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Deductions from Wages

  • Issued: September 2010
  • Content last reviewed: January 2018

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, only three types of deductions can be made from an employee’s wages: statutory deductions, deductions authorized by a court order and deductions authorized by the employee in writing (subject to certain restrictions and conditions). For more information, watch our video on illegal deductions from wages.

Statutory Deductions

These are deductions made according to federal and provincial legislation. They include Income Tax, Employment Insurance Premiums and Canada Pension Plan contributions. The money deducted 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 deducted must be paid out in accordance with directions contained in 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 their wages. It must also specify the amount of money deducted or a method of calculating the amount of money to be deducted.

It is not enough to have an oral statement that the employee authorizes the deduction, or to have a written statement that the employee owes money to the employer without stating that the amount can be deducted from the employee’s wages.

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

  • A loss due to faulty work. For example, a mistake in a credit card transaction, work that is spoiled or rejected, or damage to company tools/vehicles.
  • A cash shortage or 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

Employers, please verify that:

  • The only types of deductions from employees’ wages are either statutory deductions, court ordered deductions, or deductions for which there is a written authorization.

Employers and employees, please verify that if deductions from wages are made on the basis of a written authorization, that the written authorization:

  • States that the employee authorizes the deduction.
  • Includes either the amount of the deduction or a method for calculating the amount.

Employers and employees, even with a written authorization in place, please verify that the deduction(s) are not being made for:

  • Faulty work.
  • Cash shortages/lost or stolen property where someone other than the employee had access to the cash or property.

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

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