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Deductions From Wages

  • ISBN (HTML): 978-1-4435-4490-0
  • ISBN (PDF): 978-1-4435-4491-7
  • ISBN (Print): 978-1-4435-4489-4
  • Issued: September 2010
  • Content last reviewed: November 2011
  • PDF VersionPDF [ 295 Kb / 58 pages | Download Adobe Reader ]

This workbook has been prepared to assist employers and employees in understanding some of their obligations and rights under the Employment Standards Act (ESA) and its regulations. It does not take the place of the ESA and its regulations and it should not be considered to offer any legal advice on your particular situation.

You should be aware that under the Employment Standards Act (ESA), only three types of deductions can be made from an employee’s wages: statutory deductions, deductions authorized by a court order, and subject to certain restrictions and conditions, deductions authorized by the employee in writing.


Statutory Deductions

Deductions made according to federal and provincial legislation. They include Income Tax, Employment Insurance Premiums and Canada Pension Plan contributions. The money you deduct must be remitted to the proper authorities.

Court Orders/Garnishment

A court may order an employer to deduct an amount from an employee's wages. The money you deduct must be paid out in accordance with the court order.

Written Authorization

An employer may deduct money from an employee's wages if the employee has agreed to this in writing, subject to certain rules. Written authorization must state that the employee authorizes the deduction from his or her wages. It must also specify the amount of money deducted or a method of calculating the amount of money to be deducted.

A written statement that the employee owes money to the employer without stating that the amount can be deducted from the employee's wages or an oral statement that the employee authorizes the deduction is not enough.

IMPORTANT NOTE: A deduction from wages, even with signed authorization from the employee, is not allowed if there is:

  • A loss due to faulty work. For example, a mistake in a credit card transaction, work that is spoiled, rejected, or damage to company tools/vehicles.
  • A cash shortage, lost or stolen property if a person other than the employee had control over or access to the cash or property. For example, if customers leave without paying the bill (commonly referred to as “dine and dash”).

Deductions from Wages Checklist

Do you make deductions from employees' wages that are neither statutory deductions nor as a result of a court order?

Yes No

You answered 'No', see the sections on Record Keeping, Hours of Work, and Eating Periods.

Please verify that you have written authorization:
From the employee stating that he or she authorizes the deduction. Yes No
That includes either the amount of the deduction or a method for calculating the amount. Yes No
Please verify that the deductions are not for:
Faulty work. Yes No
Cash shortages/lost or stolen property where someone other than the employee had access to or control over the cash property. Yes No

 

Questions? Call the Employment Standards Call Centre at 1-800-531-5551


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