The Supreme Court of British Columbia has ordered a commissioned salesperson to repay his former employer $20,000 for advances against commissions he never earned.
The company, a printing business, paid the employee a bi-monthly draw of $1,600 against commissions. When the employee resigned in 2002 to work for a competitor, the company estimated that it had paid him draws which exceeded his actual earned commissions by more than $23,000. The company sued to recover the debt.
At trial, the defendant claimed he had not had any discussions with the company about what would happen if his employment ended and his draws exceeded his commissions. However, the court accepted the company’s evidence that the employee was told he would be required to repay any excess draws at the end of his employment.
The court distinguished these circumstances from a previous BC Court of Appeal decision in which the court considered the written contract of a commissioned salesperson that addressed in detail what would happen in the event of termination of employment, but was silent on repayment of excess draws. In that case, the court concluded that the debt did not survive termination.
In the present case, while there were no contractual terms addressing termination of employment, there was evidence that the company had told the employee that he would have to repay the debt if he left the company, and further, that he had agreed to this term. The court ordered the defendant to repay $20,000, which reflected a credit for weeks in which the defendant had worked more than 40 hours.