Deductions from wages

From: Employment and Social Development Canada

On this page

  1. If my employee owes me money, can I just take it out of his pay
  2. What can be deducted from an employee's pay cheque
  3. Can I simply have my employee sign a statement that he will be responsible for any damage he causes
  4. What about monthly insurance premiums? Does the employee have to sign an authorization every month
  5. What if my employee refuses to sign an authorization to deduct tickets he received under the Highway Traffic Act
  6. Can the employee be forced to sign an authorization

Alternate formats

1. If my employee owes me money, can I just take it out of his pay

Not without written authorization from the employee. If the employer and employee agree that the money is owed and the employee agrees to have the money deducted from his pay, obtaining a written authorization is easy. However, when the parties disagree, the employer cannot use his position to unilaterally decide that the money is owed and pay himself out of the employee's wages. Normally, parties who disagree about money owed are required to go through the civil court process to have the matter judged by an impartial third party. The Code sets out what amounts can be deducted from an employee's wages.

2. What can be deducted from an employee's pay cheque

  • deductions required by federal or provincial law such as taxes and employment insurance premiums;
  • deductions authorized by a court order such as child support garnishment or by a collective agreement such as union dues;
  • overpayments of wages;
  • specific amounts authorized in writing by the employeeFootnote 1.

3. Can I simply have my employee sign a statement that he will be responsible for any damage he causes

A blanket authorization is not valid. In order for a written authorization to be valid, it has to show the exact amount being deducted. The employee must understand what they are signing and how/when it will affect them.

4. What about monthly insurance premiums? Does the employee have to sign an authorization every month

No. For regular payments such as charitable donations, savings plans contributions, medical and dental plan premiums, life insurance and long term disability premiums, pension plan or RRSP contributions, the signed authorization should set out the amounts of the deductions, the purpose and the frequency of the deductions.

5. What if my employee refuses to sign an authorization to deduct tickets he received under the Highway Traffic Act

Tickets and fines can only be deducted from an employee's wages if that employee gives written consent. If the employer feels that the employee is responsible to pay them, an alternative is civil court.

6. Can the employee be forced to sign an authorization

The employee's consent must be voluntary. In the event of a complaint investigation, the inspector will look at the circumstances under which the authorization was signed. If it is found that coercion was used, the inspector may find that the authorization is not valid.

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