Interpretation Guidelines Manual British Columbia Employment Standards Act and Regulations
EMPLOYMENT STANDARDS ACT - PART 1 - INTRODUCTORY PROVISIONS
ESA Section 1 – Definitions – Wages
This section contains definitions for terms used throughout the Employment Standards Act and its Regulation.
(a) salaries, commissions or money, paid or payable by an employer to an employee for work,
(i) a determination, other than costs required to be paid under section 79 (1) (f), or
(e) in Parts 10 and 11, money required under a contract of employment to be paid, for an employee's benefits, to a fund, insurer or other person,
(i) penalties, and
(j) an administrative fee imposed under section 30.1.
Subsection (a) and (b)
Under the definition of “wages” in the Act, wages include any money paid or payable by an employer to an employee for services rendered or labour provided. This includes any incentive related to an employee’s work performance, or the performance of the company.
- a bonus for remaining to the end of a season, for seasonally employed persons, if the bonus was a term and condition of employment when hired, or during the employment period
- additional commission if certain sales objectives are met, such as 10% commission if more than $250 of product is sold in a day
- contributions towards an RRSP if the employee meets certain sales objectives
- a $100 bonus for each employee if the company meets a projected sales target
Section 63 of the Act establishes the amount of compensation for length of service an employer must provide when terminating an employee’s employment. This amount is recoverable as wages under the Act.
Amounts payable to an employee under the Act can be recovered by the director as wages through the Act's wage recovery mechanism. This includes any money ordered to be paid by the director in a determination under s.79 including:
- any money an employer requires an employee to pay, directly or indirectly, toward an employer's cost of business, is recoverable as wages pursuant to Part 3. s.21(2). This includes money paid out of an employee’s gratuities. [See s.21(3)]
- any money collected or deducted from the employee, but not remitted to a third party as required, is recoverable as outstanding wages, pursuant to s.23.
- interest (s.88(3))
- third party demands (s.90(1))
- seizure of assets (s.92(1)(b))
- wrongful removal of seized assets (s.94(3))
- penalties imposed under Section 98. (s.98(4))
Wages also includes amounts payable in a settlement agreement under s.78 of the Act and an order of the Tribunal.
Any money an employer agrees to pay on behalf of an employee under s.26 of the Act must be paid in accordance with the terms of the employment contract. Where an employer fails to make the remittance, as required, these amounts are recoverable as wages under Part 10 and 11 of the Act.
Gratuities (tips) are not wages unless used to pay an employer’s business costs. Gratuities are paid by customers to the person who served them in appreciation for the service. While tips are considered income for income tax purposes, they are not wages for purposes of this Act. Since tips are not paid by the employer to the employee for work performed, they are not wages, therefore, the Director has no jurisdiction over tips.
However, under s.21(3), an employer may not use tips to cover a business cost. Gratuities used to pay an employer’s business costs are deemed by this section to be wages under the Act.
Employers can require employees to pool their tips, and to share them with those employees who work in positions that otherwise have no access to tips.
An employer requires all employees who receive tips to put 15% of tips received into a pool. The pool is disbursed to all employees who do not receive tips at the end of each shift according to a formula agreed to by the employees. This activity does not contravene the Act.
Employers cannot deduct from a tip pool, or from tips to which the employer has access, such as those made through debit or credit cards. An employer may not charge an employee for costs such as a "dine-and-dash fund".
An employer requires all tips paid through credit or debit cards to be put in a tip pool. At the end of each month, after paying for dine-and-dash meals, for spillage, and for breakage, the employer distributes the residual to all employees. This activity is a contravention of the Act.
Wages do not include:
- Gifts or money paid strictly at the discretion of the employer that are not related to hours of work, production or efficiency.
At Christmas an employer surprises each employee with a $100 gift certificate. This payment is discretionary and not considered wages.
Wages do not include:
- Reimbursement for an employee’s personal expenses, such as car or meal allowances.
Wages do not include:
Note: A determination issued under s.79 of the Act for unpaid wages must include the imposition of an escalating monetary penalty, subject to s.98 of the Act. The penalty, although not considered wages under the Act is treated as wages for the purposes of collection as noted in s.98(4).
Related sections of the Act or Regulation
- s.21, Deductions
- s.23, Employer’s duty to make assigned payments
- s.26, Payment by employer to funds, insurers or others
- s.63, Liability resulting from length of service
- s.78, Settlement agreements
- s.79, Determinations and consequences
- s.85, Entry and inspection powers
- s.87, Lien for unpaid wages
- s.88, Payment of interest
- s.89, Demand on third party
- s.90(1), Failure to comply with demand
- s.92(1)(b), Seizure of assets
- s.94(3), Wrongful removal of seized assets
- s.98(4), Monetary penalties