By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
When your employer changes how you earn commission—without your express or implied consent—and the change substantially reduces your overall earnings, the law may treat this as constructive dismissal.
In this article, we explain:
- What constitutes constructive dismissal.
- How a commission change could trigger a claim.
- Commission-related changes that may qualify.
- What steps to take if you’ve been impacted.
What Is Constructive Dismissal?
In short, constructive dismissal occurs when an employer substantially and unilaterally changes a fundamental term of your employment agreement without your implied or express consent. This could make continued employment unworkable, forcing the employee to claim that their employment has been constructively terminated.
Can a Commission Change Amount to Constructive Dismissal?
Yes. A unilateral change to your commission structure may amount to constructive dismissal if:
- The change substantially reduces your earnings—typically by at least 10% or more.
- Your employer imposed the change without your consent—either express or implied.
When both conditions apply, the Courts and Tribunals could view the change as a fundamental breach of contract.
Common Commission Changes That May Trigger Constructive Dismissal
1. Commission Rate Reduction
If your employer slashes your commission rate—say, from 6% to 2.5%—despite clear terms in your agreement, and you lose significant income as a result, you may have a valid claim for constructive dismissal.
2. Elimination of Commission
If your employer removes commission entirely and this change significantly reduces your income, the law may treat it as constructive dismissal.
3. Changes to the Commission Calculation or Formula
Employers sometimes tweak how they calculate commission—without changing the rate—but still hurt your earnings.
For example, the employer might:
- Exclude certain sales from eligibility
- Cap your earnings
- Redefine what counts as a “Qualifying Sale”
- Shift from a percentage-based system to a tiered model. If these changes make it harder for you to earn commission and reduce your overall compensation, they may breach a fundamental term of your employment contract.
4. Territory Reassignment
If your employer reassigns or splits your territory, and limits access to profitable clients or regions, this could drastically reduce your commissions—and trigger a claim.
5. Redistribution of Clients
If your employer reallocates high-value clients to other employees without your consent, and this reduces your commission, you may have grounds for constructive dismissal.
The above are just examples. Other unilateral changes to your commission structure may also qualify.
What Should You Do If Your Employer Makes Unilateral Changes to Your Commission that Impact Your Income?
1. Document Everything: Save emails, pay stubs, the original commission agreement, and other proof. Track your earnings before and after any change(s).
2. Raise the Issue Promptly: Email your employer or HR to object in writing. Clearly state that you do not consent to any changes, and clearly explain the financial impact on you.
3. Avoid Implicit Acceptance: Don’t delay. If you work under the new terms for too long, the law may interpret this as acceptance. Act quickly.
4. Seek Legal Advice Promptly: Before resigning, speak with an employment lawyer at Workplace Sage Legal. If you resign too early—or without proper documentation—you may hurt your chances of a successful claim and ability to recover damages.
Conclusion
When your employer unilaterally changes your commission structure and the change substantially reduces your income, you may have the right to claim constructive dismissal.
Don’t ignore it. Act promptly. Document everything. Seek legal advice.At Workplace Sage Legal, we help employees protect their earnings and assert their legal rights. Don’t let your employer pocket the commission you’ve rightfully earned and are entitled to! Book a consultation today.
If you require more general information, check out our recent blog containing 40 common terms and definitions that all employees in Ontario should know.
DISCLAIMER: This article/blog is provided for educational/informational purposes only. The views expressed are solely those of the author(s) and should not be attributed to any other party not listed as the author(s).
While reasonable efforts have been made to ensure the accuracy of the content provided, it does not constitute legal advice. Prior to relying on any aspect of this article, you should consult with a suitably qualified legal professional promptly in your relevant jurisdiction, to obtain advice tailored to your individual circumstances
Nothing in this article should be interpreted as forming a solicitor-client relationship or construed as a solicitation for legal services.
