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The case of the damaged company vehicle: Employer ordered to pay unpaid wages, travel costs, and fee

gender-wage-gapNaturally you would think, if an employee damages my property, I should be able to deduct money from their paycheque to compensate for the cost of any repairs without their authorization. That is incorrect and against the law pursuant to section 12 of Alberta’s Employment Standards Code (the “Code”). The Judge in the matter of Step Energy Services Ltd. (the “employer”) v. Joe Palmer (the “employee”) makes that clear.

The employer appealed an Order of an Employment Standards Officer (the “Officer”) dated January 8, 2015. The Order required the employer to pay $3,397.22 for unpaid wages that the Officer concluded was owing to the employee. The Officer’s fee of $339.72 was also part of the Order made against the employer. The Officer concluded that the employee did not personally authorize in writing deduction of the vehicle repair and servicing costs from the employee’s earnings.

Events that led to the appeal

The employee was terminated by the employer on May 14, 2014 without cause.

The employee’s final paycheque was deposited into the employee’s bank account and from the employee’s wages, the employer deducted $3,397.22 to compensate for the cost of repairing a company vehicle. The vehicle had been used by the employee, with the authorization of the employer during the course of employment, both for work and non-work purposes.

The employer alleged that the employee damaged the vehicle while driving for a non-work purpose shortly before employment termination.

The employer had it repaired and generally serviced at a cost to the employer of $3,397.22.

The employer then took the opinion that pursuant to the terms of the employer’s written policy statement regarding “light duty company vehicles for business and personal use” (a document signed by the employee when he commenced employment with the employer) the employee was required to reimburse the employer for the repair and service costs. As a result, the employer reduced the employee’s wages, as mentioned above.

The issue

Whether the employee personally authorized, in writing the deduction made by the employer from his final paycheque.

Looking at the employer’s written policy statement

Personal Liability and Insurance for trailers and equipment:

1) The employee will be held personally responsible for any damage done to a company vehicle that occurs while operating it at any time for non-work related purposes…

What the law tells us

Section 12 of the Code states:

An employer must not deduct, set off against or claim from the earnings of an employee any sum of money, unless allowed to do so by subsection (2)…

Section 12 (2) states:

An employer may deduct from the earnings of an employee a sum of money that is…

c) personally authorized in writing by the employee to be deducted. (emphasis added)

The decision

The Judge dismissed the appeal and upheld the Order of the Officer for unpaid wages and the Officer’s fee.

The Judge held that “[b]lanket authorizations should not be used by employers to circumvent the requirements and intent of the Code and in particular, section 12.” The Judge confirmed that the policy statement relied upon by the employer constituted a blanket authorization that did not deal specifically with the sum of money deducted from the employee’s wages in this case.

The Judge went on to note that a civil remedy through the litigation process is available to employers to deal with cases, such as this matter, where there is a disagreement between an employer and employee as to damage caused to a company vehicle. The Judge stated,

[a] court of law can hear and weigh evidence from both employer and employee and apply a balance of probabilities standard of proof before determining the issues. That is, where the specific sum of money deducted from an employee’s wages is not personally authorized in writing by the employee, fairness is achieved through that process as opposed to a unilateral wage reduction by an employer.” (emphasis added)

In addition, the employee was awarded travel costs of $300 for his attendance at the appeal, which were to be paid by the employer.

Cristina Lavecchia

Cristina is an editor and researcher at First Reference. She is a licensed paralegal and obtained a Bachelor of Arts degree, Political Science major at York University. During Cristina's paralegal and undergraduate studies she studied employment standards, occupational health and safety, and workplace safety and insurance. Read more

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