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Payment of Wages

  • ISBN: 978-1-4606-1988-9 (HTML)
  • ISBN: 978-1-4606-1987-2 (Print)
  • ISBN: 978-1-4606-1989-6 (PDF)
  • Revised: May 2013
  • Content last reviewed: May 2013
  • PDF VersionPDF [ 1.39 Mb / 200 pages | Download Adobe Reader ]

This guide is provided for your information and convenience only. It is not a legal document. For complete information, refer to the Employment Standards Act, 2000 and its regulations.

Employers must establish a regular pay period and a regular payday for employees.

An employer has to pay all the wages earned in each pay period, other than vacation pay that is accruing, no later than the employee's regular payday for the period.

Some employees earn commissions or "bonuses" based on sales made in a pay period. In these situations, the employment contract or the practice of the employer often provide that the commission or bonus is not "due and owing" or "earned" until some future event has occurred. For example, this could be when goods or services have been delivered to the customer and full payment has been received. In such cases, the commission or bonus is not "earned" in the pay period in which the sales are actually made. Instead, in accordance with the employer's accepted or agreed-on practice, it is "earned" and paid at a later date.

There are special rules about when employees must be paid their vacation pay. Refer to the When to Pay Vacation Pay chapter for more information.

How Wages and Vacation Pay Are Paid

An employer may pay wages, including vacation pay, by:

  • cash;
  • cheque;
  • direct deposit into the employee's account at a bank or other financial institution.

If payment is by cash or cheque, the employee must be paid the wages at the workplace or at some other place agreed to in writing by the employee.

If the wages are paid by direct deposit, the employee's account must be in his or her name. Nobody other than the employee can have access to the account unless the employee has authorized it. The branch or facility of the employee's financial institution must be within a reasonable distance from where the employee usually works, unless the employee agrees otherwise in writing.

When Employment Ends

If an employee stops working, the employer must pay his or her outstanding wages, including vacation pay (plus any payments due to the employee because the employment has ended--see Termination of Employment and Severance Pay):

  • no later than seven days after the employment ends;
    or
  • on what would ordinarily have been the employee's next regular pay day;

whichever is later.

Wage Statements

On or before an employee's payday, the employer must provide the employee with a wage statement that sets out:

  • the pay period for which the wages are being paid;
  • the wage rate, if there is one;
  • the gross amount of wages and--unless the employee is given the information in some other manner (such as in an employment contract)--how the gross wages were calculated;
  • the amount and purpose of each deduction;
  • any amounts that were paid in respect of room or board;
  • the net amount of wages.

The wage statement must be:

  • in writing;
    or
  • provided by e-mail if the employee has access to some means of making a paper copy.

The employee must be able to keep this information separate from his or her cheque.

Vacation Pay Statements

Employees may request (in writing) a statement containing the information in the employer's vacation records. The employer is required to provide the information no later than:

  • seven days after the request,
    or
  • the first pay day after the employee makes the request,

whichever is later, but subject to the following:

  • If the employee asks for information concerning the current stub period or vacation entitlement year, the employer is required to provide the information no later than:
    • seven days after the stub period or vacation entitlement year ends,
      or
    • the first pay day after the stub period or vacation entitlement year ends, whichever is later.

The employer is required to provide the information with respect to each stub year or vacation entitlement year only once.

If the employee has agreed that vacation pay will be paid on each pay cheque as it is earned, the employer does not need to keep records and provide statements about vacation pay as discussed above. Instead, the employer must report the vacation pay that is being paid separately from the amount of other wages on each wage statement, or provide a separate statement setting out the vacation pay that is being paid. The employer must also keep a record of that information.

Deductions from Wages and Vacation Pay

Only three kinds of deductions can be made from an employee's wages or vacation pay:

1. Statutory Deductions

Federal and provincial statutes sometimes require an employer to withhold or make deductions from an employee's wages. For example, employers are required to make deductions for income taxes, employment insurance premiums and Canada Pension Plan contributions.

An employer is not permitted to deduct more than the applicable statute allows and cannot make deductions if the money is not remitted to the proper authority.

2. Court Orders

A court order may say that an employee owes money either to the employer or to someone else other than his or her employer, and that the employer can make a deduction from the employee's wages.

If a court determines that an employee owes the employer money, the court order does not have to specifically allow the employer to deduct the debt from the employee's wages. The employer can make the deduction.

However, suppose an employee owes money to someone else other than his or her employer. In this case, a court order may direct an employer to make a deduction from an employee's wages and send the money to a third party. The employer is not allowed to make this deduction if the money is not properly sent on to the third party.

The Wages Act also limits how much the employer is allowed to deduct at any one time.

3. Written Authorization

An employer may also deduct money from an employee's wages if the employee has signed a written statement authorizing the deduction. This is called a "written authorization."

An employee's written authorization must state that a deduction from wages is allowed. The authorization must also:

  • specify the amount of money to be deducted;
    or
  • provide a method of calculating the specific amount of money to be deducted.

An employee's verbal authorization or a general statement ("blanket authorization") that an employee owes money to the employer under certain circumstances is not sufficient to allow a deduction from wages.

Even with a signed authorization, an employer cannot make a deduction from wages if:

  • the purpose is to cover a loss due to "faulty work." For example, "faulty work" could be a mistake in a credit card transaction, work that is spoiled or rejected, or a situation where tools are broken or company vehicles damaged;
    or
  • the employer has a cash shortage or has had property lost or stolen when an employee did not have sole access and total control over cash or property that is lost or stolen. A deduction can only be made when the employee was the only one to have access to the cash or property, and has provided a written authorization to the employer to make the deduction.

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