Commission Based Wages – Alberta

[Aleesha Van Damme]

#100323

Forum: Private

Good morning, we are creating a policy around 100% commission based work for employees in the Province of Alberta. Outside of ensuring that workers are paid at the minimum wage rate if their commission does not exceed that, what other considerations should we include in the policy?

Thank you

[Haley O’Halloran]

#100324

A 100% commission-based compensation policy in Alberta should clearly confirm that the worker is an employee and therefore entitled to all applicable protections under Alberta’s Employment Standards Code, including minimum wage, vacation pay, general holiday pay, and potentially overtime pay. The policy should explain how hours of work will be tracked, how minimum wage top-ups will be calculated if commissions fall below minimum wage, and whether the position qualifies for any overtime exemptions. Employers should avoid assuming that all commissioned employees are exempt from overtime requirements, as this can create significant compliance risks.

The policy should also provide detailed information about how commissions are earned, calculated, and paid. This includes defining what constitutes a sale, when commissions become payable, how cancellations, refunds, non-payment, or chargebacks are handled, and whether commissions are based on gross or net sales. Clear language should also address commission payment schedules, payroll statements, recoverable or non-recoverable draws against commission, and any adjustments that may occur. Precise definitions are essential, as disputes over commission entitlement are one of the most common legal issues in commission-based employment arrangements.

Additional considerations should include expense reimbursement, territory and client ownership, performance expectations, confidentiality obligations, and procedures for leaves of absence. The policy should clarify how commissions are treated during vacation, sick leave, or parental leave, and whether accounts or sales opportunities may be reassigned during those periods. Employers should also outline expectations around sales activity, reporting requirements, CRM usage, and compliance with company policies and professional standards.

Finally, the policy should carefully address termination of employment and post-employment commission entitlement. This section should specify what happens to pending commissions if an employee resigns or is terminated, whether commissions continue through any notice period, and whether active employment is required on the payout date. Because Alberta law places restrictions on deductions from wages and courts often interpret unclear commission language in favour of employees, employers should ensure that clawback provisions, amendment rights, and forfeiture clauses are drafted carefully and reviewed by legal counsel before implementation.

Also check out: Managing Commission and Workers’ Compensation Checklist

I hope this helps!
-HRInsider Staff

[Author]

Posts