Employers are prohibited from unilaterally deducting wage overpayments from employees’ paycheques, the British Columbia Court of Appeal has ruled. In rendering the decision, the court upheld an arbitration award which concluded that section 21 of the Employment Standards Act prohibits such deductions.
The issue arose when an employer advised its union that it had the right to make unilateral deductions from employees’ wages to recover overpayments made through inadvertence or error. The union disagreed and filed a grievance, which was upheld at arbitration.
The employer appealed to the Labour Relations Board, but the Court of Appeal declared jurisdiction over the matter. The Court took jurisdiction because the interpretation of the Act was a matter of “general law” and was not a “labour relations” issue, since the Employment Standards Act applies to both unionized and non-unionized employees.
The Court of Appeal dismissed the appeal and upheld the arbitrator’s decision. The court held that if an employer does not obtain an employee’s consent to deduct a wage overpayment, it must file a grievance and seek recovery at arbitration.