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Can a small business owner change commission structure without notice?

By Joe Milstone |

Michael asked:

As a small business owner in Ontario who has independent sales representatives, do I have the right to change the commission structure with no notice, if not, how many days notice must be given.

Joe Milstone answered:

Assuming the sales agents are truly independent contractors (i.e., not employees in which case the question would be more complicated), the owner should be able to change the commission structure, although from a practical as well as conservative legal perspective some form of reasonable notice would be most prudent so that the sales agent has correct expectations as he or she continues to apply efforts. This of course assumes that there is no written or oral agreement that speaks to the issue at all; otherwise that should be looked to first. What constitutes "reasonable notice" is a slippery thing to pin down (which is one of many reasons why a proper written agreement is always the best practice) and is dependent on context and a number of other factors. It is also important not to ignore other related issues, such as respecting the old commission structure on pre-existing and potentially work in process orders, particularly where there are trailing payments/ongoing commissions flowing from those transactions.

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