An Ontario Superior Court judge awarded nearly $60,000 in punitive damages against Oracle Canada after the company withheld a terminated employee’s statutory commission entitlements for eight months without explanation.
The court found Oracle breached its duty of good faith by failing to pay the employee his commissions during the statutory notice period as required by the Employment Standards Act, then maintaining an untenable legal position about his entitlements despite a previous court ruling against the company.
The employee, a 61-year-old global strategic client executive who earned $180,000 in base salary plus significant commissions, was terminated without cause in June 2023 as part of Oracle’s restructuring after three years and seven months of service.
Twelve-month notice period awarded
The court awarded 12 months of reasonable notice, rejecting Oracle’s argument that the employee should receive only three to six months based on his sales role.
“Although [the employee’s] skills are no doubt more broadly applicable than solely to TD Bank, his specialization in the financial services industry and income level nevertheless put him into a more rarefied category of employment,” the court found.
The judge noted that courts have recognized highly specialized positions take longer to replace and that higher wage earners may require lengthier notice periods because fewer comparable positions are available.
The employee had earned $761,069 from Oracle in 2022 and $786,186 in 2021. In the first six months of 2023, he earned $725,674 before his termination.
Oracle argued the employee failed to mitigate damages by not applying for internal positions during his 30-day working notice period. However, the court found Oracle failed to provide sufficient evidence to support this claim.
“The evidence … is based on her ‘understanding.’ The basis of that understanding is not set out,” the court stated, referring to Oracle’s affiant who could not identify specific positions, salaries, or supports allegedly available.
Commission calculation disputes
The court ordered the 12-month notice period be calculated using a three-year average of the employee’s commissions rather than his higher 2023 earnings, citing uncertainties about sales cycles and seasonal patterns.
The employee had argued for calculations based on his $579,447 in commissions earned in the first six months of 2023, which would have resulted in annual commissions of $1,158,894. However, the court found insufficient information about whether those earnings would have continued through the year.
Stock unit claims rejected
The employee’s claim for damages related to restricted stock units was dismissed. The court found Oracle’s stock unit plan contained unambiguous language precluding any compensation claims related to forfeited awards.
The plan stated that awards were “not part of normal or expected compensation” and that “no claim or entitlement to compensation or damages shall arise from forfeiture of this Award resulting from the termination of [the employee’s] employment.”
Reference letter concerns
The court criticized Oracle’s reference letter as potentially damaging to the employee’s job search. The letter provided only basic employment confirmation without indicating Oracle’s policy against recommendation letters.
“A letter of this sort is damning in an employee’s search for a job hunt. It is the sort of letter that an employer would write for a mediocre or problematic employee,” the court found, noting this supported a longer notice period.
Punitive damages for statutory violations
The court’s harshest criticism focused on Oracle’s handling of statutory entitlements. Oracle admitted it had the information needed to calculate the employee’s commission entitlements but failed to pay $57,740.75 in statutory commissions for eight months.
Oracle also maintained that the employee was limited to statutory notice despite a previous court ruling in a similar case finding Oracle’s employment agreement termination clause unenforceable.
“This is not a case of Oracle seeking to distinguish an adverse court decision. Rather, Oracle adopted a legally untenable position against a former employee,” the court stated.
The court found this conduct constituted a breach of Oracle’s duty of good faith and warranted punitive damages to deter similar behaviour.
“When an employer seeks to take advantage of that power imbalance after termination when an employee is in one of the most financially vulnerable positions he or she is likely to be in, courts are justified in awarding aggravated damages,” the decision stated.
Vulnerability considerations
While awarding punitive damages equal to the withheld commissions, the court noted that as a high-income earner, the employee was less vulnerable than lower-paid workers who might lack capital reserves or ability to retain counsel.
The court suggested that sanctions for maintaining an unenforceable contract position despite contrary precedent should be addressed through costs rather than additional punitive damages.
The employee found alternative employment eight months after termination but initially earned significantly lower commissions in his new role, supporting the court’s finding that the 12-month notice period was appropriate for finding comparable employment.
The total damages award included 12 months of base salary, benefits calculated at 10% of salary, commission payments based on the three-year average, and RRSP matching contributions, reduced by working notice payments, statutory commissions already paid, and mitigation income.
For more information, see Carroll v. Oracle Canada ULC, 2025 ONSC 4889 (CanLII).
