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Deductions - Act Part 3, Section 21

Last updated on September 3, 2024

Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information

Summary

This section prohibits an employer from withholding wages for any reason, except as permitted by law, or from requiring an employee to cover any business costs. 

Text of Legislation

21. (1) Except as permitted or required by this Act or any other enactment of British Columbia or Canada, an employer must not, directly or indirectly, withhold, deduct or require payment of all or part of an employee's wages for any purpose.

(2) An employer must not require an employee to pay any of the employer's business costs except as permitted by the regulations.

(3) Money required to be paid contrary to subsection (2) is deemed to be wages, whether or not the money is paid out of an employee's gratuities, and this Act applies to the recovery of those wages.

Policy Interpretation

The cost of doing business must not be borne by employees.

Subsection (1)

Direct/Indirect Payments

This subsection prohibits an employer from withholding wages for any reason other than for statutory deductions required by law, such as income tax, CPP, and EI, or a court order to garnishee an employee's wages. An employer must honour a garnishee of an employee’s wages.

The words "directly or indirectly" give this section particularly broad coverage. A direct payment is one that is deducted from the employee's paycheque. An indirect payment is when an employee is required to pay the employer money without having it deducted from a pay cheque or earnings.

Example

A server in a restaurant breaks some dishes. The employer may not deduct funds from their pay cheque or cash the pay cheque and providing a lesser amount than the face value of the cheque to recover the cost of the dishes. Nor can the employer require them to pay for the damages out of personal money or gratuities. These payments are also prohibited under s.21(2).

Subsection (2)

Employer's Business Costs

Employees are not responsible for paying an employer's business costs. Employers are prohibited from requiring employees, directly or indirectly, to contribute towards the costs of the employer's business by

  • withholding their wages
  • requiring that wages paid be returned to the employer
  • requiring employees to pay any money to the employer or on behalf of the employer

Example

An employer who operates a hair salon requires employees to pay for shampoo, conditioners, and other similar products used for hairdressing. This requirement contravenes s.21(2). These materials are a cost of doing business.

What is considered a business cost?

  • Some employers require their staff to provide a cash float for making change to customers. This practice is prohibited since it is the cost of doing business.
  • Overweight/oversize/unsafe/speeding tickets: since the ticket is charged against the operator of the vehicle, it is not a cost of doing business. The rationale for this position is that the charge against the driver arises from the application of another statute. A party alleged to have contravened another statute can address the consequences of the alleged contravention of the other statute through the review or appeal procedure contained in that statute.
  • The director takes the position that the cost to an employee of providing a tool for use in performing employment duties does not constitute a contravention of the Act, however, requiring the employee to pay the cost of operating it does. A timber harvesting employer can require a faller to provide a chainsaw but must provide or pay for the cost of the fuel and lubricant used in performing employment duties.
  • A pizza restaurant requires employees to use their own vehicles for pizza delivery. While it was a condition of employment that employees own their own vehicle, the cost of fuel to perform their delivery work is considered a cost of doing business and is recoverable as wages under the Act if the cost of the fuel can be determined.
  • A retailer may require the employee to provide a cell phone, however, the cost incurred by the use of the cell phone for business purposes is to be paid by the employer.

Determining the amount of business costs

If an employer requires an employee to incur business costs, the employer needs to reimburse them the actual cost incurred. For example, if an employer requires an employee to purchase supplies for the employer's business, or requires the employee to stay at a hotel, the employee is entitled to be reimbursed for the actual cost of the supplies or the hotel stay. Employers can set policies regarding expenses an employee may incur, such as the type and cost of supplies or the standard of hotel.

In some cases, determining the exact amount of a business cost can be difficult, so employers and employees can agree to estimate the cost incurred. The Director will enforce these agreements, as long as the terms can reasonably be expected to cover the actual costs incurred. Common examples are payment of mileage for employees required to use their personal vehicles for business use, or partial payment of cell phone expenses for employees required to use their personal cell phones to carry out their normal work functions.

Subsection (3)

Recovery of Wages

If an employee is charged any business costs whatsoever, under s.21(2), the Director will collect that money as unpaid wages from the employer. Amounts deducted in contravention of this section, or payments an employer has required an employee to make on behalf of the employer, are considered to be wages and can be recovered under the Act. This includes any money paid out of an employee’s gratuities or any other source. Employees are not entitled to vacation pay on recovered business costs, although if the employer did properly provide vacation pay then these costs may be recovered by the employee under section 58 of the Act.

Example

Restaurant servers pool all tips to be shared amongst all employees, which is an acceptable practice. A customer leaves the restaurant without paying the bill. The employer cannot recover the cost of the meal from either the employee's wages or tips (gratuities) (pooled or otherwise) because "dine-and-dash" is a cost of doing business to be borne by the employer.

Overpayments

If an employer overpays an employee's wages, the overpayment cannot be deducted unilaterally from future wage payments. An employee may provide written consent to the deduction for an overpayment through a written assignment of wages. See section 22 of the Act for a discussion on written assignments of wages.

Should the employee not voluntarily consent to a repayment arrangement the employer can't use a withholding of all or a portion of wages as a remedy.

An advance on wages is treated in the same manner as an overpayment. If an employer gives an employee an advance on wages, the employer is not permitted to later deduct that advance from later wages earned unless the employee has provided written consent. This practice often takes place with employees making commissioned earnings.

If an employer fails to provide wage statements when paying wages for work already performed, the amount paid is still wages and will be taken into account in any calculation that is made to determine outstanding wages.

See also s.17 of the Act and Employment Standards Regulation s.37.14 for a discussion on commissions.

Employees covered by a collective agreement

Section 3 provides that parties to a collective agreement may not negotiate terms and conditions that do not meet or exceed the standards set out in section 21. Where there is a collective agreement, the enforcement of matters relating to section 21 is through the grievance procedure, not through the enforcement provisions of the Act.

Related Information

Related sections of the Act or Regulation

ESA

Other

Resident Caretakers

Court decisions

Health Employers Assn. of BC v. BC Nurses’ Union, 2005 BCCA 343