Employers in Ontario need to be aware of the rules regarding payment of wages to their employees. These rules are outlined in the Ontario Employment Standards Act and include requirements for establishing regular pay periods and pay days, payment of commissions and bonuses, and special rules for vacation pay. In this blog post, we will provide nine tips for employers to ensure compliance with these rules.
1. Establish a Regular Pay Period and Pay Day
Employers must establish a regular pay period and a regular pay day for employees. This means that employees should be paid on the same day each pay period, and the length of the pay period should be consistent from one pay period to the next. For example, an employer might choose to pay employees every two weeks on a Friday.
2. Pay All Wages Earned in Each Pay Period
An employer has to pay all the wages earned in each pay period, other than vacation pay that is accruing, no later than the employee’s regular pay day for the period. This means that if an employee has earned wages during a pay period, those wages must be paid on the regular pay day for that period, unless the employee is entitled to vacation pay.
3. Pay Commissions and Bonuses in Accordance with Employment Contracts or Employer Practice
Some employees earn commissions or “bonuses” based on sales made in a pay period. In these situations, the employment contract or the practice of the employer often provide that the commission or bonus is not “due and owing” or “earned” until some future event has occurred. For example, this could be when goods or services have been delivered to the customer and full payment has been received. In such cases, the commission or bonus is not “earned” in the pay period in which the sales are actually made. Instead, in accordance with the employer’s accepted or agreed-on practice, it is “earned” and paid at a later date.
4. Follow Special Rules for Vacation Pay
There are special rules about when employees must be paid their vacation pay. Refer to the Ontario Employment Standards Act for more information.
5. Use the Employment Standards Self-service Tool to Check Compliance
Employers can use the Employment Standards Self-Service Tool to check their compliance with the rules on payment of wages and other employment standards entitlements.
6. Wages (Including Vacation Pay) Can Be Paid by Cash, Cheque, or Direct Deposit
An employer may pay wages, including vacation pay, by cash, cheque, or direct deposit, which includes Interac e-Transfer, into the employee’s account at a bank or other financial institution.
7. If Wages Are Paid by Cash or Cheque, They Must Be Paid at the Workplace or Another Agreed-Upon Location
If payment is by cash or cheque, the employee must be paid the wages at the workplace or at some other place agreed to electronically or in writing by the employee.
8. If Wages Are Paid by Direct Deposit, the Employee’s Account Must Be in Their Name
If the wages are paid by direct deposit, the employee’s account must be their name. Nobody other than the employee can have access to the account unless the employee has authorized it.
9. Outstanding Wages Must Be Paid When Employment Ends
If an employee’s employment ends, the employer must pay their outstanding wages, including vacation pay (plus any payments due to the employee because the employment has ended) no later than seven days after the employment ends, or on what would ordinarily have been the employee’s next regular pay day, whichever is later.
Employers in Ontario need to be aware of the rules regarding payment of wages to their employees. These rules include requirements for establishing regular pay periods and pay days, payment of commissions and bonuses, and special rules for vacation pay. Employers can use the Employment Standards Self-Service Tool to check their compliance with these rules, and can pay wages by cash, cheque, or direct deposit. It is important for employers to follow these rules to ensure that their employees are paid correctly and on time.