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Payment of Interest - Act Part 11, Section 88

Last updated on November 26, 2019

Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information

Summary

This section sets out the requirements for payment of interest on wages earned and not paid; including wages received by a talent agency from an employer on behalf of an employee and not paid to the employee.

Text of Legislation

88. (1) If an employer fails to pay wages or another amount to an employee, the employer must pay interest at the prescribed rate on the wages or other amount from the earlier of

(a) the date the employment terminates, and

(b) the date a complaint about the wages or other amount is delivered to the director

to the date of payment.

(2) No interest accumulates under subsection (1) from the date a determination is made under section 79 or a settlement agreement is made under section 78 requiring payment of the wages or other amount until 38 days after that date.

(3) Interest payable under subsection (1) is deemed to be wages and this Act applies to the recovery of those wages.

(4) Subsection (1) applies whether or not the wages or other amount became payable before this section comes into force, but the date from which the interest is calculated must not be earlier than the date this section comes into force.

(5) An amount collected under this Part, or deposited under section 113, earns interest at the prescribed rate, payable by the minister charged with the administration of the Financial Administration Act, from the date the amount is deposited in a savings institution to the date of payment to the person entitled.

(6) Subsection (5) does not apply to any security provided or bond posted under section 100.

(7) If a talent agency that has received wages from an employer on behalf of an employee fails to pay those wages, less any fees allowed under the regulations, to the employee within the time required under the regulations,

(a) the talent agency must pay interest at the prescribed rate on the amount of the wages, less the fees, from the date a complaint about the wages is delivered to the director, and

(b) subsections (2) and (3) apply in respect of the interest.

(8) Subsection (7) applies whether or not the wages were received by the talent agency before that subsection comes into force, but the date from which the interest is calculated must not be earlier than the date subsection (7) comes into force.

Policy Interpretation

Subsection (1)

If an employer fails to pay wages earned or any other amount defined as
wages under section 1 of this Act, interest accrues from the earlier of:

  • the date the employment terminates; or
  • the filing of a complaint.

Example

An employee files a complaint on October 14, 2013, claiming overtime for the 6 month period ending with the employee's termination on April 15, 2013. Upon investigation, the director decides that the employer owes $1,500 in overtime wages. The director issues a determination on January 15, 2014. Interest is calculated as follows:

April 15 - June 30/13

(prime = 3%): $1,500 3% (77/365)*

= $9.45

July 1 - Sept. 30/13

(prime = 3%): $1,500 3% x (92/365)*

= $11.70

Oct. 1 - Dec. 31/13

(prime = 3%): $1,500 3% x (92/365)*

= $11.70

Jan. 1 – Jan 15/14

(prime = 3%): $1,500 3% x (15/365)*

= $2.25

Total interest charge = $35.10
* denotes number of days in that quarter for which interest is earned.

Interest owing by an employer, talent agency or other person named in a determination is recoverable in the same manner under the Act as unpaid wages.

(For interest rate calculations for talent agencies, refer to subsection (7) below.)

Interest continues to accrue to the date of payment. The rate of interest is at the prescribed rate in accordance with section 25 of the Employment Standards Regulation.

Under s.26 of the Employment Standards Regulation, where no complaint has been filed but information is obtained about an employer's failure to pay wages under s.76. of the Act, interest will accrue from the date the information is obtained by the director.

Interest is not payable on penalties.

Subsection (2)

Where a determination is issued under s.79 requiring payment of outstanding wages, or a settlement agreement has been reached under s.78, interest does not accumulate until 38 days after the date of the determination or settlement agreement. Interest continues to accrue daily beginning on the 39th day after the issuance of the determination or signing of the settlement agreement.

The 38 days represents the maximum amount of time a determination can be subject to appeal under section112 (3)(a), including the 8 days allowed for service if served by registered mail.

No invoices will be issued, but persons who owe wages will be advised that interest continues to accrue daily on all unpaid balances. Recovery of all wages and interest owed to within $20.00 of the full amount on the date wages and interest are received by the Director will be deemed full payment.

Subsection (3)

The director may recover interest in the same manner as wages are recovered.

Subsection (4)

Interest will not accrue on wages outstanding prior to the date this section of the Act came into force.

Subsection (5)

The interest rate on money collected by the director is set in accordance with s.27 of the Regulation. Money collected by the director on behalf of an employee under this section accrues interest from the date it is deposited in a bank or credit union to the date it is paid out.

Under s.113, when a person who appeals a determination sends the director an amount approved by the Employment Standards Tribunal, the amount will accrue interest from the date it is deposited into a savings institution to the date it is paid out, in accordance with the provisions of s.27 of the Regulation.

Where an employer has appealed a determination to the Employment Standards Tribunal and the appeal is successful, money deposited with the director by the employer will be returned to the employer, with interest accrued in accordance to s.27. If the appeal is unsuccessful, the money will be distributed to the complainants in accordance with s.99 of the Act.

Subsection (6)

Interest does not accrue on any security provided or bond posted under s.100 of the Act.

Subsection (7)

When wages have been received by a talent agency from an employer, on behalf of an employee, and the talent agency fails to pay the wages to the employee, (less any fees allowed as set out in the Regulation), daily interest accrues from the date a complaint for the wages is delivered to the director.

The provisions of subsections (2) and (3) above apply to this subsection.

Related Information

Related sections of the Act or Regulation

ESA

ESR

Other

Talent Agencies