Employers Required to Pay Minimum Wage - Act Part 3, Section 16
This section explains what wage employers must pay their employees.
16. (1) An employer must pay an employee at least the minimum wage as prescribed in the regulations.
(2) An employer must not, directly or indirectly, withhold, deduct or require payment of all or part of an employee’s wages in a pay period to comply with subsection (1) in relation to any other pay period.
Employers must pay employees at least the agreed-upon rate of pay. This rate of pay must meet or exceed the minimum wage rates as set out in the Employment Standards Regulation.
The wage rate enforced by the director is the one agreed to between the parties, either verbally or in writing. The wage rate may change during the course of employment, but cannot be reduced without giving the employee clear and adequate notice in writing. A reduction in the wage rate may be considered to be termination of employment under s.66 of the Act.
Foreign Workers entitled to wage rate in Labour Market Impact Assessment
In order to hire foreign workers, employers must receive a positive Labour Market Impact Assessment (LMIA) from Service Canada. Among other things, the employer must offer prevailing wage rates and acceptable working conditions. The employer must state the proposed wage rate, and the LMIA will not be issued if the wage rate is below the prevailing wage rate.
The Director considers the wage rate stated in the LMIA to be the one agreed to between the parties, and will enforce that wage rate.
The minimum wage rate established in Part 4 of the Regulation will be the wage rate enforced by the director if:
- no agreement was reached between the parties on a wage rate; or
- it is impossible to determine what wage rate was agreed to between the parties.
Note: The onus is on the employer to inform each employee of their wage rate.
Section 27 of the Act requires the employer to display the wage rate on each wage statement.
Section 28 of the Act requires the employer to keep a record of an employee’s wage rate.
See Part 4 of the Employment Standards Regulation for a list of minimum wages including:
- minimum hourly rate;
- minimum wage for liquor servers;
- minimum daily wage for a live-in home support worker and a live-in camp leader;
- minimum wage for certain resident caretakers; and
- minimum wage for certain farm workers.
An employer is prohibited from applying earnings from one pay period to another pay period for any purpose, including to meet the minimum wage requirements of the Act. This is of particular significance to employees with earnings paid entirely, or in part, by commission.
Commission Sales and Minimum Wage
Commissioned salespeople are also entitled to earn at least the equivalent of minimum wage, subject to the exceptions set out in Employment Standards Regulation s. 37.14. They may be paid entirely by commission or by a combination of salary and incentives. Where an eligible salesperson's commissions do not total at least the minimum wage for the number of hours worked in a given pay period, the employer is obliged to pay the difference between the commissions earned and the minimum wage. Therefore, each employee should be receiving at least minimum wage for all hours worked on each pay cheque except as modified by s. 37.14 of the Regulation.
If an employer has to make up a shortfall between commissions actually earned and minimum wage owed for hours worked in a pay period, the employer cannot recover that payment in a subsequent pay period where the employee makes a commission in excess of minimum wage.
An employee works as a sales representative for a neighbourhood newspaper selling advertising. Earnings are based entirely on commission sales. The employee works 6 hours per day, Monday to Friday. Their sales record is very good and they usually earn over $1,500 every two-week pay period. During one pay period, however, the employee earns only $500. When they ask their employer about the small commission and minimum wage, they are advised not to worry; they will get the additional wages required to bring them up to minimum wage.
The employer cannot deduct the additional wages from a subsequent pay cheque, as it is not permissible to use future earnings to top up wages in a current pay period in order to meet minimum wage requirements.
See Employment Standards Regulation s.37.14 and the Commission Sales factsheet for specific information on the application of minimum wage for certain employees paid entirely or partly by commission.
Employees covered by a collective agreement
Section 3 provides that parties to a collective agreement may not negotiate terms and conditions that do not meet or exceed the standards set out in section 16. Where there is a collective agreement, the enforcement of matters relating to section 16 is through the grievance procedure, not through the enforcement provisions of the Act.
Related sections of the Act or Regulation
- s.1, Definition “pay period”
- s.17, Paydays
- s.3, Scope of the Act
- s.66, Director may determine employment has been terminated
- s.15, Minimum hourly wage
- s.16, Minimum daily wage
- s.17, Minimum wage – resident caretakers
- s.18, Minimum wage - farm workers
- s.18.1, Minimum wage - liquor servers
- s.37.14, Commission sales