![male and female farm workers harvesting](https://www.datocms-assets.com/64336/1724793357-temp-foreign-worker.png?auto=format&w=500)
Blog
- Legislative updates
Home
Resources
Equality & Diversity
Peninsula Team, Peninsula Team
(Last updated )
Peninsula Team, Peninsula Team
(Last updated )
Many employers encounter situations in which they feel they have the right to “dock” an employee’s pay. For instance, employee pay deductions come to mind when an employee is:
However, contrary to what many people assume, employers in Ontario have a very limited ability to make deductions to an employee’s pay. I will explain.
The Ontario Employment Standards Act, 2000 (the “ESA” or the “Act”) contains a general prohibition against employers making deductions to an employee’s pay. The Act sets out two narrow exemptions to this general rule:
This exemption is self-explanatory: it is permissible for the employer to deduct employee pay in accordance with the terms of the applicable court order or legislation. Specifically, this means:
An employer may also make deductions to an employee’s pay if the employee provides written authorization and:
In other words, the ESA does not give employers carte blanche to make discretionary deductions from an employee’s pay. This includes such things as for “faulty work” or “poor work performance”. These sorts of deductions are viewed as punitive and open to abuse and are therefore prohibited by the Act. To be enforceable, authorization in writing must not only explain in clear terms how the deduction(s) will be calculated, but the need for the deduction must also be connected to a legitimate business purpose. For example, recovering employee training costs (which employers view as an investment of sorts).
While it is often a tempting option for employers, making unauthorized deductions from an employee’s pay can result in significant financial penalties. Particularly, this includes fines issued by the Ministry of Labour and employee claims for compensation.
Home
Resources
Equality & Diversity
Find out what 6,500+ businesses across Canada have already discovered. Get round-the-clock HR and health & safety support with Peninsula.