Where sales people are employed on a commission-only basis, is their employer obliged to pay the national minimum wage if their commission over a period falls below this?
Commission workers (those paid entirely or partly on the basis of sales made or deals completed) must still be paid at least the national minimum wage. Workers do not have to be paid the minimum wage for each hour worked, but they must be paid the minimum wage, on average, for the time worked in a pay reference period. The pay reference period is the period by reference to which a worker is paid and is usually the period of time for which a worker's wage is actually calculated. Therefore workers who are paid weekly will have a pay reference period of one week and workers who are paid monthly will have a pay reference period of one month. For the purposes of the minimum wage, a pay reference period cannot be longer than one calendar month.
The pay that is allocated to a pay reference period is the pay received during that period and pay earned in that period but not received until the next period. For example, a worker may earn some commission towards the end of a period. It may not be possible to calculate the earnings in time to get the money into the pay packet for that period, but the money will still be counted in that period when it comes to calculating whether the minimum wage has been paid, provided always that it is received in the next period. Any pay "transferred" in this way from the period when it was received to the period when it was earned must stay transferred. It cannot be double-counted. Likewise, payment delayed by more than one pay reference period cannot be referred back to the period in which it was earned but simply counts in the period it is paid.
Where commission-only workers are required to be at work for a fixed or set number of hours per day or week, their work must be treated as "time work", even though their pay is calculated by reference to the number of sales made or deals completed, and they must receive, on average, at least the minimum wage for each hour worked in the pay reference period. Therefore, if the workers' commission over a pay reference period falls below the minimum wage (taking into account any transfer of pay as set out above) based on the number of hours worked, the employer must make up the sum to at least the minimum wage.