The Québec Court of Appeal's decision in Brick Warehouse c. Commission des normes, de l'équité, de la santé et de la sécurité du travail sends a clear message to employers: they cannot, pursuant to the public order provisions of the  Act respecting labour standards (the "ALS"), do indirectly what they cannot do directly. Consequently, remitting an amount to employees to ensure that they receive a minimum wage for a given pay period in accordance with the ALS, only to subsequently recoup it, is a breach of minimum labour standards. In this context, employers have every interest in ensuring that their compensation program is valid.

The reasons rendered by Judge Julie Dutil were supported by Judges Jacques J. Levesque and Robert M. Mainville.

Context

The appellant, Brick Warehouse (the "employer"), is a furniture, mattress, household appliance and electronics retailer. Its 270 salespersons in Québec are remunerated solely on a commission basis according to the volume of sales made. They do not receive any base salary.

Where the amount of the generated commissions corresponds, for a given pay period, to an hourly rate below minimum wage, the employer makes top-up payments in order to comply with section 40 of the ALS. Indeed, the employees are not covered by the regulatory exceptions applicable to the payment of minimum wage.

Around August 5, 2015, the employer modified its commission program so as to implement a new subtraction mechanism pursuant to which the amount of the top-up payments intended to guarantee the minimum wage would be recouped over one or more subsequent pay periods, where earned commissions exceed the minimum wage.

Several employees lodged complaints with the CNESST regarding this change to the commission program. The latter filed 15 originating applications (motions to institute proceedings) which were joined for the purposes of the legal debate.

First instance judgment

Judge Daniel Dortélus of the Court of Québec, Civil Division, dealt with a claim for unpaid wages and annual leaves totalling $32,759.04 for all the applications.

He reached the following three conclusions in connection with the clause containing the subtraction mechanism provided for in the commission program.

  • The clause is abusive and contrary to public order since it puts the employees in a situation of a de facto waiver of a right which they cannot waive (sec. 93 of the ALS).
  • The clause violates article 46 of the Charter of Human Rights and Freedoms (the "Charter"), since by working below the minimum wage for a given period, the employees do not benefit from fair and reasonable conditions.
  • The clause is abusive within the meaning of article 1437 of the Civil Code of Québec (the "C.C.Q.").

Issue in dispute

  • Did the judge err in ruling that the commission program subtraction mechanism is illegal?

Analysis

In recouping the top-up payment remitted to an employee for a given pay period, the employer then creates a debt equivalent to the amount the purpose of which was to ensure the payment of the minimum wage. The employer cannot do indirectly what it cannot do directly, that is, pay an employee below the minimum wage for a pay period, by subsequently recouping the amount that it thus paid.

The Court of Appeal concurs with the trial judge where he considers that the amount paid by the employer to meet the minimum wage requirements of the ALS cannot also constitute a debt for the employee who benefits therefrom.

Thus, the employer's commission program subtraction mechanism is null since it infringes the right to minimum wage (sec. 40 ALS), which is a public order standard which an employee cannot waive (sec. 93 ALS).

The Court of Appeal did not rule on the other alleged breaches of the Charter and of the C.C.Q. as they are not relevant to adjudicate the appeal. The appeal is dismissed with legal costs.

N.B. At the time of writing this blog, we do not know if an application for leave to appeal to the Supreme Court has been filed.

The author would like to acknowledge the support and assistance of Juliette Bousquet, law student.

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