I am often asked simple questions by small businesses in the community and I am surprised that the majority of the small business owners I talk to do not know the first thing about employment standards. If you hire employees you need to at least be aware of the minimums of what is required for you to know as a business owner.

Part V, Sections 11 to 14 of the Ontario Employment Standards Act deals with the payment of wages.

The Act indicates that as an employer you must establish a recurring pay period and a recurring pay day for your employees.  You shall then pay all wages earned during each pay period, other than accruing vacation pay, no later than the established pay day.  There prescribed manner is by cash or cheque payable to the employee only.   You can obvioulsy use direct deposit to pay your employees, but the account must be in the employee’s name;  no person other than the employee or a person authorized by the employee has access to the account.

You also need to provide your employees with statements.  On or before your employee’s pay day, you are to give to your employee a written statement setting out several things including the pay period for which the wages are being paid; your employee’s  wage rate, if there is one; and the gross amount of wages to be paid. You are also to state the amount and purpose of each deduction from wages and the total net amount being paid out the your employee.  The statements need to be in writing or you can email the statements to your employees – ideally the information should be kept separate from the cheque.

Your employees has the right to a vacation pay statement.  If your employee requests a vacation pay statement you must prepare one and  provide the information no later than seven days after the request or the first pay day after the employee makes the request. You only have to legally provide the information with respect to each stub year or vacation entitlement year only once. If your employee has agreed that vacation pay will be paid on each pay cheque as it is earned, you technically do not need to  keep records and provide statements about vacation pay.  You must then pay it separately from the amount of wages being paid out, and prepare a separate statement that sets out the vacation paid that will be paid – you do need to keep a record of this information.

If employment ends – besides the obvious providing of the ROE -  you must pay your employee’s wages no later than the later of seven days after the employment ends or what would ordinarily have been your employee’s next regular pay day.

With respect to deductions- the ESA notes that deductions can only be made 3 ways – through Statutory Deductions -such as EI, CPP and Income Tax. You CANNOT deduct more than the statute allows and you are not allowed to make deductions if the money is not remitted to the proper authority.  You are also allowed to make deductions if set out by Court Order. If you get a Court Order – follow it. Don’t make deductions any other way – even if you employee ends up owing you money (i.e. breaking stuff accidentally).  You can also make deductions via  written authorization, if your employee has signed a written statement authorizing the deduction that specifies the amount of money to be deducted or it provides a method of calculating the specific amount of money to be deducted.

Be careful – Your employee’s verbal authorization or a general statement that he or she owes you money is not sufficient to allow a deduction from wages.  Even if you have authorization – it is illegal to make deductions to  cover a loss due to work mishaps – i.e. over or under counting money, spoiling items or breaking things. You should never deduct money from your employee’s pay cheque to cover these things.

It all seems like simple stuff – but it is required by law.

If you have any questions please do not hesitate to contact me through the contact form, or you may visit www.haber-lawyer.com and contact me via email at matt.lalande@haber-lawyer.com