Many employees assume that if they are terminated without cause, their severance or damages will be based on their past salary or average earnings. A recent Ontario court decision shows that this is not always the case—particularly for professionals whose income includes commissions, bonuses, or other performance-based compensation.
The Case: Warren v. Canaccord Genuity Corp.
In Warren v. Canaccord Genuity Corp., the Ontario Superior Court awarded a senior investment banker over $2.5 million in wrongful dismissal damages (after mitigation). Most notably, the Court calculated damages largely by looking at what the employee’s replacements earned during the notice period, rather than relying only on the employee’s historical compensation. This approach may have significant implications for workers in industries where income fluctuates with market conditions.
Craig Warren worked for Canaccord Genuity for 18 years and held a senior role as Managing Director in its mining group. While his base salary was modest, most of his income came from annual bonuses tied to company performance and his own results. In September 2019, at age 52, Warren was terminated without cause or notice and commenced an action for wrongful dismissal.
Reasonable Notice: How the Court Set the Notice Period
The Court determined that Warren was entitled to 21 months of reasonable notice, taking into account his senior position, specialized experience, age, length of service, and the difficulty of finding comparable employment. These are the standard factors Ontario courts consider when assessing reasonable notice.
The Key Issue: How Do You Calculate Damages When Pay Is Variable?
Because Warren’s compensation depended heavily on bonuses that varied from year to year, the Court had to decide how to calculate what he would have earned during the 21-month notice period.
- Canaccord’s position: damages should be based on an average of Warren’s bonuses over the three years preceding termination.
- Warren’s position: the Court should look to what the two senior bankers who replaced him actually earned.
This is sometimes described as a “comparator approach”—using the compensation of a replacement (or a comparable employee) during the notice period as evidence of what the dismissed employee likely would have earned had they remained employed.
The Court’s Decision: A Comparator Approach (and Why It Mattered)
The Court agreed with Warren.
After his dismissal, Canaccord hired two new Managing Directors. Shortly thereafter, the mining sector entered a significant bull market, generating record revenues. The replacement employees received substantial bonuses during this period.
The Court found that Warren would likely have continued servicing many of the same clients, would have benefited from the same market conditions, and had the experience to perform at least as well as one of his replacements. The Court also accepted that Warren’s prior bonuses were negatively affected by internal dysfunction at Canaccord rather than poor performance on his part.
As a result, the Court concluded that relying on Warren’s historical bonuses would unfairly understate what he would have earned. Instead, it adopted the comparator approach and based damages primarily on what his replacement earned during the notice period—substantially increasing the value of his claim.
Why This Matters Beyond Investment Banking
While this case involved a senior investment banker, the principle applies much more broadly. Many roles involve variable compensation, including sales, financial services, technology, executive positions, real estate, and commission-based employment.
In industries affected by economic cycles, an employee dismissed just before a strong market upswing may be entitled to damages that reflect that upswing—even if their own past earnings were lower. Courts may be prepared to look at evidence of what would likely have happened during the notice period, rather than simply averaging what happened before termination.
Practical Implications for Severance Negotiations
Courts are increasingly willing to look forward, not just backward, when calculating wrongful dismissal damages. In practical terms, severance and damage assessments may depend on factors such as:
- the employer’s performance after termination;
- what a replacement or comparable employee earned during the notice period; and
- broader economic conditions affecting the role during the notice period.
Historical averages are not always the fairest measure—especially where compensation is bonus-heavy and the evidence supports a higher “but for dismissal” outcome.
Key Takeaways
- Damages may not be based only on past earnings where compensation is heavily variable.
- Replacement pay can be strong evidence of what the employee would have earned during the notice period.
- Market cycles matter: termination timing (e.g., right before an upswing) can materially affect damages.
- Bonus/commission roles deserve careful analysis—initial severance offers may rely on averages that understate potential entitlements.
Need Advice on Severance or Wrongful Dismissal?
The takeaway is that employees terminated without cause may be entitled to far more than what is initially offered—particularly where compensation includes bonuses or commissions, the role is senior or specialized, the business performed well after departure, or a replacement earned significantly more.
Every case turns on its own facts, but this decision confirms that Ontario courts aim to place employees in the position they would have been in had they not been dismissed, rather than simply replicating past compensation.
If you have been dismissed or are negotiating a severance package, obtaining legal advice early is important. An offer that appears reasonable at first glance may fall well short of your legal entitlements.
At Pavey Law, we regularly advise employees and employers on wrongful dismissal claims and severance negotiations. If you would like to discuss your situation, we would be pleased to help.