Even a mistaken over payment by an employer – it should be unilaterally deducted by the employer against future pay owed to the employee or against any other amount due and payable.

Most employers assume they can simply deduct it from wages payable, for example.

No so.

While the Employment Standards Act of Ontario, on its face, suggests that employer can deduct a mistaken over payment against regular wages, holiday pay or termination pay, for example, that is not likely the case. Even the Ministry of Labour’s Policy and Interpretation Manual, which Employment Enforcement Officers use and follow to interpret and apply the Act, suggest that over payments can deduct without penalty. Often this arises in the context of employee’s co-contribution to benefits coverage, for example, where the employer mistakenly does not deduct the employee’s benefit co-payment from source at a regular pay day. 

However, in the case of Re All-Way Transportation Services, an Ontario arbitrator held otherwise. In that case, the arbitrator, relying on the power imbalance between employer/employee, ultimately held that the employer had no right to unilaterally deduct mistaken over payments (due to a payroll error) from wages of the employees.

Therefore, before doing so, you should speak with a qualified employment lawyer, if you, as an employer, propose to deduct any over payment to an employee from that person’s regular wages, holiday pay or termination pay, directly or indirectly.

Chance are, you are doing do unlawfully.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We’re here to help – [email protected]  www.wardlegal.ca



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