of the employment, the length of service, the age of the employee, and the availability of similar employment given their experience, training, and qualifications (Bardal v. The Globe and Mail Ltd., 1960).
Read those four factors as a sales owner and you will see why sales talent lands at the high end. A senior rep or a sales manager is often older, long-tenured, and specialised, and there are only so many comparable seats in their territory. Long service is not rare, either. In 2023, 36.1 percent of Canadian workers had been with the same employer for ten years or more (Statistics Canada, 2024). A tenured, senior salesperson can attract many months of reasonable notice, and I have seen the range run well past a year for people who assumed "a couple of weeks."
The frustrating part is that almost all of this uncertainty is avoidable. A clean, enforceable employment agreement, written and signed before the person starts, is what pulls the number back toward the floor and out of a judge's hands. Most of the pain I see does not come from the law being harsh. It comes from there being no proper plan in place.
Do you still owe commission and bonus during the notice period?
Usually, yes. This is the one that turns a manageable number into a painful one for sales roles specifically, because so much of the pay is variable.
Reasonable notice is meant to put the employee in the position they would have been in had they been given working notice. So it is not just base salary. It includes the commission and bonus they would have earned over that period. The Supreme Court of Canada settled this in Matthews v. Ocean Nutrition Canada Ltd. A senior executive was pushed out shortly before a company sale that triggered a long-term incentive payout. He was found entitled to 15 months of reasonable notice, and the Court awarded him roughly $1.1 million for the incentive payment he lost during that window (Matthews v. Ocean Nutrition Canada Ltd., 2020).
The Court set a two-part test. First, would the employee have been entitled to the bonus or benefit as part of their compensation during the reasonable notice period? Second, if so, do the terms of the plan unambiguously take away or limit that common-law right? (Matthews v. Ocean Nutrition Canada Ltd., 2020).
That second step is where most plans fail. A boilerplate line saying the bonus is only paid to someone in "active employment" on the payout date does not clear the bar. The Ontario Court of Appeal had already made that point in Paquette v. TeraGo Networks Inc., holding that a dismissed employee was owed the bonus he would have earned across a 17-month notice period despite an active-employment clause, because that language alone was not enough to strip the common-law right (Paquette v. TeraGo Networks Inc., 2016). If your comp plan does not clearly and lawfully address what happens on termination, the default is that you keep paying the variable pay through the notice period. So have an employment lawyer look at your comp plan language. Do not rely on a boilerplate template, and please do not rely on ChatGPT.
The one clause that can undo your whole termination plan
This is the mistake that costs the most, because it converts everything above from "the number we agreed to in the contract" into "whatever a court decides."
Owners think a signed contract with a termination clause caps their exposure at the ESA minimum. It can, if it is drafted correctly. But in Waksdale v. Swegon North America Inc., the Ontario Court of Appeal held that if any part of the termination provisions violates the Employment Standards Act, the entire termination clause is void, even the parts you were relying on and even the parts you never tried to use. The Supreme Court of Canada denied leave to appeal in January 2021, so this is the law employers are operating under (Waksdale v. Swegon North America Inc., 2020).
In practice, an unlawful "we can fire you for cause and pay nothing" clause buried in a contract from 2019 can knock out the clean without-cause clause sitting right beside it. Void the clause, and the employee reverts to common-law reasonable notice with variable pay attached. The template that was supposed to protect you is the thing that exposed you.
Protecting a sales organisation is not only about non-solicitation covenants and who owns the customer list. It is also about the exit terms you agreed to on the way in, which is exactly the kind of structural detail I check when I run a retained search or step in as a fractional Sales and HR executive for an Ontario company. The cheapest time to fix a termination clause is before you hire, not the week you want someone gone.
How to terminate a salesperson the right way in Ontario
None of this is a reason to keep a rep who is not working out. It is a reason to do it with your eyes open. This is general HR information, not legal advice, and for any specific exit you should confirm the plan with employment counsel.
Know the two numbers before the meeting. Calculate the ESA floor (notice plus any severance), then get a realistic read on common-law reasonable notice using the Bardal factors. Assume the real exposure for a tenured, senior rep is months, not weeks (Bardal v. The Globe and Mail Ltd., 1960; Ontario Ministry of Labour, n.d.-a).
Add the variable pay in. Model the commission and bonus the person would earn across that notice window, not just base. For sales roles this is often the largest line, and Matthews makes clear you cannot assume it away (Matthews v. Ocean Nutrition Canada Ltd., 2020).
Have counsel review the termination clause before you rely on it. One offside "for cause" line can void the whole clause under Waksdale and reset you to common law. Do this before the termination, not after the demand letter (Waksdale v. Swegon North America Inc., 2020).
Fix the comp plan language going forward. If you intend variable pay to end at termination, the plan has to say so clearly and lawfully. A generic "active employment" clause will not do it (Paquette v. TeraGo Networks Inc., 2016).
Keep the exit conversation short, respectful, and consistent. Deliver the decision, confirm the next steps and the package in writing, and resist the urge to argue the reasons in the room. A clean, humane exit is your best protection against the bad-faith conduct that adds damages on top of notice.
I am in HR, and I have signed off on the "just pay the eight weeks" version of this because it was fast and it felt safe. It is neither. The founder who calls me the Thursday after is rarely undone by the size of the notice number. They are undone by learning it was three or four times what they budgeted, that the commission counted, and that the contract they trusted did not hold. You cannot control the market for reasonable notice. You can control whether you walk in knowing it.
Work with Ashley
I am Ashley Wesley (MA, CHRL, CIM), a Fractional VP of Sales and HR and a rretained search and selection partner based in Guelph, Ontario, Canada. I help owners and leaders at Ontario SMBs of roughly 20 to 500 employees hire the right sales and leadership people, build compensation and exit terms that hold up, and run the hard people decisions properly. If you are hiring, restructuring, or worried about how a sales exit might land, let's talk. Find me at ashleywesley.com.
In short
Terminating a salesperson in Ontario usually costs more than the Employment Standards Act minimum. The ESA notice schedule (up to eight weeks) and severance (up to 26 weeks) are the floor. Unless a valid contract clause limits it, the real obligation is common-law reasonable notice, measured in months, and it includes the commission and bonus the rep would have earned during that period. A single non-compliant clause can void your whole termination provision and reset you to common law, so the numbers and the contract both need checking before the exit meeting.
Key takeaways
The ESA minimum is a floor, not a cap: statutory notice tops out at eight weeks (eight-plus years of service) and statutory severance at 26 weeks (five-plus years and a $2.5 million payroll), while common-law reasonable notice has no fixed ceiling (Ontario Ministry of Labour, n.d.-a, n.d.-b).
Reasonable notice is set by the Bardal factors (character of employment, length of service, age, and availability of similar work), which tend to push senior, tenured, specialised sales talent to the high end (Bardal v. The Globe and Mail Ltd., 1960).
Notice pay includes variable pay. In Matthews v. Ocean Nutrition, a dismissed executive won roughly $1.1 million in lost incentive comp over a 15-month notice period (Matthews v. Ocean Nutrition Canada Ltd., 2020).
An "active employment" clause, on its own, does not remove the right to commission or bonus during the notice period (Paquette v. TeraGo Networks Inc., 2016).
Under Waksdale, if any part of your termination provisions breaches the ESA, the entire termination clause is unenforceable and the employee reverts to common law (Waksdale v. Swegon North America Inc., 2020).
Frequently asked questions
How much notice does a salesperson get when terminated in Ontario?
At minimum, the Employment Standards Act notice schedule: from one week (three months to under a year) up to eight weeks (eight-plus years of service), plus statutory severance of up to 26 weeks if the employee has five-plus years of service and the employer's payroll is at least $2.5 million. Unless a valid contract limits it to that floor, the employee is entitled to common-law reasonable notice, which is usually longer and is measured in months based on the Bardal factors (Ontario Ministry of Labour, n.d.-a, n.d.-b; Bardal v. The Globe and Mail Ltd., 1960).
Do you have to pay commission during the notice period in Ontario?
Generally yes. Reasonable notice aims to give the employee what they would have earned had they worked through the notice period, which includes commission and bonus. The Supreme Court in Matthews v. Ocean Nutrition set a two-part test: would the pay have been earned during the notice period, and does the plan unambiguously remove that right? A plain "active employment" requirement typically does not (Matthews v. Ocean Nutrition Canada Ltd., 2020; Paquette v. TeraGo Networks Inc., 2016).
Can a termination clause limit a salesperson to the ESA minimum?
Yes, but only if it is drafted to comply fully with the Employment Standards Act. Under Waksdale v. Swegon North America Inc., if any part of the termination provisions violates the ESA, the whole clause is void and the employee reverts to common-law reasonable notice. Have the clause reviewed before you rely on it (Waksdale v. Swegon North America Inc., 2020).
Is this legal advice?
No. This is general HR information for Ontario employers, not legal advice. Termination entitlements turn on the specific contract and facts, so confirm any exit plan with employment counsel before acting.
References
Bardal v. The Globe and Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.).
Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26. https://www.canlii.org/en/ca/scc/doc/2020/2020scc26/2020scc26.html
Ontario Ministry of Labour. (n.d.-a). Termination of employment. Your guide to the Employment Standards Act. Government of Ontario. https://www.ontario.ca/document/your-guide-employment-standards-act-0/termination-employment
Ontario Ministry of Labour. (n.d.-b). Severance pay. Your guide to the Employment Standards Act. Government of Ontario. https://www.ontario.ca/document/your-guide-employment-standards-act-0/severance-pay
Paquette v. TeraGo Networks Inc., 2016 ONCA 618. https://www.canlii.org/en/on/onca/doc/2016/2016onca618/2016onca618.html
Statistics Canada. (2024). Quality of employment in Canada: Job tenure, 2023. https://www150.statcan.gc.ca/n1/pub/14-28-0001/2024001/article/00007-eng.htm
Waksdale v. Swegon North America Inc., 2020 ONCA 391. https://www.canlii.org/en/on/onca/doc/2020/2020onca391/2020onca391.html
