If a court or legal tribunal orders one of your employees to pay a family maintenance or support order or other money damages, there’s a chance that the person that won the award will seek to garnish the employee’s wages to collect the debt. Garnishment orders put you squarely in the middle of the dispute between the employee, aka, debtor, and the person to whom they owe money, aka, creditor, because it forces you to redirect part of the employee’s wages to the creditor. Failing to comply with a garnishment order exposes you to fines and other penalties. However, garnishment laws can be complicated; and they vary from jurisdiction with regard to:

  • Which wages and payments are and are not garnishable;
  • Which wages and payments are exempt from garnishment; and
  • How much of an employee’s wages can be garnished in a particular pay period.

And that’s not the only way you can get into trouble. In 8 jurisdictions—FED, AB, MB, NB, NL, NS, NT, ON—you’re not allowed to terminate or take adverse action against employees because their wages have been garnished. Here’s a look at the basic garnishment requirements in each part of Canada.

Wage Garnishment Requirements Across Canada

  1. Employer may not dismiss, suspend, lay off, demote or discipline an employee on ground that garnishment proceedings may be or have been taken regarding employee (Canada Labour Code, Sec. 238);
  2. Garnishable: Among other things, personal income tax refunds, EI benefits, CPP benefits except benefits paid to the child of a disabled contributor or orphan of a deceased contributor and Old Age Security Act benefits (Family Support Orders & Agreements Garnishment Regs., Sec. 3); and
  3. Pensions can also be garnished subject to Garnishment, Attachment & Pension Diversion Act
  1. No employer or other person may suspend, lay off or terminate an employee for sole reason that garnishment proceedings are being or may be taken against the employee (Employment Standards Code, Sec. 124);
  2. An employer who dismisses, suspends, lays off, penalizes, disciplines or discriminates against an employee in respect of whom a garnishee summons, notice of continuing attachment, support deduction notice or order for payment is served must show cause for the action and, if it doesn’t, the action is deemed to have been illegal (Maintenance Enforcement Act, Sec. 40(3));
  3. Garnishable: “Remuneration for employment” includes: (i) salary, wages, allowances, commissions, bonuses, incentives, holiday pay and vacation pay, and (ii) income that, in the opinion of the Director: (A) replaces remuneration from employment, and (B) is appropriate in the circumstances to treat as remuneration from employment, but does NOT include termination or severance pay; and
  4. Exemption: Subject to an order obtained under section 17(4) of the Act, a support deduction notice targeting remuneration from employment may not require payment to the Director of more than 40% of the gross amount of remuneration per month without the debtor’s consent (Maintenance Enforcement Reg., Secs. 1(b.1) and 13(1))
  1. No employer or person acting on its behalf may intimidate, dismiss or otherwise penalize an employee or threaten to do so because of a court order or garnishment, to pay to a third party an amount owing by the employer to the employee (Employment Standards Act, Sec. 74(1)(b));
  2. Garnishable: 50% of “net amount” owed by employer to employee, defined as the total amount owed by the income source to the payor at the time payment is to be made to the Director, less the total of the following deductions: a. Income Tax; b. CPP; c. EI; d. Union dues; and e. Such other deductions as may be prescribed by regulations;
  3. Exception: Despite subsection (2), up to 100% of a payor’s income tax refund or other lump sum payment that’s attachable under the Family Orders and Agreements Enforcement Assistance Act (Canada) may be deducted and paid to the Director under a support deduction order (Family Responsibility & Support Arrears Enforcement Act, 1996, Sec. 23); and
  4. Exemptions: 80% of a person’s wages are exempt from seizure or garnishment; 50% of a person’s wages are exempt from seizure or garnishment in the enforcement of an order for support or maintenance enforceable in Ontario; judge may increase or decrease these limits if the judge is satisfied that it’s just to do so, having regard to the nature of the debt owed to the creditor, the person’s financial circumstances and any other matter the judge considers relevant (Wages Act, Sec. 7)
  1. Garnishable: “Remuneration” which includes: (i) wages, salary or other financial benefit of employment, (ii) a commission, bonus or other payment, if it is not recoverable by the income source from the payor on the failure of the payor to earn the commission, bonus or other payment, to meet a quota or to otherwise establish eligibility for the commission, bonus or other payment, (iii) piece-work payments, (iv) accident, disability or sickness benefits, (v) retirement and pension benefits, (vi) an annuity, (vii) rental income, (viii) debts owing to the payor or to a family company, and (ix) money paid into court, in which the payor has an interest (Maintenance Enforcement Act, Sec. 1(f)); and
  2. Exemption: Prothonotary calculates monthly exemption using a monthly schedule set out in the Garnishee Act Regulations based on number and age of kids in household to cover: a. Food; b. Clothing; c. Household & personal items; d. Housing; e. Fuel & utilities; and f. Healthcare (Garnishee Act Regs., Sec. 3)