Lorraine asked:

I am an employee whose sales are made over the phone from the office of the employer as well closing deals at the clients place of business in person. I sell in a territory defined by my employer limited to a sector of the city.

Am I entitled to vacation pay on my commissions?  I work in Ontario.

CO Staff answered:

Based on the information you provided, it sounds like you are covered by Ontario's Employment Standards legislation. (Assuming that you are an employee of an Ontario-based company and not an independent contractor.)

Ontario's Employment Standard's website provides clear information about vacation time and pay in their Vacation fact sheet:

Employees must receive a minimum of four per cent of the gross "wages" (excluding vacation pay) they earned in the 12 months vacation entitlement year or stub period for which the vacation is being given.

So the question we need to answer is this: Are commissions part of your gross "wages"? The answer to that, as you will see in the next excerpt from the fact sheet, is yes.

Gross wages, on which vacation pay is calculated, include:

• regular earnings, including commissions;

• bonuses and gifts that are non-discretionary or are related to hours of work;

• overtime pay;

• public holiday pay;

• termination pay; and

• allowances for room and board.

Gross wages do not included:

• vacation pay paid out or earned but not yet paid;

• tips and gratuities;

• discretionary bonuses and gifts that are not related to hours of work, production or efficiency (e.g. a Christmas bonus unrelated to performance);

• expenses and traveling allowances;

• living allowances;

• contributions made by an employer to a benefit plan and payments from a benefit plan (e.g. sick pay) that an employee is entitled to;

• federal employment insurance benefits;

• severance pay.

So as you can see, vacation pay is based on gross wages that include your salary and commissions, as well as overtime and public holiday pay.

If you have any concerns or would like to know how you can address an incorrect payment if your employer is not currently including your commission pay when determining how much vacation pay you are owed, please contact Ontario's Employment Standards Office for further assistance.

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