A judge just put an employer's commission-heavy pay math back in play
An employer's below-minimum hourly rate, topped up with sales commissions, drew a regulator's order to repay staff. A court has now found that decision unreasonable and sent it back for another look.
The decision, dated July 24, 2026, came from Justice Gregory A. Cann of the Supreme Court of Prince Edward Island. He found the Prince Edward Island Employment Standards Board's ruling against Soft-Moc Inc. unreasonable and sent the matter back to the Board for reconsideration, rather than granting the declaration the company had primarily sought.
How the pay dispute began
The dispute traces back to complaints from employees who were paid under a model that combined sales commissions with a base hourly rate set below the province's minimum wage. An Inspector examined the practice during the period covered by the complaints and concluded the arrangement fell short of what the Employment Standards Act required.
The Inspector determined that Soft-Moc could not fold sales commissions into the calculation used to meet its minimum wage obligation. On that basis, according to the decision, the Inspector found the company liable to its employees for $35,158.74 in gross wages and vacation pay. The Inspector also found the company had failed to pay a total of $5,570 in gross holiday pay.
Soft-Moc appealed to the Prince Edward Island Employment Standards Board, which agreed with the Inspector on both points. The Board accepted the finding on minimum wage and held that the company had not shown the Inspector's holiday pay determination to be unreasonable. Soft-Moc then sought judicial review in the province's Supreme Court.
The definition at the heart of the case
At the centre of the case sat a question of statutory definition: what counts as wages, and whether commissions can help an employer reach the minimum wage floor. The Board took the position that they cannot, reasoning that an employer may offer incentives on top of the minimum but may not use them to satisfy it.
In the Board's reasoning, an employer's choice to offer commissions is entirely its own, but that choice cannot displace a mandatory obligation. "But there is no discretion to avoid paying minimum wage for all hours worked," the Board wrote, adding that any incentive must be applied only after the minimum wage for each hour is paid.
Justice Cann took a different view of how the Board read the Act. He noted that the statute's definition of minimum wage refers to wages, and that the defined term wages expressly includes commissions. In his analysis, the Board had disregarded that defined term when it left commissions out of the minimum wage calculation.
Why the case is not over
The decision turned largely on a more technical failing. Justice Cann found the Board had not justified, through any real analysis, the standard it used to review the Inspector's determination, an omission he treated as a question of statutory interpretation the Board was required to work through. Because it had not done so, he found the decision unreasonable.
Justice Cann was careful to say what he was not deciding. He wrote that nothing in his reasons amounted to a finding that Soft-Moc did or did not breach the Act in any way beyond the minimum wage question, and that whether the company met its minimum wage obligations was the only issue before him. He sent the matter back to the Board and declined to order costs.
On the interpretation point, the judge's language was direct. Referring to the defined term the Board had set aside, he wrote: "It was not open to the ESB to disregard it." He also cautioned that the Board's impartiality, in both substance and appearance, would matter on any rehearing, given how its members and staff had taken part in the review.
