(This Client Guide provides general information and is made available to provide a general description of the statutory employment standard for minimum wage determination for those involved in commission auto sales in Ontario. This is not intended to constitute legal advice, which by its nature is situation specific. The legal consequences of the minimum employment standards can be confusing and if you have questions about a specific employment standard or other legal problem, you should consult a lawyer who will provide legal advice only after reviewing all the facts relevant to your situation, rather than relying on the general information provided in this Guide.)

 The Employment Standards Act of Ontario (the "Act") sets out provincial minimum standards for certain specified employment conditions in Ontario. Since these standards are minimums only, an individual contract of employment may well entitle an employee to benefits beyond the statutory minimum standards. These standards do not apply to employees governed by the Canada Labour Code.

For employees who sell automobiles at least partly on commission, there are special rules for providing for a minimum wage. An employer must pay to each employee during a pay period (a pay period cannot exceed one month) an amount that is at least equal to the amount that the employee would have earned at the minimum wage. There are also quarterly reconciliation periods ending on March 31, June 30, September 30 and December 31 of each year. Essentially, if the commissions earned in the quarter do not exceed the minimum wage paid to the employee, the employee is entitled to keep the minimum wage paid without further adjustment. The reconciliation cannot result in an employee being paid less than the minimum wage during a reconciliation period.

Within the reconciliation period, however, a shortfall of commissions (in the sense that commissions earned would be less than the minimum wage paid to the employee) in one pay period can be offset against excesses (in the sense that commissions earned and paid to the employee were greater than the minimum wage) paid in an earlier pay period in the same quarter or reconciliation period. When the quarterly reconciliation period is looked at in total, the employee must receive at least the minimum wage for the entire reconciliation period. Once the reconciliation for the reconciliation period has been completed, the employer cannot use any excess in a subsequent reconciliation period to recover the shortfall in a prior reconciliation period.

An employee whose employment is terminated prior to the end of a reconciliation period, shall have the payments reconciled with wages at the termination date and such reconciliation cannot result in the employee receiving less than the minimum wage for the reconciliation period up to the termination date.