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Understanding the Canada Labour Code

by Jim Park
Untitled Document

Back in the early 1980s, a tugboat captain in Tampa, Fla. crashed his boat into a bridge piling under the Howard Frankland Bridge, which crosses Old Tampa Bay. The barge wasn't badly damaged, but the helmsman took out a piling causing a section of the bridge to collapse into the water below. Several motorists were killed in the crash, and the tugboat was struck by falling debris and sunk. The tab for all the damage, including the rerouting of traffic around the fallen span for more than a year afterward, was in the hundreds-of-millions-of-dollars range.

The captain survived the accident, as did his crew, but their pay was withheld for causing the accident. They should have been paid right up until the moment the boat slipped beneath the waves, but the employer disagreed. The case was eventually decided in favor of the sailors.

Now, acknowledging that there are differences between the labor laws of the State of Florida and our own, this little tale serves as an illustration of the havoc you could cause, and still be entitled to pay for time on the job. Like the labor statutes in Florida, the Canada Labour Code does not permit unauthorized deductions from wages, for any reason, under any circumstances, no how. Period.

The bottom line, says David Leroux, is that other than statutory deductions, an employer may not tamper with a person's pay cheque.

"If they wish to take something from the person's pay cheque, they have to have a signed authorization to do so, with specific amounts indicated," he says. Leroux is technical advisor on labor standards with the Client Education & Training Branch of Human Resources Development Canada's Labour Program.

Leroux says that unauthorized deductions continue to represent a significant number of the investigations undertaken by his department. In recent years, Labour Canada has been conducting an education and awareness campaign that's been successful in reducing the number of complaints, but there's still a way to go, he says.

This is where damage to the truck or damage to goods comes up, over and over again. The Code recognizes that employees are protected from having monies deducted from wages to pay for such damages, but as Leroux points out, authorized deductions are permitted. That assumes - under certain conditions - that some kind of an agreement has been arrived at between the employer and the employee, <it>without coercion</it>.

Meaning, "Sign this or you're fired" doesn't count as an agreement arrived at without coercion.

When an inspector is called in to investigate a claim, part of the investigation could revolve around how the agreement was arrived at. If it can be determined that some form of coercion or 'encouragement' was used, an inspector can still issue a payment order against the employer.

If an employer still feels that an employee owes money, for something other than a statutory deduction (such as Income Tax, CPP, E.I. etc.), or something the employee has authorized in advance, then the only route is civil action, such as small claims court.

The Canada Labour Code goes a long way in protecting your rights to be paid for work done, but it doesn't prohibit an employer from using some other legal means to right what may still be perceived as a wrong. So, you see, it can cut both ways.

Adding to the aforementioned complexity in the way drivers are paid is the "performance or safety bonus." Are bonuses part of the wage package, and subject to protection under the Code, or not? Leroux says bonuses are a bit of a gray zone, where each case must be considered on its own merit.

If a performance bonus were to start at say $1000, with amounts deducted as violations occur, could the employer 'deduct' $100 from your bonus for leaving a load lock on a loading dock, or for bending a bumper?

"In some cases, a bonus may be considered 'wages,' while at other times it would not," he says. "In the case where it is wages, it too would be protected from unauthorized deductions."

Watch this space in the future: Leroux is presently working on a document that will clarify the issue, and when he's finished, you'll see it here first.
Workers not covered by the Code, such as owner-operators, are not granted the same protection afforded to employees. The terms of the owner-operator contract are all that stand between you and an unfair deduction. But in the case of an owner-operator employing a driver, the owner-op would be considered an employer for the purposes of the Code, and subject to all the same obligations that any other employer would be, including the restrictions that prohibit arbitrary and unauthorized deductions from their employee's earnings.

The Fine Print
According to Leroux, another major bone of contention regarding payment of wages is determining the amount an employee is due for certain work performed. The trucking industry struggles under one of the most complex remuneration schemes in the land. With pay in various sectors based on percentages, miles traveled, hours waited, flat-rated items on a schedule, etc., it's seldom clear exactly what is owed to you on pay day.

Leroux says that in instances where his people are called to intervene in a dispute, the employer's policy and procedures manual (or the conditions of employment manual) is one of the places they start looking for 'standard practice'. That, he says, should spell out how pay will be determined, and what, if any, mileage program the carrier uses to pay drivers. And the manuals should speak to any other options for determining pay, such as legitimate and billable waiting time, flat fees for border crossings, trailer drops, bonuses, etc.

"It's not wise to rely on word of mouth," Leroux cautions. "If you're in any doubt about how you'll be paid, or what services you're obliged to perform, check it out in the manual. It should all be there."

When you get right down to it, the more there is in writing, the less chance there will be of confusion and misinterpretation. From the policy and procedures manual to the records of hours worked, Leroux can't over-stress the importance of keeping proper records. And of course, the reverse side of that is, you have an obligation to read and understand the rules and policy stuff.

Interestingly, just because the employer commits a certain policy to writing, and you agree to it in writing, it doesn't mean it's the rule. If it contravenes the Code, it's bunk.

The Code sets out specific obligations for employers, outlining what kinds of records must be kept, including records of hours worked ("hours worked," by the way, is broader in scope that it sounds, records should cover all forms of remuneration, and records of all duty-related activities) . You might do your boss a favor and suggest the he or she visit the website listed below, and download pamphlet # 14 - Keeping of Records. It's a plain language version of an otherwise pretty hard to read legalize-laded official interpretation of the rules.

Quite often, Labour Canada inspectors end up playing a sort of mediator's role if those records and manuals don't make it clear enough, or don't exist at all. In cases where records can't be found or prove inadequate (there are fines in place for non-compliance on the employer's behalf), any records the <it>employee</it> might have kept will be considered. The employee will be asked to swear out an affidavit, under oath, attesting to the accuracy of those records. The records may then be presented to the employer to agree or refute, and that's frequently where the discussion ends - with agreement between the parties.

But the employer could disagree with the records. At that point, the investigator could issue a formal payment order, which the employer could then decide to pay or appeal. The avenue exists - if it goes to that stage - where a referee could be appointed to settle the dispute. Of course, that's hardly the norm, but because of that possibility, Leroux urges all employers to issue formal payment guidelines (conditions of employment or company contract), and he urges all employees to read and understand the terms and conditions of those documents at the time they're hired, and on a regular basis after that.

By far, the biggest irritant in this whole discussion has to be that carriers often calculate pay using a mileage and routing program, while employees watch the hubodometer to see how much they're making. If ever there was a recipe for conflict, this is it.

"We've got no problem at all with the use of these programs because they are a recognized standard in the industry for determining mileage," says Leroux. "All we're asking is everyone be made well aware that so-and-so is the standard, right from the start."

If you know there's a shortcoming in the standard mileages, or that routing requirements will add unpaid miles to the trip, raise the issue with your employer in advance to head off a potentially unpleasant confrontation.

The issue of deductions from wages is actually pretty straightforward, yet it remains one of the most frequently reported difficulties to Labour Canada investigators.

As Dave Leroux puts it - in 25 words or less - "Other than statutory deductions, an employer may not tamper with a person's pay cheque."

But just so you'll know, here's the skinny on deductions from that pay cheque, directly from Pamphlet 13 - Deductions From Wages, Part III of the Canada Labour Code (Labour Standards).

For information only. For interpretation and application purposes, please refer to Part III of the Canada Labour Code (Labour Standards), the Canada Labour Standards Regulations, and relevant amendments.

1. If my employee owes me money, can I just take it out of his pay?
Not without written authorization from the employee. If the employer and employee agree that the money is owed and the employee agrees to have the money deducted from his pay, obtaining a written authorization is easy. However, when the parties disagree, the employer can't use his position to unilaterally decide that the money is owed and pay himself out of the employee's wages. Normally, parties who disagree about money owed are required to go through the civil court process to have the matter judged by an impartial third party. The Code sets out what amounts can be deducted from an employee's wages.

2. What can be deducted from an employee's pay cheque?
a. deductions required by federal or provincial law such as taxes and employment insurance premiums
b. deductions authorized by a court order such as child support garnishment or by a collective agreement such as union dues
c. overpayments of wages
d. specific amounts authorized in writing by the employee*

* even with a written consent, an employer can't deduct amounts for property damage or loss of money if any other person had access to it.

3. Can I simply have my employee sign a statement that he will be responsible for any damage he causes?
A blanket authorization is not valid. In order for a written authorization to be valid, it has to show the exact amount being deducted, and be signed at the time that the deduction is made. In this way, the employee understands what he is signing and how/when it will affect him.

4. What about monthly insurance premiums? Does the employee have to sign an authorization every month?
No. For regular payments such as charitable donations, savings plans contributions, medical and dental plan premiums, life insurance and long term disability premiums, pension plan or RRSP contributions, the signed authorization should set out the amounts of the deductions, the purpose and the frequency of the deductions.

5. What if my employee refuses to sign an authorization to deduct tickets he received under the Highway Traffic Act?
Tickets and fines can only be deducted from an employee's wages if that employee gives written consent. If the employer feels that the employee is responsible to pay them, an alternative is civil court.

6. Can the employee be forced to sign an authorization?
The employee's consent must be voluntary. In the event of a complaint investigation, the inspector will look at the circumstances under which the authorization was signed. If it is found that coercion was used, the inspector may find that the authorization is not valid.

For More Information...

HRDC has published a series of bilingual information pamphlets on this and other relevant sections of the Canada Labour Code, Part III. They're available on-line at:

Written copies of the publications can be obtained from:
Public Enquiries Centre
Human Resources Development Canada
140 Promenade du Portage, Phase IV, Level 0
Gatineau, Quebec
K1A 0J9
Fax: 819-953-7260

All three parts of the Canada Labour Code are available on-line:

Canada Labour Code Part I - Industrial Relations:

Canada Labour Code Part II - Occupational health and Safety:

Canada Labour Code Part III - Labour Standards:

For further information, please contact the nearest Labour Program office of Human Resources Development Canada or visit the HRDC Web site:

HRDC Labour Program
Regional Offices, District Offices

Alberta, Northwest Territories & Nunavut Region
Calgary District Office - 780-310-0000, then 427-3731
Edmonton District Office - 780-427-3731
All other Alberta locations - 780-310-0000, then 427-3731
NWT/NU - 800-897-5629

British Columbia & Yukon Region
Vancouver District Office - 604-872-4384
Kelowna District Office - 250-762-3018

Manitoba Region
Winnipeg Regional Office - 204-983-3493
Brandon District Office - 204-726-7936
Winnipeg District Office - 204-983-6375
Toll free - 800-838-2033 (within Manitoba and area codes 807 and 819)

New Brunswick Region
Regional Office, Moncton - 506-851-6640

Newfoundland Region
Regional Office, St. John's - 709-772-5022

Nova Scotia Region
Halifax District Offices - 902-426-4995
Sydney District Office - 902-564-7130

Ontario Region
Regional Office - 416-954-2891
Toronto District Office - 416-954-5900
Ottawa, North and East District Office - 613-946-2800
Southwestern District Office - 519-645-4047

Prince Edward Island Region
Charlottetown - 902-566-7171

Québec Region
Montreal District Office - 514-283-2214
Québec District Office - 418-648-7707

Saskatchewan Region
Regina District Offices - 306-780-5408
Saskatoon District Office - 306-975-4303