Print

Why Proper Pay Matters

Article written by: Mahnoor Fatima, Student-at-Law

The following is legal information and not legal advice. If you need further information or need legal advice, please call our Intake Line at 416-441-1764 ext. 1.

In Ontario, employers have legal obligations regarding how employees are paid. Under the Employment Standards Act, 2000 (“ESA”), employers must pay wages properly and on time, provide wage statements (commonly referred to as “pay stubs”) and follow strict rules when making deductions from wages. Understanding the law can help you recognize how to be paid properly, when your worker’s rights have been violated and what steps to take if your wages are missing or incorrect.

Employer Obligations Regarding Employee Pay

Wage Payments

An employer may pay wages, including vacation pay, by either:

  • cash;
  • cheque; or
  • direct deposit, which includes Interac e-Transfer, into your account at a bank or other financial institution.

Pay Stubs

Employers must establish a regular pay period and a regular pay day for employees such as yourself. On or before your pay day, your employer must provide you with a pay stub that sets out:

  • the pay period for which the wages are being paid;
  • the wage rate, if there is one;
  • the gross amount of wages and how the gross wages were calculated (unless you receive the information in another manner, such as in an employment contract);
  • the amount and purpose of each deduction;
  • any amounts that were paid in respect of room or board;
  • the net amount of wages.

Additionally, this pay stub must be:

  • in writing; or
  • provided by e-mail if you have access to some means of making a paper copy.

You must be able to keep this information separate from your cheque.

Cash Payments – Legal but Still Regulated

Some employers provide wages in cash. This is legal; however, this does not relieve employers of their obligations. You must be paid at least the minimum wage, and the employer should provide a pay stub each time you are paid, even with cash payments.

If an employer does not provide pay stubs, it is beneficial for you to maintain a record of your wages paid and the hours worked.

Deductions

When Can My Employer Make Deductions from My Wage?

Deductions are permitted in certain circumstances. These include where the deduction:

  • is authorized by statute;
  • is required by court order;
  • is the result of an inadvertent overpayment;
  • is authorized by the employee in writing.

Under the ESA, employers are permitted to make certain standard deductions. These include deductions for income tax, Canada Pension Plan, and Employment Insurance (“EI”).

Deductions are permitted when the employer makes a payment due to a true administrative error as well, such as if an employer’s payroll department mistakenly deposited a higher amount into an employee’s bank account than what was due.

In certain circumstances, deductions are permitted with written authorization from the employee. The written statement must either specify the amount of money to be deducted or provide a method of calculating the amount of money to be deducted. In such cases an oral statement of authorization or a general authorization will not suffice.

When Is My Employer Not Permitted to Make Deductions from My Wage?

Even if an employee has provided written authorization, deductions are not permitted:

  • for faulty work;
  • if cash or property has been lost or stolen when and a person other than the employee had access to the cash or property;
  • when deductions would cause an employee’s wage to fall below the required minimum wage rate.

Impermissible deductions for faulty work can occur in several circumstances. For example, if an employee works in a restaurant and accidentally breaks a plate during one of their shifts, the employer is not allowed to deduct the cost of replacing that plate from the employee’s pay. Similarly, if an employee makes a mistake while processing a customer transaction and undercharges the customer, the employer cannot recover the lost amount by deducting from the employee’s pay.

What Should I Do If My Wages Are Missing or Wrong?

There are steps you can take to protect yourself from worker’s rights violations regarding wages. In a situation where you being denied full wages, you can contact a lawyer to defend your right to correct wage.

It will be easier for a lawyer to assist you if you have maintained a record of your hours worked and payments made by your employer. The following are the types of documents and records an employee should maintain:

  • Copies of all work schedules, pay stubs, and employment contracts. If your employer does not provide you with a written schedule or pay stubs, keep a contemporaneous personal record of your hours, dates and, if applicable, the locations you worked.
  • If you are paid in cash, keep copies of payment transfers or receipts from payday loan or cash stores, to provide evidentiary support to your record. Additionally, it is best practice to deposit cash received from your employer into your bank account.
  • Your company’s name and contact information. This will assist a lawyer in contacting your employer and properly naming them as a defendant/respondent in an employment claim.
  • Copies of relevant communication with your employer such as emails or texts.
  • Keep a copy of any important documents such as pay stubs, employment contracts or screenshots of work schedules.

It is recommended to keep these and any other records on a personal device and not on a company computer. If you have a company email, you should refrain from forwarding emails to your personal email. If you maintain hard copies of records, do not store them at your work site.