Overview
A recent decision of the Ontario Superior Court of Justice highlights the risk to employers of punitive damages where statutory entitlements are withheld without justification. The case is also noteworthy for the Court’s assessment of the reasonable notice period and the calculation of damages for commissions over the notice period.
In Carroll v. Oracle Canada ULC, 2025 ONSC 4889, Justice Koehnen awarded punitive damages after finding that the employer breached its duty of good faith and fair dealing by failing to pay a former employee’s commissions owing during the statutory notice period under the Employment Standards Act, 2000 and by delaying those payments for eight months without a defensible explanation. The punitive damages ordered were equal to the full amount of wrongfully withheld commissions – $57,740.55.
In assessing the reasonable notice period, Justice Koehnen awarded an employee with 4 years of service, 12 months of notice. He pointed to the Mr. Carroll’s age, unique position and lack of a positive reference letter as factors warranting a longer notice period.
In assessing how to calculate damages for the notice period, Justice Koehnen considered the “averaging” approach versus the “recent earnings” approach. He opted for the “averaging” approach pointing to the lack of evidence of “sales in a forward-looking pipeline.”
The Facts
Mr. Carroll worked for Oracle as a Global Strategic Client Executive for approximately three and a half years before being terminated without cause as part of a restructuring. At the time of his dismissal, he was 61 years old and responsible for managing a major client account. His compensation included a base salary of $180,000 and substantial commissions, resulting in average annual earnings exceeding $700,000.
Following termination, Justice Koehnen found that Oracle withheld commissions that were statutorily required to be paid under the ESA, releasing them only eight months later.
Determining Reasonable Notice
Even though Mr. Carroll was a short-service employee, Justice Koehnen awarded him 12 months of reasonable notice, emphasizing that all the Bardal factors – from Bardal v Globe & Mail Ltd., 1960 CanLII 294 (ONSC) – supported a longer notice period. Specifically, Justice Koehnen found as follows:
Character of Employment
Mr. Carroll was not “simply a salesperson,” as Oracle argued. Rather, his role was specialized as he was responsible for providing leadership to the sales and account management process, and for developing and implementing business and account plans. His specialization and high income placed him in a “more rarefied category of employment,” where comparable opportunities were less readily available. As such, this factor supported a longer notice period.
Length of Service
Mr. Carroll had 3 years and 7 months of service. Although this was a relatively short period, Justice Koehnen explained that, depending on the other Bardal factors, short-service employees may still be entitled to proportionately longer notice periods. He cited Tsakiris v Deloitte & Touche LLP, 2013 ONSC 4207, which cautioned against placing undue weight on length of service, as other Bardal factors are less mathematical and more qualitative.
Age
At 61, Mr. Carroll’s age also supported a more extended notice period. Justice Koehnen observed that older employees generally face greater challenges finding comparable employment and cited cases recognizing the reduced marketability of workers in their late 50s and 60s. He reviewed similar cases where employees of comparable age and compensation received around 12 months of notice and found that Mr. Carroll’s circumstances fit within that range.
Alleged Failure to Mitigate
Oracle alleged that Mr. Carroll failed to mitigate his damages by not applying for internal roles during his 30-day working notice period. However, Justice Koehnen rejected this argument, finding Oracle’s evidence insufficient. The affidavit from Oracle’s HR representative was based merely on their “understanding,” and the Company provided no concrete evidence of available roles, compensation details, or any actual assistance offered. As such, Justice Koehnen held that Oracle failed to discharge its onus to prove a lack of mitigation.
Absence of a Letter of Recommendation
Justice Koehnen took issue with Oracle’s “conflicting positions” regarding an employment letter provided to Mr. Carroll. Oracle maintained that it was company policy to not write recommendation letters. However, they provided Mr. Carroll a letter confirming his title, employment dates, and salary “to assist” him in job search efforts.
Justice Koehnen found that such a letter was “damning,” and typically only written for a “mediocre or problematic employee.” Oracle also failed to mention its company policy against writing recommendations in the letter. Given Mr. Carroll’s successful track record as an employee, this absence suggested a longer notice period.
Calculation of Damages During the Notice Period
Commissions
Given that a significant portion of Mr. Carroll’s remuneration came from commissions that fluctuated, Justice Koehnen explored two different options for the calculation:
- The 3-year average approach (relied on by Oracle); and
- The recent earnings approach (relied on by Mr. Carroll).
Mr. Carroll’s position was that his commissions had steadily increased, starting with around $260k in 2020 to $478k in 2022. In the first 6 months of 2023, before his termination, Mr. Carroll earned $579k in commissions. He argued that his damages for the notice period should be based on the commissions he earned in 2023.
Due to a lack of evidence about Mr. Carroll’s future sales and market factors, Justice Koehnen declined to rely on the recent earnings approach. Instead, he found it more appropriate to calculate Mr. Carroll’s entitlement based on a 3-year average from 2020 to 2023. This approach was intended to provide a fairer and more reliable estimate, given the uncertainties in the record.
Restricted Stock Units
In addition to notice-based damages, Mr. Carroll sought compensation for lost Restricted Stock Units (RSUs), benefits, and employer RRSP contributions.
Justice Koehnen denied damages for lost RSUs, finding that Oracle’s RSU plan unambiguously precluded claims for damages on account of unvested stock units during the notice period. The plan expressly stated that the awards were not part of normal compensation and could not be used to calculate severance or other termination payments. Justice Koehnen distinguished cases where plan language had been ambiguous or silent on this point.
Benefits
Mr. Carroll was, however, awarded damages in lieu of lost benefits, calculated at 10% of his base salary, and RRSP matching contributions, calculated at 6% of his base salary, during the 12-month notice period.
Punitive Damages
The most significant aspect of the decision is the award of punitive damages.
Oracle withheld $57,740.55 in statutory commissions owed to Mr. Carroll during the ESA notice period, paying them only eight months after termination. Oracle explained that it lacked the information necessary to calculate the payment. However, Justice Koehnen found that the evidence did not support this assertion and that Oracle clearly had the relevant information at the time of termination but failed to act on it.
In addition, Justice Koehnen criticized Oracle for taking the position that it was not required to pay Mr. Carroll anything more than his statutory entitlements pursuant to his employment agreement, even though a similarly worded employment agreement involving another Oracle employee had been struck down as unenforceable, Nasser v. Oracle Global Services, 2022 ONSC 5401. Justice Koehnen called this position “legally untenable,” and inferred that Oracle’s actions were intended to place financial pressure on a recently terminated employee and to force a less favourable settlement.
Justice Koehnen held that Oracle’s conduct breached the duty of good faith and fair dealing in contractual performance, amounting to an independent actionable wrong that justified punitive damages. In doing so, Justice Koehnen emphasized that employers are expected to act with fairness and honesty, particularly when dealing with employees at their most vulnerable moment, which is upon termination.
Relying on authorities such as Pohl v Hudson’s Bay Company, 2022 ONSC 523, and Teljeur v Aurora Hotel Group, 2023 ONSC 1324, Justice Koehnen concluded that punitive damages equal to approximately 100% of the amount wrongfully withheld were appropriate to achieve denunciation and deterrence. While acknowledging that Mr. Carroll was a high-income earner and therefore somewhat less financially vulnerable than others, Justice Koehnen nonetheless found Oracle’s conduct serious enough to warrant a punitive award of $57,740.55, equal to the unpaid commissions.
Conclusions
The decision in Carroll v Oracle Canada ULC serves as a caution to employers that arbitrarily withholding statutory entitlements can have significant financial consequences. While punitive damages remain exceptional, Carroll underscores that courts will use them to denounce and deter employers who act in bad faith or disregard their statutory and contractual obligations. The case also calls into question the common practice of providing letters of employment rather than letters of recommendation. We will continue to monitor whether Justice Koehnen’s decision on this point is referred to in other cases.
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