By Shelley Omand, BA, BSW (Honours), BEd (A), CEB - a Career Coach with the Student and Graduate Employment department at Mohawk College.
Some companies operate on a 100% commission basis, meaning that employees' earnings are solely based on the sales or services they generate.
While this model may offer the potential for earnings, it also comes with significant risks such as:
- Financial Instability: Without a guaranteed base salary or hourly wage, workers are vulnerable to fluctuations in income. Instability can come from slow periods, economic downturns or door-to-door sales. It's particularly challenging for students who may rely on a steady income to cover living expenses and tuition fees.
- Unethical Business Practices: Companies relying heavily on commission-based work may engage in unethical or exploitative practices to maximize profits. This can include misleading sales tactics and pressure to meet unrealistic sales targets.
- Financial Obligations: Employees may be required to rent or purchase equipment, pay training fees or cover administrative costs resulting in significant financial obligations. Students may be particularly susceptible to financial hardship in such situations.
Before accepting a commission-based offer, it’s crucial to do the following:
- Seek Legal Advice: Consult a legal professional to review the contract and ensure your rights are protected.
- Understand Employment Standards: Familiarize yourself with Ontario’s employment laws as outlined in the Employment Standards Act, which sets minimum rights and obligations for employees and employers. These standards may include provisions related to minimum wage, hours of work, overtime pay, vacation entitlements and termination of employment. Regulatory bodies such as the Ontario Ministry of Labour oversee compliance with employment standards.
- Clarify Payment Structure: Understand how commissions are calculated and when they’re paid, including any minimum sales requirements or quotas you must meet to earn income.
- Beware of Hidden Costs: Watch out for additional fees or expenses not outlined in the contract. These expenses can quickly eat into your earnings and lead to financial strain.
- Know Your Rights: Familiarize yourself with your rights as an employee, including protections against discrimination, harassment and unfair labour practices. If you believe your employer is engaging in illegal or unethical behavior, report it to the appropriate authorities or seek assistance from advocacy organizations.
- Consider Alternative Employment Options: If the terms of the contract seem overly risky or unfair, consider exploring alternative employment opportunities that offer stability, guaranteed pay and ethical business practices.
While commission-based work offers potential earnings and flexibility, it's essential to approach such opportunities with caution. By understanding the risks, reviewing contracts carefully, and seeking legal advice when necessary, students can protect themselves from exploitation and ensure their rights are upheld. Remember: your financial well-being and personal integrity are worth safeguarding, no matter the job opportunity.
