Exemption maximums vary between provinces
Employers have an obligation to comply with government-ordered garnishment notices in the time prescribed by the notice, according to Sean Taylor, a lawyer at Bradley, Hiscock, McCracken in Ottawa.
“Ultimately, if an employer doesn’t either pay what it’s told to pay or explain why it’s paying less… then the employer becomes liable for that amount,” Taylor says, adding this is the case even if the reason payment wasn’t remitted is an accident.
An employer might receive a garnishment notice after a judgment has been rendered against the employee. This means a creditor has sued the employee and a judge has agreed the employee owes the debt. The employer, often referred to as the garnishee in court-ordered garnishment notices, then deducts the amount of the wage garnishment from the paycheque of the employee — normally referred to as the debtor. The garnishment continues until the debt is fully paid off.
“The money gets paid to the court, so employers don’t need to worry about being taking advantage of,” he says.
An employee’s wages could also be garnished to the Canada Revenue Agency (CRA) or Revenue Quebec.
“This is usually when the person might owe taxes,” says Linda Scott, a consultant with Carswell’s payroll consulting hotline in Toronto. “It could be because they’re acting on behalf of Service Canada… or it could be that perhaps the pension was overpaid.”
Employer obligations
“First and foremost, you’ve got to remember that this is confidential,” Scott says. “You do not want people to know about this.”
Acknowledging an employee’s wages are being garnished may lead to unjust treatment in the future, Scott says. As a result, employers cannot terminate or discipline an employee in any way because they may have one or more garnishments.
“A lot of employers used to look at it in the past and say, ‘Well, if you can’t manage your money, how can you manage your job?’” she says. “You can’t do that anymore. It’s protected by law now.”
Employers should ensure the following upon receipt of the garnishment:
• the company’s legal name is correct
• the name and social insurance number (SIN) of the employee is correct
• record the date the notice was received in case the date is questioned in the future
• note any due dates and expiration date of the order
• calculate the pay period garnishment deduction
• remit payment to the court on or before the due date
• maintain a log of the deductions and remittances.
Upon receiving a garnishment notice, employers do not have an obligation to inform their employee of the forthcoming garnishment.
“The debtor will receive a notice independent of the employer,” Taylor says.
Should an employee leave the organization for whatever reason, the court must be notified immediately, Scott says.
“If something should happen that that employee goes either on a leave of absence… or if they quit or if you terminate them, you must notify the court immediately in writing,” Scott says. “You may be held, as an employer, liable for the amount of the debt.”
Provincial maximums
Each province and territory has its own legislation governing garnishments, wage assignments and support orders. The law limits the amount of wages a creditor or court can garnish from a debtor.
“In a lot of different jurisdictions, when you’re doing the maximums, it will say you can garnish 70 per cent of the wages, but you have to leave the person at least $100,” Scott says.
Family support orders are a different story, she says, noting the garnishment for family support orders can reach up to 50 per cent in Ontario.
If an employee has more than one garnishment order for their wages, Scott suggests contacting a lawyer before proceeding.
“Employers with multiple garnishments for an employee should check with their lawyer to see what the order of priority should be,” Scott says. “The CRA maintains that they’re top dog and should be given priority, but sometimes the FRO (Family Responsibility Office) may also claim priority.”
(See the chart at the bottom of this page for an overview of the rules in each jurisdiction.)
Voluntary garnishment
If employees owe their employer for equipment, such as a uniform, the employer can only deduct amounts owing from the employee with written permission from the employee, Scott says. Employers should keep in mind that even with written consent, an employer is not permitted to deduct amounts for property damage or loss of money if any other person or employee had access to the property of lost money.
Third-party software providers
Third-party software providers have the ability to garnish wages on behalf of employers, including ADP Canada.
“ADP acts as the employer, per se, and will take care of all of the steps required,” says Helen Patterson, product compliance manager with ADP Canada in Toronto. “(Our) payroll solutions are configurable to automatically deduct the appropriate amount of wages to be garnished.”
Employers can also indicate at which point the garnishment should be stopped.
“A goal limit can be set up so that once the total amount of the garnishment order is reached the wages will no longer be garnished,” Patterson says. “This can be set up by the client, or with the assistance of our client service team.”
Employers do not necessarily have to worry about remitting payments, either.
Provincial breakdown
Gudelines for exemptions
Alberta
• Minimum monthly earnings exemption is $800, plus $200 per dependent
• Maximum monthly earnings exemption is $2,400, plus $200 per dependent
• Maintenance orders — 60 per cent of the employee’s gross amount of remuneration each month are exempt. If the employee’s gross remuneration is $15,000 or less, employers may get permission to increase the exemption to 80 per cent
British Columbia
• 70 per cent of wages protected
• Maintenance orders — will depend on the type of order (tax deductible or not), type of payment to the employee, and pay period frequency
Manitoba
• 70 per cent of wages protected
• Maintenance orders — $250 per month
New Brunswick
• 100 per cent protected
• Maintenance orders — no specific amounts exempted
Newfoundland and Labrador
• $1,019 protected for employees supporting a spouse or co-habiting partner
• $1,059 protected for employees supporting a spouse or co-habiting partner and one dependant, $47 for each subsequent dependent
• $963 monthly, plus $47 for each subsequent dependent in excess of one
• Maintenance orders — no specific amount defined, depends on marital status, dependents
Northwest Territories
• 70 per cent protected
• Maintenance orders — 50 per cent protected. If amount is less than $600 per month, then $600 per month is exempt, plus $80 for each dependent child Nova Scotia
• 85 per cent is protected
• Maintenance orders — determined by court
Nunavut
• $1,500 monthly protected, plus $300 per dependent
• 70 per cent of the employee’s net pay, up to $3,500 per month, plus $300 per month for each dependent, whichever is higher
• Payment orders for support — 50 per cent of net salary or wages
Ontario
• 80 per cent of net wages protected
• Maintenance orders — 50 per cent of net wages
Prince Edward Island
• Garnishments determined by court
• Maintenance orders — no set exemption
Quebec
• 70 per cent of wages in excess of $180 per week protected, plus $30 per week for each dependant in excess of two, for employees who are supporting a spouse, have a dependent or are the main support of a relative. In all other cases, 70 per cent of wages exceeding $120 are exempt
• Maintenance orders — 50 per cent of gross wages
Saskatchewan
• $500 per month protected, plus $100 for each dependant
• Maintenance orders — courts can decide exemptions
Yukon
• 70 per cent of net wages protected, provided the amount exempted is not less than $600 per month for a single employee. For an employee supporting one to three dependants, the amount exempted on a monthly bases must not be less than $1,000. If the employee is supporting at least four dependants, the minimum monthly exemption begins to increase by $150 per month.
• Maintenance orders —no specific amount exempted
