Understanding statutory holiday and vacation pay for commission-based workers in Ontario

The employee in question started working in an administrative role for the company in 2004. At that time, she received a salary and was paid for both vacation time and statutory holidays. However, in 2007, she transitioned to an account manager position and was switched to a commission-based pay structure.  

Her employer informed her that she was no longer entitled to vacation or statutory holiday pay. Unaware of her rights, she did not contest this decision. 

From 2007 to 2023, she received no vacation or statutory holiday pay. In 2023, she filed a complaint with the Ministry, seeking compensation for the unpaid benefits. 

What does the law say about statutory holiday and vacation pay? 

The ESA establishes clear rules regarding statutory holiday and vacation pay. Employers cannot override these protections through private contracts. Section 5 of the ESA states any contract that violates the law is void. For example, an employer cannot legally pay an employee less than the ESA's mandated minimum wage. 

Section 24 of the ESA ensures employees are entitled to statutory holiday pay (referred to under the ESA as “public holiday pay”), calculated using a specific formula. Section 26 requires employees scheduled to work on a statutory holiday that falls on a regular workday to receive the day off with pay. Vacation pay is governed by s. 35.2, which outlines the formula for calculating and disbursing these payments. 

However, certain salespeople are exempt from these rules. Specifically, salespeople who earn commissions from sales conducted outside their employer's business premises do not qualify. The primary issue in Fiber Shield was determining whether the employee fit this exemption. 

The ESA's “Exemptions, Special Rules and Establishment of Minimum Wage” Regulation (O. Reg 285/01) exempts salespeople, other than “route salespeople,” from statutory holiday and vacation pay requirements if “they receive all or part of his or her remuneration as commissions in respect of offers to purchase or sales that (i) relates to goods or services, and (ii) are normally made away from the employer's place of business." 

To determine if an employee qualifies as a route salesperson, courts assess the level of employer control over scheduling, sales calls, and overall work structure. The less control an employer exerts, the less likely an employee qualifies as a route salesperson, making them ineligible for statutory holiday and vacation pay. 

Entitlement to unpaid statutory holiday and vacation pay 

The Ontario Labour Relations Board reviewed the employer's control over the employee's work schedule and duties. Although the employee had some autonomy, she was required to visit 12 major clients three to four times a year and work at the office at least two to three days per week. Additionally, the employer monitored the movements of its sales staff. 

Given these conditions, the board determined that the employee was a route salesperson under the ESA Regulation. Consequently, she was entitled to statutory holiday and vacation pay and was not exempted under the Regulation. As per s. 35.2 of the ESA, she would be entitled to at least six per cent vacation pay as an employee with over five years of service. 

The employer, Fiber Shield, argued that even if the employee was a “routine salesperson,” she failed to bring a claim for 16 years and, therefore, should not be entitled to compensation. The board disagreed, pointing to s. 5(1) of the ESA, which prohibits employees from waiving their employment standards protections. However, the amount of vacation pay retroactively owed was limited to the two-year period preceding the employee's complaint, as per the limitation period found under the ESA (this calculation by the Employment Standards Officer was unchallenged by either party to the claim).  

The employer further argued that the employee should not receive statutory (public) holiday pay because she did not work all the required “qualifying days” before and after some holidays. However, the company failed to provide evidence supporting this argument, while the employee provided documentation showing she had worked the qualifying days or been approved for time off.  

Classifying workers 

For employers, the Ontario Labour Relations Board's decision in Fiber Shield highlights the importance of correctly classifying workers under Ontario's ESA. Simply paying an employee on commission does not automatically exempt them from entitlements like vacation and statutory/public holiday pay. If an employer exercises significant control over an employee's schedule, client interactions, and work processes - as with Bevilacqua - they may be considered a route salesperson and thus entitled to these benefits. 

This decision also reinforces that employment rights cannot be waived, even if they go unclaimed for years. If an employee is working in a structured sales role with employer-directed schedules and procedures, they may be entitled to statutory benefits, regardless of whether their employer initially informed them otherwise. Additionally, while employees can recover unpaid entitlements, they will likely be limited to the two-year period preceding their claim. This underscores the importance of reviewing employment conditions regularly and addressing concerns with an experienced employment lawyer as soon as possible. 

Paulette Haynes is the founder of Haynes Law Firm, a boutique employment law firm in Toronto.