January 22, 2003 by Israel Foulon LLP
Question: In Ontario , if an employee who has taken vacation time she has technically not earned and resigns, is the company allowed to deduct that unearned vacation time from her last pay?
Answer: Under the Ontario Employment Standards Act, 2000 an employer cannot make any deductions from an employee’s wages unless the employee has given written authorization to do so. In order for it to be valid the employee’s authorization must refer to a specific amount or provide a formula from which a specific amount may be calculated. Therefore, without a specific authorization from the employee directing the employer to deduct unearned vacation time from her wages, the employer is not entitled to make such a deduction.
In these circumstances, the employer’s remedy would be to seek recovery of its overpayment to the employee by bringing a small claims court action. But it is likely the cost of commencing such an action in terms of time and court fees would greatly exceed the amount of the claim itself.
Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or pi@qtw38575.mywhc.ca. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today