Deductions from Pay and Minimum Wage

Employers make deductions from pay for various reasons. Often these deductions are lawful, but sometimes they are not.

Lawful deductions include:

• Statutory deductions (income tax, CPP, EI)
• Court ordered deductions (for example, garnishment)
• Those that provide a benefit to employees (for example, health plans)
• Charges for board and lodging as authorized by the Minimum Wage Orders
• Recovery of pay advances and overpayments
• Deductions for employee purchases from the employer's business on account, if there is a clear agreement between the employee and the employer that these can be deducted
• Deductions for dry cleaning of woolen or other heavy material uniforms

These deductions can be made even if they bring the employee’s take-home pay below the minimum wage.

Other Deductions

Some employers make deductions from employees' pay for losses, shortages, damage, etc. Also some employers may make deductions for employee debts that are not for purchases on account.

These deductions:

• must not take the employee's gross pay below minimum wage.
• must be authorized by a clear agreement between the employer and the employee. Deductions are authorized by the employee when there is a written agreement or when the employee has acted in a way that shows that s/he accepts the deduction.
• we recommend that employers use written authorizations for all such deductions.
• if the deduction is for losses incurred while the employee is working, it must be supported by a written authorization by the employee. The authorization should be made in advance, ideally when the employee is hired. Authorizations made after the loss occurs will be open to challenge. The authorization should specify the kind and amount of deductions that will be made. It should be dated and signed by the employee.
• if the deduction is for losses caused by customers leaving the employer's business without paying for the purchase of goods or services, the employer must be able to show that the loss is the fault of the employee.

Deductions to Recover Recruitment Costs

• individuals or companies who recruit workers for employment cannot charge the workers, including foreign workers, a fee for recruitment related services.
• employers cannot make deductions directly, or indirectly, from employees' pay to cover costs of recruiting.

If you have further questions about deductions from pay, contact us at our toll free number 1-888-315-0110, or in Halifax at 424-4311.