Minimum Wage and Commission Pay

If an employee’s pay is based completely or partly on commission, or by salary, employers must ensure that the employee receives an amount of pay that matches minimum wage.  This rule also applies to employees who are paid a “flat rate per day” or piecework.

In the case of commission sales persons, the employee’s sales (or the customer’s offers to purchase goods or services) are normally made at the employer’s place of business (think furniture sales, telemarketers, etc.) or the employee is a route salesperson.

Industry-specific and job-specific exemptions and special rules may apply to some other types of salespeople who earn commission. These are travelling sales persons, real estate agents and automotive sales persons. Please see the Special Rule Tool for details.

Travelling salespersons make their sales “away from the employer’s premises”, they travel within an assigned territory in order to sell merchandise or to solicit orders for the commercial enterprise the person represents by direct personal contact with customers and potential customers.

A route salesperson is someone who follows a particular route over the course of a day where the employer exercises “substantial control over the hours of work and the manner in which the work is performed”, for example, representatives of corporate retail chains or franchises, and similar jobs.

Here is an example from the Ministry of Labour:

Luba works on commission and has a weekly pay period. One week, she earned $150 in commission and worked 25 hours. The minimum wage in effect is $11.40 an hour.

The minimum wage ($11.40) multiplied by the number of hours worked in the pay period (25 hours) is $285.00. Luba is owed the difference between her commission pay ($150) and the required regular pay at the minimum wage rate ($285.00).

Luba’s employer owes her $135.00.

IMPORTANT NOTE: These employees are also entitled to overtime, making the calculation more complicated.

Contact me today for help with your compensation questions!