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Assignments - Act Part 3, Section 22

Last updated on November 27, 2020

Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information

Summary

This section explains an employer’s obligations to honour an employee’s written assignment of wages. 

Text of Legislation

22 (1) An employer must honour an employee's written assignment of wages

(a) to a trade union in accordance with the Labour Relations Code,

(b) to a charitable or other organization, or a pension or superannuation or other plan, if the amounts assigned are deductible for income tax purposes under the Income Tax Act (Canada),

(c) to a person to whom the employee is required under a maintenance order, as defined in the Family Maintenance Enforcement Act, to pay maintenance, and

(d) to an insurance company for insurance or medical or dental coverage.

(e) [Repealed 2003-65-5.]

(2) [Repealed 2003-65-5.]

(3) An employer must honour an assignment of wages authorized by a collective agreement.

(4) An employer may honour an employee's written assignment of wages to meet any of the following credit obligations:

  1. an advance of wages to the employee from the employer, including vacation pay;
  2. an outstanding balance in respect to the purchase of goods or services from the employer by the employee;
  3. an outstanding balance in respect of the personal use of real and personal property of the employer by the employee.

Policy Interpretation

The Act requires that employee’s assignment of wages must be written, and the employer must prove that the assignment of wages was authorized. Wages which were improperly assigned can be collected as wages, although employees are not entitled to vacation pay on improperly assigned wages if the employer previously provided vacation pay.

Subsection (1)

If the employee has given written authorization, the employer must make payroll deductions for

  • Union dues
  • Donations to a charity if the amounts are tax deductible
  • Payments to pension or superannuation plans if the amounts are tax deductible
  • Payments required under the Family Maintenance Enforcement Act
  • Payments to an insurance company for medical or dental coverage (e.g. Medical Services Plan coverage or extended health and dental benefits)

Section 28(g) of the Act requires an employer to keep a record of each deduction made from the employee’s wages and the reason for it for a period of 4 years.

Subsection (3)

If an employee is represented by a trade union, the employer and union may agree to certain assignments of wages under the collective agreement. The grievance procedure of the collective agreement applies to disputes concerning such assignments. Refer also to section(3).

Subsection (4)

Employees may arrange for assignments to meet certain personal credit obligations.

Assignments must be made in accordance with written employee instructions. The employer has the right to choose whether or not to honour an employee’s written assignment to meet a credit obligation.

Example

An employee works for a car dealership. The employer lends them $1,500 to purchase a car. The employee signs a written agreement to repay the amount at $300 per month, but the agreement does not address what will happen if their employment ends before the loan is fully paid back. The employee leaves the company with $600 still owing. The employer cannot deduct more than the written agreement authorizes from the final wages unless they provide further written authorization.

Example

An employee works in a remote fishing camp as a guide. They have a tab at the employer’s store on site where they can buy groceries and incidentals. The employee signs a written authorization for the employer to deduct their purchases from their paycheque.

Insurance Deductibles

If an accident involving a company vehicle occurs during the course of company business, this is a cost of doing business for the employer. The insurance deductible or any other costs must not be charged to the employee.

If an employee has an accident while the company car is being used for personal reasons, the employer may request payment. Because the vehicle was not being used for business purposes, it is permissible if the employee provides written authorization for the employer to recover the liability for the insurance deductible through payroll deduction.

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 22. Where there is a collective agreement, the enforcement of matters relating to section 22 is through the grievance procedure, not through the enforcement provisions of the Act.

Related Information

Related sections of the Act or Regulation

ESA