It is generally understood that employers are required by law to
make certain deductions from employees' wages, including for
income tax, employment insurance premiums, Canada Pension Plan
contributions, union dues or other amounts authorized by a
collective agreement. Where authorized by employees,
employers may also make deductions for health, dental or disability
group insurance plans and payroll savings plans, as these provide a
direct benefit to employees.
Aside from these exceptions, employment standards legislation
across Canada generally prohibits employers from unilaterally
deducting money from employee paycheques. In particular, an
employer is prohibited from deducting money from an employee's
wages to recover a business loss caused by an act or omission of
the employee. In some provinces, this is the law even if the
employee consents to the deduction. The purpose of this law is to
ensure that employees are paid for the services they provide.
The recent decision of the British Columbia Supreme Court in Rothberger v.
Concord Excavating & Contracting Ltd., 2015 BCSC 729,
addresses the issue of unauthorized deductions and sends a message
to employers that these deductions may not only violate employment
standards legislation, but may also be considered constructive
In Rothberger, the plaintiff worked for the defendant
as a seasonal excavator operator from 2001 to 2012. In the summer
of 2012, equipment being operated by the plaintiff suffered damage,
which resulted in delays and other costs to the defendant.
Following a few instances of damage to the defendant's
equipment, the defendant wrote a note on the plaintiff's pay
slip, suggesting that if there was any further loss or damage to
the defendant's equipment, a deduction would be made from the
After receiving notification of the defendant's intention to
deduct future costs from his pay, the plaintiff attempted to speak
to the defendant's principal about the issue. However,
the plaintiff's concerns were "brushed off" by the
principal. Subsequently, the plaintiff learned that the
defendant's intention to deduct business costs from his
paycheque was prohibited under the B.C. Employment Standards
Act. This discovery prompted the plaintiff to leave a
copy of the relevant passage from the Act in the
Shortly thereafter, the wife of the defendant's principal
sent a threatening email to the plaintiff which made reference to a
prior employee who had left the defendant's employ under
"unhappy circumstances". The email also implied the
defendant's legal counsel would get involved if the plaintiff
complained further. As a result of receiving this email, the
plaintiff walked off the jobsite and subsequently filed a lawsuit
for constructive dismissal.
At trial, the plaintiff argued the note on his pay slip, coupled
with the threatening email sent by the defendant's
principal's wife, amounted to a change to the terms of his
employment and a constructive dismissal. The defendant denied the
plaintiff was constructively dismissed and took the position that
the plaintiff quit his job with the defendant when he walked off
After considering the evidence, the Court found a clear
intention on the part of the defendant to deduct future costs from
the plaintiff's paycheque. The Court held that the note
on the plaintiff's pay slip, suggesting future losses would
result in a deduction from his paycheque of an unspecified amount,
substantially affected the plaintiff's rights and constituted a
material change to his employment contract. The Court also
held the plaintiff was not required to remain in his position and
await implementation of the defendant's intended course of
action before treating the employment contract as at an end.
In the end, the Court concluded the combined effect of the note on
the plaintiff's pay slip and the defendant's subsequent
uncivil manner in dealing with the plaintiff amounted to
constructive dismissal, entitling the plaintiff to damages.
The decision in Rothberger underscores the message that
an unauthorized deduction from an employee's paycheque may not
only lead to a breach of applicable employment standards
legislation, but may also give rise to a constructive dismissal
claim against the employer. Employers should think twice
before threatening or making any deductions from wages to recover
business costs, including those associated with loss or damage to
company property. An employer who believes it has a right to
recover an amount from an employee is encouraged to seek legal
advice to determine whether alternate means may exist to recover
the amount owed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).