Unauthorised Deductions

If you work in the province of Ontario and the company falls under its jurisdiction, you may be covered under the Employment Standards Act, 2000. The Act sets minimum standards that an employer is required to follow. If it doesn’t, you can file a claim with the Ministry of Labour. If you are still working for the company, you may be able to file a claim without disclosing your name. The Act protects you when you are exercising your rights under it.
 
If you are working for a company on a regular basis, the employer may pay wages on a weekly, bi-weekly or semi-monthly or some other fixed day. The employer is required to provide you a wage statement that details wages earned and deductions made. The employer must give you wage statement along with net pay that is, total earnings minus deductions. The deductions permitted under the Act are as follows:
 
1.                  Statutory Deductions
 
The provincial and federal laws may require the employer to withhold specific amounts from the employee’s wages, such as both federal and provincial income taxes, Employment Insurance premium and Canada Pension Plan contribution. These deductions can only be made if sent to the proper authorities.
 
2.                  Court Orders
 
A court may find that the employee owes money either to the employer or someone else other than his or her employer and that the employer can make a deduction from employee’s wages.
 
If the court determines that an employee owes money to the employer, the court does not have to specifically allow the employer to deduct the debt from the employee’s wages. The employer can make the deduction.
 
However, if the employee owes money to someone else other than his or her employer, in such a situation, a court order may direct an employer to make deduction from the employee’s wages and send the money to the third party. The employer is not allowed to make the deduction if the money is not properly sent to third party.
 
3.                  Written Authorization
 
The employer may also deduct money from the 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 the 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.
 
If your employment relationship is governed by the collective agreement and you are a member of the trade union, the provisions of this Act do not apply to you. It is assumed that the collective agreement would provide greater benefits than the minimum standards of the Act. It is expected collective agreement would provide a way to resolve any other issue|
 
There may come a time when you or the employer disagree with the officer’s decision, in that case, both parties have a right to appeal the officer’s decision to Ontario Labour Relations Board within 30 days. It does not cost you money to request an appeal but the employer may be required to pay money to the Ministry if it is found to be owing. The Ministry distributes the money in accordance with the referee decisions. The Board’s decision is final and binding on both parties.
 
It is important that you must attend any hearing called to deal with your claim. If you fail to do so but the employer attends, you not only lose the chance to submit evidence to support your position but also miss a chance to challenge employer’s evidence. The officer or the referee may accept the employer’s evidence and make the decision on that basis. 
 
This information is provided for guidance and should not be considered as a legal advice.

This article is provided by Rajinder K. Batra, who is a retired Employment Standards Officer with the Ministry of Labour with 15 years experience in these matters.

If you have any questions regarding your employment, please contact the writer by e-mail at esaconsulting@hotmail.com

If you don’t have access to e-mail; you can fax your question at (905) 331-1805.  

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