Most employers are aware that they must pay their employees at least the minimum wage of the jurisdiction where their employees work, but many may not realize how many other wage and pay-related obligations they have.
- Do you know that in some provinces an employer must reimburse an employee for expenses that they incur if the employer changes or cancels their vacation?
- Or, that in some provinces an employee must provide consent to be paid by direct deposit?
Non-compliance with payment of wages was one of the top 5 violations found during Employment Standards claim investigations in Ontario in 2021-2022.
1. Definition of “Wages”
Wages is a defined term in the employment standards legislation in each jurisdiction, and it isn’t always defined the same way. The way that “wages” is defined impacts many other employment standards obligations (for example, the definition is relevant to payments made on termination or the liability of directors and officers, among other things). It’s important to look at the definition when considering your obligations.
2. Minimum Wage
While minimum wage is generally straightforward, in most jurisdictions there is more than one minimum wage, and there are exceptions to the minimum wage. For example, Alberta and Ontario have a separate minimum wage for students and in Quebec, students are exempt from the minimum wage requirements.
Other common industries or occupations with a separate minimum wage or exemption include (this is not an exhaustive list):
- Domestic & Support Workers
- Professionals, such as doctors, dentists, lawyers, accountants etc. (the exact list of professions also varies by jurisdiction)
- Certain agriculture workers
- Construction
- Fishing
- Forestry
- Residential and building services
In addition to knowing whether your employees are subject to a minimum wage other than the general minimum wage, you also need to know when the minimum wage increases. Many jurisdictions have implemented significant increases in their minimum wage over the next 1-2 years. For example, the general minimum wage in Nova Scotia is currently $13.60 per hour but it will be $15.00 per hour as of April 1, 2024 (with increases between now and then).
As minimum wage increases, employers need to ensure that they are still paying at least the minimum wage. With the scheduled increases in many provinces, this may mean that the minimum wage catches up to employers who are paying more than the current minimum wage.
3. Pay Period
Every jurisdiction requires an employer to establish a regular pay period. Most jurisdictions also provide a limit on how long a pay period can be. For example, in Alberta a pay period can be no longer than one work month whereas in British Columbia a pay period can be up to 16 consecutive days.
Employers with employees in more than one province and a standard pay period must ensure that your pay period is in compliance with the most stringent jurisdiction.
Most jurisdictions also provide that wages must be paid within a certain period of time after the end of the pay period.
4. Statement of Earnings
An employer must provide an employee with a written statement of earnings. Most jurisdictions allow a statement of earnings to be provided electronically, as long as the employee has confidential access to the statement through the workplace and the employee is able to make a paper copy.
The information that must be included on a statement of earnings varies considerably by jurisdiction, but at a minimum includes:
- Number of hours worked and wage rate OR wages to be paid
- Deductions from wages
- Net amount of payment
Many jurisdictions require more information to be included, so be sure to check the specific requirements.
5. Method of Payment
In some jurisdictions, the rules regarding the method of payment are quite specific. For example, in Quebec, wages must be paid in cash in a sealed envelope, by cheque or by bank transfer. If wages are paid by cash or cheque, they must be paid directly to the employee at their place of work and wages paid by cheque must be cashable within 2 working days after the cheque is issued.
Some jurisdictions require an employee’s consent for payment to be made by direct deposit, and in Ontario wages can only be paid by direct deposit if the account is in the employee’s name and no person other than the employee or a person authorized by the employee has access to the account.
Many, but not all, jurisdictions specify that wages must be paid in Canadian currency.
6. Deductions
Every jurisdiction has rules regarding what an employer can and cannot deduct from an employee’s wages. These rules vary significantly from one jurisdiction to another. In all jurisdictions, deductions can be made if they are permitted or required to be deducted by statute (for example, income tax, employment insurance etc.) or by court order.
Some jurisdictions prohibit an employer from deducting amounts for faulty work or for any part of the employer’s business costs. Before deducting any amount other than the usual statutory withholdings, you should ensure that the deduction is permitted.
7. Reducing Wages
Alberta and Prince Edward Island both require an employer to give notice of a reduction in wages. In Alberta, an employer must give notice of a reduction in the employee’s wage rate (as well as other pay reductions) before the start of the pay period in which the reduction takes effect and in PEI notice must be given at least one pay period before the start of the pay period in which the reduction will take effect. Other jurisdictions prohibit the reduction of an employee’s wages if they have been given notice of termination.
8. Expenses and Reimbursement
Some jurisdictions provide for reimbursement of expenses for employees or require the employer to pay certain expenses. For example, in Manitoba, if an employee’s hours of work begin or end after 12 midnight and before 6 a.m and the employer’s place of business and an employee’s residence are located within the boundaries of a city or town, the employer must provide the employee with adequate transportation between their residence and the workplace.
Saskatchewan and Newfoundland and Labrador also require an employer to reimburse an employee for costs associated with a cancelled vacation. If an employer cancels or changes the dates of the employee’s annual vacation after having given the employee notice of their vacation, the employer must reimburse the employee for reasonable expenses incurred by the employee with respect to the cancelled or changed vacation that are not otherwise recoverable by the employee.
Currently, there are no provisions regarding expenses and reimbursement for federally-regulated employers, but this will be changing. The federal government has passed legislation amending the Canada Labour Code to require employers to reimburse employees for reasonable work-related expenses.
9. Tips and Gratuities
Almost every jurisdiction provides that tips and gratuities are not wages. The Acts in British Columbia, New Brunswick, Newfoundland and Labrador, Ontario, PEI, and Quebec provide that tips and gratuities belong to the employee and cannot be withheld by the employer, and in each of those provinces except Newfoundland and Labrador pooling of tips is specifically allowed (although in Quebec and New Brunswick this can only be done with the employee’s consent).
10. Uniforms and Other Charges
Many jurisdictions specifically address whether or not an employer can charge an employee for a uniform or other work-related charges. An employer is prohibited from charging an employee or deducting an amount from their wages for a uniform in Alberta, British Columbia, Manitoba, Newfoundland and Labrador, and Saskatchewan. In PEI an employer can request a deposit of up to 25% of the cost of a uniform or footwear that is supplied by the employer, but the employee must be reimbursed the deposit when employment ends or the items are returned.
In addition to uniforms, some jurisdictions place limits on the amount that employees can be charged for lodging and board. If you require your employees to wear a uniform or special clothing, or you provide lodging and/or board to your employees, be sure to review the applicable rules.
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