HR glossary · Pay and payroll

Wage deductions

Wage deductions are amounts taken off an employee's pay. Tax, CPP and EI are required; most others are limited by provincial employment standards.

Also called: deductions from pay, payroll deductions, unauthorized deductions, deducting from wages

What wage deductions means

A wage deduction is any amount you take off an employee's pay before paying them. Some deductions are required by law, such as income tax, CPP contributions and EI premiums. Others are optional, such as benefit premiums, a pension plan or a payment plan for a company purchase.

Provincial employment standards laws limit what else you can take. Deducting for things that go wrong at work, such as a till shortage, a broken tool or a customer who leaves without paying, is restricted or forbidden in some provinces, even if the employee was at fault.

Getting this wrong can turn into an unpaid wages complaint, so check your province's rule before you take anything beyond tax, CPP and EI.

How it works

Sort deductions into three groups. First, deductions the law requires: income tax, CPP (or QPP in Quebec) and EI. You must take these. Second, deductions a court or government orders, such as a garnishment or a family support order. You must follow the order. Third, everything else, which is only allowed if your province's rules permit it.

For the third group, check two things in your province's rules: whether the employee must agree in writing, and for what, before the deduction is made; and whether some deductions, such as for cash shortages, breakage or required uniforms, are forbidden even with consent. Read your province's rule before you set up any new deduction.

Tips have their own protection in some provinces. In British Columbia, for example, you cannot deduct from tips or use them to cover business costs, except under a court order such as a garnishment.

Show every deduction, by name and amount, on the pay statement. If an employee owes you money, for example for a pay advance, agree a written repayment plan rather than taking a large amount from one pay or from the final pay.

Wage deductions by province

Rules on deductions other than tax, CPP and EI differ by province. These are the rules we confirmed on official pages.

Where the work is done	The rule
British Columbia	An employer must not require an employee to pay any of the employer's business costs, except as the regulations allow. A walkout ("dine-and-dash") is a cost of doing business and cannot be recovered from the employee's wages or tips. Tips cannot be withheld or deducted from, except under a court order such as a garnishment or family maintenance order.

We did not confirm deduction rules for the other provinces and territories in this update. Check your provincial employment standards office before deducting anything other than tax, CPP and EI.

Example: A cash shortage in Kamloops

Ruth runs a 10-person café in Kamloops, British Columbia. At closing, the till is $40.00 short, and she suspects the new cashier counted change wrongly.

Ruth does not take the $40.00 from the cashier's pay or tips: in British Columbia a cash shortage is a business cost. Instead she shows the cashier the till procedure again and adds a mid-shift count to the closing checklist.

Employment standards by province

Staffkin's free employment standards by province page brings together pay rules, minimum wage and final pay timing, with links to each province's official office.

See the rules by province

Free tools and guides for this

Employment standards: pay frequency and final pay by province

Questions about wage deductions

Can I deduct a till shortage from an employee's pay?

In British Columbia, no: business costs cannot be passed on to employees. Most provinces limit deductions like this, so check yours before deducting anything.

What deductions are allowed from a pay cheque?

Income tax, CPP or QPP and EI are required. Court-ordered amounts such as garnishments must be deducted as the order says. Anything else depends on your province's rules.

Can I take money from an employee's final pay for unreturned equipment?

Only if your province's rules allow that deduction. Check first, and ask for property back as part of your exit process.

Official sources

General information for Canadian employers, not legal advice. Rules differ by province and territory and change over time, so check with your provincial employment standards office (or the federal Labour Program if you are federally regulated) before you rely on it. See employment standards by province.

Checked against official sources on 4 November 2026.