Payment of Wages
The Employment Standards Act (ESA) of Ontario mandates that businesses set up a recurring pay period and a recurring pay day. With the exception of vacation pay that keeps accruing, all wages earned during each pay period must be paid by the specified pay day for that period. Employers are required to pay workers in cash, via check made payable to the worker alone, or by direct deposit into an account in the worker's name. Wages must be delivered at the employee's place of employment or another agreed-upon location if they are paid by cash or check.
When an employee's employment terminates, the employer must pay any unpaid wages no later than seven days from the termination date or the employee's next scheduled pay day, whichever comes first. Additionally, companies are required to give workers a wage statement on or before each pay day. The pay period covered, gross wages earned, an explanation of the wage calculation (unless otherwise provided), any vacation pay included in the payment (unless paid separately as permitted), all deductions and their purposes, room or board amounts deemed to be paid under the Act, and the final net amount paid are all required to be included in this statement.
The ESA imposes stringent restrictions on when businesses can withdraw money from an employee's paycheck. Such deductions are only allowed if they are mandated by a federal or provincial statute, a court order, or an employee's written consent. Even in that case, the authorization needs to be explicit and make reference to a precise sum or a formula that can be calculated. Unless there are extremely precise legal restrictions, employers are not allowed to withhold salaries or seek restitution from workers for things like poor performance, cash shortages, or property loss. The employer must carry out any deductions intended to be sent to a third party; otherwise, the authorization is void.
Ultimately, if an employer goes insolvent, the Act guarantees that, up to a maximum of $10,000 per employee, pay will be paid out before other unsecured creditor claims.
