DEDUCTIONS FROM WAGES
Welcome to another edition of MOL Radio. On today's podcast, we're going to give you an overview of deductions from wages … what your employer must or can deduct, and what your employer can't deduct.
There are only three kinds of deductions that an employer can make from your wages.
The first type of deduction is what is known as a "statutory deduction". Federal and provincial laws sometimes require your employer to withhold or make specific deductions from your wages. This includes deductions for income taxes, employment insurance premiums and Canada Pension Plan contributions.
Your employer is not permitted to deduct more than the applicable law allows. As well, your employer cannot make these deductions if the money is not remitted to the proper authority
The second type of deduction is where a court order has been served on the employer asking them to retain money or remit it to another party.
If the court order states that you owe your employer money, the employer can make a deduction.
However, if the court order is for money you owe to someone else -- not your employer - the order must also state that your employer can make a deduction from your wages, and must send the money to that third party.
There is legislation in place - the Wages Act - that limits how much your employer may deduct as a result of a court order, per pay cheque. According to the Wages Act, the maximum amount your employer may deduct is twenty percent of your net wages - unless the order is with respect to enforcing support payments. Then the maximum amount that can be deducted is fifty percent of your net wages, per pay cheque.
The third type of deduction is called "written authorization". In other words, your employer may deduct money from your wages only if you have signed an agreement permitting this deduction. Oral or verbal authorization from the employee is not sufficient.
The written authorization must clearly state that a deduction from wages is allowed. The authorization must also specify the amount of money to be deducted. Or, it must provide a method of calculating the specific amount of money to be deducted.
A written statement permitting a general deduction is not sufficient if it does not include the amount to be deducted, or a method of calculating that amount.
Even if you have signed a written authorization, your employer cannot make a deduction from wages if the purpose is to cover a loss due to "faulty work." "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.
You employer cannot make a deduction to cover a cash shortage or property lost or stolen if you did not have sole access and total control over the cash or the property. In these cases, a deduction can only be made when you were the only one to have access to the cash or property … and you have provided a written authorization to make the deduction.
Some employers require employees to pay for personal uniforms or other items as a condition of having a job. Again, deductions from wages to cover these expenses may only be made if you agree in writing to have a specified amount deducted. You should ask the employer about any special requirements before accepting a job.
These are some of the conditions where employers may or may not make deductions from wages.
For a more detailed explanation of deductions from wages, we urge you to go to our website at Ontario.ca - forward slash - employment standards - one word.
That's Ontario.ca - forward slash - employment standards - one word.
Go to the topics and publications section and click on Deductions.
Or, you may call our Information Centre at 1-800-531-5551.
That's 1-800-531-5551.
There, we can provide more information on employment standards in Ontario.
That's it for this employment standards podcast.
Thank you for listening.