Employer's Unauthorized Wage Deductions Ruled Illegal

Reasons for decision [COMPANY]., applicant, and [NAME], respondent, and Head of Compliance and Enforcement. Board File: 037936-C Neutral Citation: 2026 CIRB 1243 April 20, 2026 The panel of the Canada Industrial Relations Board (the Board) was composed of [NAME], External Adjudicator, appointed pursuant to section 12.001(1) of the Canada Labour Code (the Code ). Parties’ Representatives of Record Mr. [NAME], for [COMPANY].; [NAME], on his own behalf; Ms. [NAME], for the Head of Compliance and Enforcement.

I. Nature of the Matter Before the Board [ 1 ] [COMPANY]. (the applicant) operates an interprovincial and cross-border trucking business in accordance with section 2(b) of the Code : 2 In this Act, … federal work, undertaking or business means any work, undertaking or business that is within the legislative authority of Parliament, including, without restricting the generality of the foregoing, … (b) a railway, canal, telegraph or other work or undertaking connecting any province with any other province, or extending beyond the limits of a province. [ 2 ] [NAME] (the respondent) worked for the applicant as a truck driver. [ 3 ] On July 12, 2024, the applicant filed a request for review of a payment order issued on June 28, 2024, by a Labour Affairs Officer (LAO) with respect to a claim for unauthorized deductions against it. [ 4 ] The Head of Compliance and Enforcement (the Head) referred the applicant’s request to the Board to be treated as an appeal for the purposes of section 251.12 of the Code . The Board received the referral and supporting documents on August 15, 2024. [ 5 ] For the following reasons, the Board has determined that the appeal should be dismissed.

II. Background and Facts [ 6 ] On May 9, 2023, the Labour Program of Employment and Social Development Canada received a complaint from the respondent for unpaid wages and unauthorized deductions, pursuant to sections 247 and 254 of the Code . [ 7 ] On March 8, 2023, [NAME] sent an “Evaluation–Amounts Owing” letter to the parties based on the evidence provided by them. [NAME] determined that the applicant did not owe any unpaid wages to the respondent. However, he found that the applicant owed the respondent $500.00 in respect of unauthorized deductions from his wages during the February 12 to March 6, 2023, pay period. [ 8 ] By email dated March 19, 2024, the applicant objected to [NAME]’s analysis. It stated that the respondent had authorized it to deduct $50.00 from his pay for each pay period until a maximum of $500.00 was reached. The document that purportedly provided this authorization is entitled “Payroll Agreement,” and the respondent signed it on February 14, 2023. The applicant asserted that these funds were to pay for any preventable accidents, incidents or fines and that the respondent had caused over $10,000.00 in damage to the trailer that was in his care and control. By email dated June 5, 2024, the applicant again explained the purpose of the Payroll Agreement and added that the respondent had also disobeyed its rules against smoking in the truck he drove. By email dated June 25, 2024, the applicant made further submissions. It argued that the respondent’s assertion that he was required to sign the Payroll Agreement was false and noted that it was a longstanding policy with which no other driver had taken exception. However, the applicant also stated that the respondent could have chosen not to accept employment with it if had an issue with the deductions. [ 9 ] On June 28, 2024, [NAME] issued a payment order for unauthorized deductions and $200.00 for the administrative fee, for a total of $700.00. [NAME] found that the respondent did not voluntarily consent to the deduction authorization because he believed that he had to sign the Payroll Agreement to obtain employment. [NAME] also found that the Payroll Agreement did not make specific authorizations for the deductions. Rather, he found that the written authorization amounted to a blanket authorization in which the applicant took $50.00 from each of the respondent’s pay periods regardless of whether an accident would occur in the future. [NAME] noted that the deductions were not taken for a specific purpose other than the possibility of a future accident and that the respondent could not be expected to authorize deductions for an accident that had not occurred when he signed the Payroll Agreement. [NAME] noted that only consent for deductions made at the time of or after an occurrence is valid. [ 10 ] In a letter dated July 9, 2024, the applicant requested a review of the payment order, along with supporting documents. [ 11 ] In a letter dated August 27, 2024, the Board acknowledged the referral from the Head and set a deadline of September 11, 2024, for the parties to provide any further documentation and submissions regarding this matter. It set a further deadline of September 23, 2024, for the parties to respond to any submissions made by the other party. [ 12 ] A mediation session with the parties was held on November 27, 2024, but they were unable to resolve their dispute. [ 13 ] Neither party filed additional documents. A. The Applicant’s Position [ 14 ] In its submissions dated July 9, 2024, the applicant submitted that the respondent agreed to its policy allowing it to make payroll deductions of $50.00 per pay until $500.00 was collected to cover any preventable accidents/incidents and fines. It argued that this does not amount to a deduction because the funds are held in a trust account and are only used in the event of an accident. Unused funds are returned to the employee at the end of their employment. The respondent was only employed for two weeks prior to his accident; therefore, the applicant was unable to collect the full amount. The respondent’s accident caused over $10,000.00 in damage, and the applicant noted that the $500.00 deducted from his pay did not cover the deductible on its insurance. The applicant stated that it also incurred costs to clean the truck because the respondent smoked in it, which was against its policies. The applicant asserted that the respondent had sole care and control over the truck and trailer to which he was assigned and noted that the Payroll Agreement was signed after he was hired and therefore had no bearing on his employment offer. B. The Respondent’s Position [ 15 ] The respondent stated that he signed the Payroll Agreement because he believed his employment would end if he did not.

III. Analysis and Decision A. Legal Principles 1. Decision Without an Oral Hearing [ 16 ] Section 16.1 of the Code provides that the Board may decide any matter before it without holding an oral hearing.

Accordingly, the Board has broad discretion to determine matters without an oral hearing (see Pacific Coast Terminals Co. v . [NAME] , 2025 FCA 152; and [NAME] v. [NAME] , 2009 FCA 100, application for leave to appeal dismissed by the Supreme Court of Canada in [NAME] v. Métallurgistes unis d’Amérique (F.T.Q.), et al. , No. 33195, October 15, 2009). [ 17 ] The Board expects all parties to put forward their entire case in writing, including all supporting documents, to ensure a full opportunity to be heard. Once the timelines for filing documents and submissions have expired, there is no right to make further submissions and the Board may decide the matter based on the written record (see [NAME] Company , 2009 CIRB 446 ( [NAME] Company 446 ), affirmed in Teamsters Canada [NAME] v. [NAME] Company , 2009 FCA 368; and [NAME] Company , 2021 CIRB 989). [ 18 ] The Board is also not required to notify the parties that it intends to decide a matter without an oral hearing (see NAV CANADA , 2000 CIRB 88; NAV Canada v. [NAME] , 2001 FCA 30; and [NAME] v. [NAME] of Postal Workers , 2003 FCA 418). [ 19 ] Having reviewed all of the material on file, the Board is satisfied that the documentation before it is sufficient for it to determine this matter without an oral hearing.

2. Legal Principles for Wage Recovery Appeals [ 20 ] The applicant filed a request for review under section 251.101(7) of the Code , challenging [NAME]’s decision to issue the payment order. When the Head refers a request for review to the Board in accordance with section 251.101(7) of the Code , the Board has an appeal before it that is not restricted to questions of law or jurisdiction. Instead, the appeal involves a full hearing of the matter, and the Board assesses the correctness of [NAME]’s decision based on all evidence presented to [NAME], as well as any additional evidence and submissions provided by the parties during the appeal process. The Board is not bound to accept [NAME]’s findings if an error is demonstrated by the applicant (see [NAME] , 2020 CIRB 926). [ 21 ] The applicant has the onus of proof in these circumstances. This means that it must demonstrate, through evidence or submissions, that [NAME] made mistakes in the decision, such that the Board should intervene to correct those mistakes (see [NAME] ). The onus is not on the respondent to establish that [NAME]’s decision is correct, and the Board does not play an investigatory role.

3. Deductions From Wages [ 22 ] [COMPANY]. , 2025 CIRB 1214, the Board summarized the principles applicable to a wage recovery process under the Code . [ 23 ] The Board explained that the wage recovery process under the Code is intended to be a process for an employee to collect wages from an employer that has neglected or refused to pay. It is not a mechanism for an employer to advance monetary claims or “set offs” against wages otherwise owing to an employee. The Code does not permit an employer to “help itself” to an employee’s pay which is otherwise earned. [ 24 ] Deductions from wages are highly restricted by Part Ill of the Code . Generally, such deductions are prohibited, except in specific limited circumstances as a result of section 254.1 of the Code , which reads in part as follows: 254.1 (1) No employer shall make deductions from wages or other amounts due to an employee, except as permitted by or under this section. (2) The permitted deductions are … (c) amounts authorized in writing by the employee. [ 25 ] Consistent with this restrictive approach to deductions from wages due to an employee, the Board has interpreted the phrase “amounts authorized in writing by the employee” to mean that an authorization must be in writing, must specify a particular amount and must be given in a way that is truly consensual. A [NAME] “blanket” statement to the effect that an employee is responsible for certain costs is not sufficient. Authorization must also generally come after the fact, that is, after the incident or transaction to which it is related has occurred. [ 26 ] The Board wishes to point out that there is a distinction between an employment contract, which sets out the rights and obligations of the parties, and an authorization permitting a deduction. The employee’s responsibility for paying a specific amount or certain costs and the possibility of making a deduction are two separate issues. The fact that an employee has agreed to be responsible for certain costs does not in itself entitle an employer to “help itself” to the employee’s wages without a valid authorization. B. Application to the Facts 1. Unauthorized Deductions [ 27 ] There is no dispute that the respondent signed the Payroll Agreement, which purported to authorize the applicant to deduct $50.00 from his pay for each pay period until $500.00 was collected. These funds were to offset any costs incurred if the respondent had a preventable accident, incident or fine. The respondent’s employment was brief, and the applicant had collected only $50.00 from his pay when he was dismissed on March 9, 2023. The applicant deducted the remaining $450.00 from the respondent’s final pay because he had a vehicle accident that led to significant damage and costs. [ 28 ] In the Board’s view, the Payroll Agreement does not meet the requirements of sections 254.1(1) and (2) of the Code . Under the Payroll Agreement, the applicant deducted $50.00 from the respondent’s pay for each pay period to defray any preventable cost he might incur. The authorization in the Payroll Agreement amounts to a blanket authorization against future events, since the specific cost of a future incident could obviously not be known. The deductions taken against future events also offend the requirement that any deductions come after the incident or transaction to which it is related has occurred. There is also nothing in the payroll agreement that permitted the applicant to deduct more than $50.00 per pay period, and there is no evidence that it asked for or obtained the respondent’s written authorization to deduct $450.00 from his final pay. [ 29 ] Therefore, the Board finds that the Payroll Agreement did not amount to a valid authorization under section 254.1(2)(c) of the Code and that [NAME]’s conclusions were correct.

IV. Conclusion [ 30 ] Based on the above, the appeal is dismissed and the payment order confirmed. [ 31 ] Consequently, the Board makes the following orders: The Board confirms, in whole, the payment order issued by [NAME] on June 28, 2024. The Board directs that the amount of $500.00, held in trust by the [NAME] in relation to this matter, be paid forthwith to the respondent, plus any accrued interest. Since the Board has confirmed the payment order in whole, the applicant is liable for the administrative fee of $200.00 specified in the payment order. [ 32 ] The Board’s order no. 1785-NB is enclosed. ____________________ [NAME]