Interpretation Guidelines Manual British Columbia Employment Standards Act and Regulations

EMPLOYMENT STANDARDS REGULATION - PART 7 - VARIANCES AND EXCLUSIONS

ESR Section 37.14 – Commission sales 


Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information


Summary

This section excludes commissioned salespersons from certain sections of the Act, and sets out specific provisions that apply instead.


Text of Legislation

37.14. (1) A salesperson paid entirely or partly by commission is excluded from sections 35 and 40 and Part 5 of the Act on the condition that all wages earned by the employee in a pay period exceed the wages that would be payable under those provisions when calculated at the greater of the employee's base rate or the minimum wage under the Act.

(2) Section 16, Part 4 except section 39, and Part 5 of the Act do not apply to a salesperson who is paid entirely or partly by commission and who is employed to sell, or sell a lease arrangement for, any of the following products:

(a) Repealed. [B.C. Reg. 118/2003.]

(b) heavy industrial or agricultural equipment;

(c) Repealed. [B.C. Reg. 118/2003.]

(d) sailing or motor vessels.

(3) Part 4 of the Act, except section 39, does not apply to a salesperson who is paid entirely or partly by commission and who is employed to sell, or sell a lease arrangement for, automobiles, trucks, recreation vehicles or campers.

(4) Part 5 of the Act does not apply to a salesperson who is paid entirely or partly by commission and who is employed to sell, or sell a lease arrangement for,

(a) automobiles or trucks, on condition that the employer pays that salesperson, in place of statutory holiday pay, 4% of gross earnings for the pay period on each pay cheque, or

(b) recreation vehicles or campers.

(5) For the purpose of section 16 of the Act, a salesperson who is paid entirely or partly by commission and who is employed to sell, or sell a lease arrangement for, automobiles, trucks, recreation vehicles or campers must be paid each month according to the following requirements:

(a) despite the amount earned in commission or other wages, the first payment referred to in section 17 (1) of the Act must be equal to at least the minimum wage for all hours worked, at the request of the employer, in the pay period;

(b) the final payment referred to in section 17 (1) of the Act must be equal to the greater of

(i) all wages earned in the month, or

(ii) the minimum wage for all hours worked, at the request of the employer, in the month to a maximum of 160 hours,

minus the amount paid under paragraph (a).


Policy Interpretation

This section applies to salespersons who are paid entirely or partly by commission.

A “salesperson” means a person employed to sell merchandise, products or a service. Selling a service is different from providing a service.

Example

A hair stylist is employed on a commission basis to cut hair and may from time to time sell hair related products. The hair stylist is not employed as a salesperson and therefore this regulation does not apply. In this case the selling of hair products is incidental to providing hair stylist services.

Commission” means incentive based pay in the form of a fee or percentage paid to a salesperson for a transaction including, but not limited to, the selling or leasing of goods. “Commission” does not include flat rate or piece rate wages.

This regulation contains provisions governing commission sales in general, as well as different provisions that are specific to salespersons selling, or selling a lease arrangement for:

  • Heavy industrial or agricultural equipment;
  • Automobiles or trucks; or
  • Recreation vehicles or campers.

Subsection 37.14(1)
Commissioned salespersons not otherwise addressed in Regulation

A commissioned salesperson is excluded from the following provisions of the Act:

  • Section 35 – Maximum hours of work before overtime applies
  • Section 40 – Overtime wages for employees not working under an averaging agreement
  • Part 5 – Statutory holidays

only if the total wages paid in a pay period are more than the salesperson would have been paid using the greater of their “base rate” or minimum wage plus any overtime or statutory holiday pay payable under sections 35 or 40 or Part 5 of the Act.

Base rate” means the hourly wage rate calculated using the same method set out in the definition of “regular wage” in section 1 of the Act.

Commission earnings are not included in the calculation of a base rate. If the employment agreement does not include a base hourly rate or salary for an employee, minimum wage applies.

Calculation required each pay period

A calculation must be made each pay period to determine whether the salesperson earned enough to be excluded from overtime pay and statutory holiday pay.

Example

Tegan sells carpets. She is paid by commission, but guaranteed a base rate of $600 per week. She normally works 40 hours per week and is paid every two weeks. In the bi-weekly pay period from March 29 to April 11, Good Friday falls on April 10 and she works on that day. She works 50 hours the first week and 40 hours the second week for a total of 90 hours. Her sales generate earned commissions of $1,875.00.

Each pay period, Tegan’s employer must determine whether her earned commissions exceed what she would have earned if paid at her base rate plus overtime and statutory holiday pay. Her base rate is $15/hour, calculated by dividing $600/week by her normal 40 hours worked. For this pay period her employer would do the following calculation:

Week 1

40 hours x $15/hr

   $600.00

 

10 overtime hours x $22.50

     225.00

Week 2

40 hours x $15/hr

     600.00

 

8 hours x $22.50/hr for working on Good Friday at time and a half

     180.00

 

statutory holiday pay (average day’s pay of $15/hr x 8 hours normally worked)

     120.00

Total payable at base rate

 

$1,725.00

 

 

       

In this pay period Tegan’s base rate plus overtime is less than the amount she earned in wages and commissions. In this pay period she is excluded from sections 35, 40 and part 5 of the Act, and is paid the $1,875.00 she earned in wages and commissions.

If the amount of her earnings in the above example had been less than $1,725.00, sections 35, 40 and part 5 of the Act would have applied, and the employer would have paid $1,725.00, the amount of the employee’s base rate plus overtime and statutory holiday pay.

Section 37.14(2)
Heavy industrial or agricultural equipment; sailing or motor vessels

Heavy industrial or agricultural equipment” refers to equipment such as logging equipment, bulldozers, tractors, factory equipment, woodworking equipment for industrial use and agricultural equipment such as a combine or hay baler. Hand tools such as a drill or saw would not be included even if used for industrial production.

Sailing or motor vessel” includes a ship or boat that is propelled by motor or by motor and sail.

Commissioned salespersons selling, or selling a lease arrangement for, these items are excluded from the following provisions of the Act:

  • Section 16 – Employers required to pay minimum wage
  • Part 4 – Hours of work and overtime (except Section 39 – No excessive hours)
  • Part 5 – Statutory holidays

Section 37.14 (3) to (5)
Automobiles or trucks:

Commissioned salespersons selling, or selling a lease arrangement for, automobiles or trucks are excluded from the following provisions of the Act:

  • Part 4 – Hours of work and overtime (except s.39 – No excessive hours)
  • Part 5 - Statutory holidays if the employer pays the salesperson an additional 4 percent of gross earnings each pay period.

These commissioned salespersons are entitled to be paid at least semi-monthly.

Recreation vehicles or campers:

Commissioned salespersons selling, or selling a lease arrangement for, recreation vehicles or campers are excluded from the following provisions of the Act:

  • Part 4 – Hours of work and overtime (except s.39 – No excessive hours)
  • Part 5 - Statutory holidays

These commissioned salespersons are entitled to be paid at least semi-monthly.


Related Information

Related sections of the Act or Regulation

ESA

ESR

Factsheets

Employee or Independent Contractor

Paying Wages

Keeping Records

Statutory Holidays

Annual Vacation

First Job/Entry Level/Minimum Wage